How do you know?
If you’re joining an MLM or Direct Sales company with the hope of making a few extra bucks or even as a career choice, there are some things you should consider about both the commission plan and culture of the company you’ve selected before signing on the dotted line. I have asked my commissions team to tell me what they thought people should know. Below is what they consider to be some top tips.
Does the company sell a product or service you can get behind?
It’s important to remember that the main focus of a Multi-Level Marketing or Direct Sales job is selling the product or service offered by your company. There are those exceptions – individuals gifted with a golden tongue when it comes to sales – but for most of us, if it’s not something you believe in or can stand behind, you’re going to have difficulty convincing others to join the business or buy the product. If the company’s commission plan is particularly appealing, try the product, read the testimonials and talk to your potential sponsor. Find out why they joined and why they’ve stayed in it. If you ultimately discover that you don’t really have buy-in to the company itself, consider moving on.
Does the company reward reps based on enrollment of new reps or based on sales made to/purchases made by new reps?
This is an important question to consider. In an industry that fights against the stigma of a few bad egg companies who used people’s hope and hard work to make a big, selfish, and unfair profit, recognizing a company that is utilizing pyramid or Ponzi type schemes is the key to succeeding. Never join a company that rewards you directly for enrolling a new rep. Rewards should be based on the sales volume of reps and customers. So if you enroll Joe, you won’t necessarily get a commission. But if you enroll Joe and he makes 3,000 in sales volume in his first three weeks, you might earn a percentage of that volume, or a flat dollar payout for your involvement in his achievement. It’s not about bringing the proverbial “representative lamb” to the slaughter. It’s about finding a “lamb”, teaching him and supporting him in the business and being rewarded when he turns into a sales lion.
Is the main marketing focus on selling to the end-user rather than other distributors?
There is a behavior in MLM and Direct Sales companies called Front Loading. Front Loading and its negatives are detailed here, but in short, is defined by Business Dictionary.com as “Forcing or encouraging purchase of large inventory by the agents or retailers as a condition of retaining agency status or qualifying for volume bonuses”. Simply, buying more inventory than you could possibly hope to resell so that you’ll qualify for commissions. A commission plan that promotes this type of behavior is one to be avoided. This can often be found in the monthly requirements that must be met in order to earn. For example, if the plan requires you to achieve X volume from your personal purchases only in order to qualify, then this could be a red flag. If it allows you to include the volume of your customer purchases, that’s more like it.
Are there training opportunities, documentation, and sales aids available?
Many people who join MLM and Direct Sales companies and fail do so because they did not receive the support and training they needed in order to be successful. Make sure when you choose to join, you’re doing so with a sponsor who will take the time to sit down with you and explain the whys, whats and how-tos. If you’re having difficulty finding one, call the corporate offices of the company you wish to join. The huge majority will be happy to assist you in finding a good sponsor. Once you’ve decided on a sponsor, make sure the company itself provides plenty of sales aids. I’m not referring to costly brochures, business cards, and flyers. Instead look for training aids that come with your enrollment kit and back office. Verify that there are training documents, videos and even corporate or regional training events. Most good companies realize that their sales force does not always have the skills needed to succeed right off the bat and goes through a good amount of trouble to help their field build those skills through media like those mentioned above. If your prospective company has nothing in the way of new rep help that doesn’t come with a steep price tag, steer clear. It suggests the company is not really interested in your success as much as they’re interested in your purchases.
Is there detailed information available to you about how the commission plan actually works?
Often times, companies will have two variations of their commissions plan. The first is a visual aid, sometimes a PowerPoint, that doesn’t have a whole lot of detail as to the how. Instead, it gives an overview and tries to simplify complex concepts into terms that will help reps to understand what is required of them, but doesn’t go in depth into the actual work required to achieve those payouts and rewards so as not to discourage new distributors. These fluffy marketing forms are great when you just want a broad understanding of what the plan can offer. But once you’re actually in the business, they don’t offer a lot of instruction as to how to achieve success.
Make sure your company of choice is willing to provide you with a detailed commissions plan that shows exactly what is required to achieve each level of success and includes actual numbers and how those numbers are calculated. For example, knowing you need 100 PV and 2,500 GV to achieve Director Rank is the first step, but more important is know how to achieve those numbers. What contributes to them? Sales volume from your orders? Are your customer orders included in that? What about GV? Is it sales volume from your entire downline, or does it just include the sales volume from reps down to a certain level? What is the exact timeframe during which you must achieve that number? Are there any other requirements? Do you need to have a specific number of active, personally enrolled reps, too? What exactly defines an active rep? Someone you enrolled who is purchasing? Or someone you enrolled who has 100 PV? These types of questions are critical to understanding what it is you need to do to succeed, and if your company or sponsor isn’t willing to share those very specific details with you, you may want to look for another business to join.
Focus on the requirements rather than the rewards.
It’s easy to be dazzled by the potential earnings available to the elite few who reach that Double Platinum Diamond Rank. But don’t be tricked into signing on until you understand the requirements that must be met in order to reach that rank. And the time and effort it will take you to get there. Make sure you take the time to figure out what you consider a valid reward in relation to the effort you’ll have to put forth to receive it. And if it’s not a fair exchange, move on.
Lastly, before you sign up, don’t be afraid to ask the hard questions, like “how much can I potentially earn in my first 90 days” and “who do I go to for help if my sponsor is unavailable” and even “why should I join this company over another”. Go with your gut and remember to never let yourself be pressured into something you’re unsure of. Best of luck!