Concerned that devoting less time to personal sales and more to recruiting could hurt you financially?
The direct sales industry, for the most part, uses a two-tiered compensation plan. You can read more about it here; but essentially it means consultants get paid a commission on their personal sales and if they choose to build a team, they also get paid a leadership bonus on a portion of sales of all other consultants within their downline.
Recently I had a conversation with a direct sales team leader about compensation from personal sales vs. team sales. For maximum payout in direct sales, team building is a must. You must continue to build your own personal business by selling the products, and you must also share the business opportunity with others and continually sponsor new team members.
Optimal payout requires balance.
Personal sales pays a higher commission (up to 30% with Scentsy), and leadership bonuses range from 2-9%. At first blush you can see why one would rather have 30% than 2%. Not necessarily so, read a portion of my (LA) conversation with the team leader (TL).
TL: Of my whole paycheck, the portion of my personal sales is so much smaller than what I get from the other team members. That stinks.
LA: That’s good. It shows team building. You’re working smarter, not harder, and the importance of balancing personal sales and mentoring others. The portion of my check from my personal sales is also very small compared to the leadership bonus I get from the hundreds of others I’ve brought in over the years – either me personally or sponsorees of others within my downline.
TL: Ya but aren’t you bored just selling the minimum personal sales required? I want to be proud of what I’m bringing in too.
LA: Not bored at all. I spend most of my day talking to people who are interested in joining, or those who have joined and have questions or helping veteran consultants remember why they joined in the first place and work with them to get their mojo back. That’s more satisfying for me to be helping others. I help my customers by making myself available and my website to be found so they can get their Scentsy. I’m proud of my efforts to ‘train the trainers’ and earn the leadership bonus.
We’re also in different seasons too. I love our products but let’s face it, once you learn the scents we have and the FAQ about the products, it doesn’t change much. I need to be challenged more with something new. I’m not about to join a new company. I love Scentsy but I don’t want to get bored either. With team building, I get to work with new people all the time.
Remember you’re not getting paid OFF OF YOUR TEAM – that suggests you sit around watching Netflix waiting for money to plunk in your lap. You’re getting commission PLUS bonus because we have a two-tiered compensation plan that rewards team building.
TL: Yeah I know… But I got pissed with myself when I saw I only contributed such a small amount to the pay check. I have major purchases I want to make, and that isn’t going to cut it.
LA: Don’t think of it that way. Look look at it that you’ve achieved the required goal of 500 PRV, and you’ve earned extra from being a mentor and finding others build their own. You’re getting paid for training the trainers. You haven’t just contributed a small amount of your check; you’ve contributed to the entire check. You may not have actively been in contact with each person this month, but because of the foundation you started when you joined, you have all those other consultants within your downline.
But I get that 30% off 2000 PRV is a bigger chunk than 25% of 500. I can see why your first instinct is to bump up your personal sales to get the 30% on a higher amount. The comp plan is intentionally set up that way with minimum required only 500 so that you’re not required to spend all your time on just personal sales, but so that you’re spreading the love with others. Think about once you hit Director. You get paid 9% on all frontline team wholesale volume for the first two ranks, and other percentages for all other ranks within your downline. That adds up.
TL: Too true! I think I’m just scared I’ve let go of my old customers when they signed up to be consultants, and now I need to get new ones. I was happily earning [a higher rate] and would like to get back to that. I’m so happy with what I get for mentoring my team…it’s just a personal challenge for myself.
LA: Nothing wrong with that. We do need to keep pushing ourselves and keep our personal businesses thriving. But balance is the key. I’m not saying you can’t or shouldn’t do both – just be careful not to tip the scales too far in the other direction when you’re devoting so much time to PRV, then YOU carry the brunt of your GWV. You could devote most of your efforts to personal selling but you’ll still hit a ceiling. Whereas if you split time or get your 500 then devote time to more newer team members, then you start adding up the 9%+9%+9%… up to an infinite number of nine percents. It’s learning to delegate.
TL: True. Being responsible for most of the team’s retail sales, shows they aren’t sharing the opportunity in flipping parties.
LA: BINGO! I’m not suggesting it’s just so easy, but I like to think of it as climbing a flag pole to grab flags on the way up. You climb; you get one (new customers or team members). But then keep going because you have to just keep getting more flags, because you’re bound to drop some of the ones you acquired on the way up.
Now if someone signs up mainly JUST for personal sales, that’s one thing, but those who claim they want to work it as a business and earn more than a little extra money, have to actually DO something to make that happen – which includes team building.
There are so many analogies. Think of literally building a house. You can be the sole builder and keep all the money, or… you can hire a team of contractors, all work on it together, all share the payments, and then move onto another house. All the while the first builder is still working on framing out the first house, and doesn’t get paid until the job is done.