compensation strategies for growth presented by: dan jensen & andi sherwood 1

Compensation Strategies for

GrowthPresented by:

Dan Jensen & Andi Sherwood

1

Danger! Don’t Copy a Plan

Great plans are designed and precisely calibrated for:

Selling approach Party plan Autoship emphasis One-on-one selling MLM buying club

Product line

Payout target & budget

Sales force culture

Training programs

2

Know Who You Are

Who you are must be a “stake in the ground.”

Decisions should support your business model and product strategy

3

Career Path

CAREER PATH

PAYOUTS

Do This Get That

4A

Career Path is Your Key to Growth

• Backbone of a comp plan• Payouts cannot fix gross defects• Each title is a stepping stone• Each title demonstrates more competency• Design 2+ future titles to be released later• Leader volume matches 5+ year revenue forecast• Career Path = Game plan for recruit & mentor• Basis of field recognition

5A

Career Path

HobbyistStart Business Builder

Ramp Up

Leads a Small Team

TeamManager

Focuses on

Rising Stars

Leader

Transition Zone 1Passive to Business

Transition Zone 2Full Time

6

Good Design = Sustainable Growth

Team Manager

Strong Selling & Recruiting

Team Building Building Managers

Building LeadersThe mix of behaviors evolve as aperson advances up the career path

Focus on the Behaviors

Selling

Recruiting

BuildingManagers

Building Leaders

RetentionFive

GoldenBehaviors

8A

Payout Types = Behaviors

Selling RecruitingBuilding Manager

s

Building Leaders

Retention

Selling Profit

Uni-Level

Step Level

Generation

Check Match

Binary10

ViSalusNeriumNuSkin

MelaleucaDoTerra

Amway, HerbalifeVisalus, ScentsyPampered Chef

Stella & DotNatures Sunshine

Oragami Owl

Pampered ChefNerium

Stella & DotMary Kay

AvonMost party plan

UsanaMonaVieNeriumUsana

MonaVieIsagenix

AmwayHerbalifeScentsy

Legal ShieldNatures Sunshine

Oragami Owl

How much should you pay?

• Design now for future payout• Pay more, get more behavior• Payout stabilizes at maturity

($100m/year)

11A

How much should you pay?

Mark-up to Retail 3x 4x 5x 6x 7x 8x

COGS % of Retail 33 25 20 17 14 12

Retail Commission 25 25 25 25 25 25

Overhead Costs 15 15 15 15 15 15

Profits 8 13 15 15 15 15

Other incentives 4 4 4 4 4 4

Overrides (% of Retail) 15 18 21 24 27 29

Total Paid (% of Retail) 40 43 46 49 52 54

Customer Biased Model / Party Planat $100m / Year, Percent of Retail Volume

12

How much should you pay?

Mark-up to Wholesale 4x 5x 6x 7x 8x 10x

COGS % of Wholesale 25 20 17 14 12 10

Retail Commission 0 0 0 0 0 0

Overhead Costs 20 20 20 20 20 20

Profits 16 20 20 20 20 20

Other incentives 5 5 5 5 5 5

Downline Overrides (Paid on Wholesale) 34 35 38 41 43 45

Self Consumption / MLM Modelat $100m / Year, Percent of Wholesale Volume

13

ww.danjensen-consulting.com360-852-8300

dan@danjensen-consulting.com Winners of the 2007 DSA

Partnership Award

Dan Jensen

Andi Sherwood

Brian Jensen