Continuing with our series of Compensation Plan tips related articles we are presenting our second issue. Read here our first installment “Are you selling your Direct Selling products right?”
Let’s be honest, Direct Selling offers one business opportunity like no other, one in which there is no cap on income. Till date, Direct Selling has faced some challenges on how most of the income goes to the people on top of the networks.
This challenge remains for most companies facing high turnover percentage of consultants due to their paying schemes. Compensation Plans are in great part the responsible for this income perception for distributors.
Direct Selling companies are responsible for adapting their Compensation Plans to become future-proof businesses and maintain a growing base of distributors with people of different ages.
In our previously published Blog Article "Are you selling your Direct Selling products right?", we described how one of the first steps on building a compensation plan is the understanding of the distributor profile, and the journey the company expects them to travel as Sellers.
After the identification of that profile, the company starts with determining the actions they want consultants to pursue depending on the product and the sales strategy to advance in the network and the goals for a higher income generation.
Design Direct Sellers’ behaviors
Consider the behaviors carefully based on your product and profile. Behaviors evolve with the levels that you want to have in your consultants’ journey. At first, when people are just getting to know your brand, you want them to generate purchase behaviors and user experience so complete and attractive that is going to make them want to re-purchase and also share their experience. If your product and your branding are great, consultants will come on their own. To increase the levels of engagement consultants have with your business you have to be offering constant training and content to increase their social selling power and improve their digital presence.
From that re-selling phase on, the determinant variable for the consultants’ advance is the perception of income they are generating. As we stated in the title of our post, having an unlimited opportunity of income generation is the most attractive gig in the Direct Selling industry, and your payment scheme messaging has to be focused on displaying that horizon for your network.
Define metrics to measure Direct Sellers’ behaviors
- Measure the distributor capacity to bring more people: will help you understand the pace your network is going to be developing and the payouts it would demand.
- Measure how many distributors are actually bringing more distributors: and understand the number of levels your plan should be offering or if you would do better with a simple commission plan.
- Measure sales differentiating Payable / Commissionable / Calificable: to understand from the cost of your product on, how much is going to be left in payments of commissions and will derive in bonuses and point campaigns that will be paid in products and/or cheques.
- Sales strategies for each life stage of the product: offers, kits, and discount maximum value that still won’t hurt your operation costs but will stimulate purchases.
- Business rules that encompass all behaviors: determine the rules of “if” “then” and run tests on the payable amount of each rule.
Build your Compensation Plan
At this point, you have the profile of both consumers and consultants, the journey you want them to follow with your company, the behaviors your consultants would be taking and how your business is going to support them throughout it.
Now, build a Compensation Plan in a format you can share and is easy to comprehend by the people interested in becoming your consultants. Having a very complicated to understand business compensation plan would give you a large turnover of people that wouldn’t work with you simply because they did not understand how they were going to make money and how fast.
Answer those questions in the document you are going to share to work on getting new consultants, study common Direct Selling business models and then make decisions if your business would adapt with those rules better with a Party Plan, Binary, MLM or other.
Stay connected with us, we will go deeper into the different types of compensation plans in future issues.
S4DS Solutions leveraging Software for Direct Selling to boost sales
At S4DS we make managing your compensation plan easy, simple and secure, with us, you can:
- Control, monitor and manage your resources for the management of your network marketing business and commission payout more easily as your business grows
- Managing and sharing information relevant to different business areas, simple and always available
- Decrease consultants turnover with faster income generation paying commissions immediately
- Reach out to the maximum number of customers and market with your consumer products more efficiently and effectively.
Do you want to know how? Let us show you, contact us here: