Heidi Thompson, Scentsy President & Co-Owner

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Understanding a Two-Tiered Compensation Plan

Most direct sales companies have a two-tiered compensation plan. It’s a different structure than most compensation plans. Lack of understanding how a two-tiered plan works can lead to frustration and inability to reach full earning potential.

In short, part of the direct sales consultant’s income is derived from personal sales and the second part results from royalties paid on downline member sales. Two parts make a whole.

Another way to look at it is that you get two checks.   Many times you don’t actually get two separate hard copy checks; in my company we get one electronic deposit.   Yet it is itemized so that we can still see the “two checks”.    That’s the way you need to think of it “two checks”.

I’m reminded of my days when I worked for the federal government.   Payday would roll around and our secretary would walk around to our offices and hand out paychecks. Can you even imagine if she were to thumb through the stack of checks, then say “There are two checks here for you, Laurie.   Do you want both, or just one of them?”   Bring it on, both of them, right?

Yet many direct sellers are content leaving one check on the table. You can earn extra income in direct sales with just one check from the commissions on your own sales, if that’s what you choose.   Although if you’d like to earn a full time income it’s going to require getting into the mindset that you want and need both checks. In other words, if you just earn on your own personal sales, you’re only getting half a pay check.

Now that you have an understanding that direct sales income is based on “two checks”, it may be easier to understand how skewed the following comment is: “She only contacts me when it benefits her.” (Insert snide tone above if you didn’t pick up on that.) Many upline members have heard this comment directly or indirectly from some of their downline team members. Ironically that statement is accurate.   Everything an upline does with or for the downline does indeed benefit her.

Along these same lines, other similar comments coming from some downline members is how the upline is “getting paid off of me (downline)” or that the downline does the work while the upline sits around and collects money off of everyone else.

The consultants who make derogatory comments about their upline’s pay, clearly don’t have a good understanding of how their own compensation works.   As an upline it’s important to keep this in mind and not let those type of comments bother you.   Rather, it’s a good opportunity to work with the downline to help them better understand that you have a two tiered plan and that “both checks” are available to everyone.

The choice is certainly yours to make. You can earn one check or two in direct sales. If one is all you want or need and you’re happy with that, then there are no worries. If you have your sights on a more substantial income, then hopefully this has helped you to look at your two-tiered compensation plan a little differently. The second check isn’t a bonus; it’s part of your pay plan – two parts make a whole.

It always takes awfully long time to understand unbelievably simple things. – Joe Chung

About the Author: Laurie Ayers is a Michigan work from home mom and a Superstar Director with Scentsy Wickless Candles. She enjoys helping men and women start and maintain a home based business in the US, Canada, Poland, Mexico, Puerto Rico, Germany, Ireland, Australia and the UK. To download a FREE Start Up Guide which provides more details about how to start a home business as well as to learn about our compensation plan go to https://www.thrivingcandlebusiness.com/how-to-start-a-candle-business/

In addition to topics on compensation, please browse this site to find more articles about how you can successfully work from home with a direct sales business.

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One Response to Understanding a Two-Tiered Compensation Plan

  • Thanks for the good read. I found your page while searching ‘two tier direct sales compensation’ plans. Good advice keeping it simple to understand the ‘two paychecks’ model. Also good advice to team leaders not to let things bother you. It’s truly a learning curve, and personal growth experience to grow as a home business entrepreneur.

    All the best,

    Andrew, from NJ

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