compensation strategies for growth presented by: dan jensen & andi sherwood 1
TRANSCRIPT
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Compensation Strategies for
GrowthPresented by:
Dan Jensen & Andi Sherwood
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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
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Know Who You Are
Who you are must be a “stake in the ground.”
Decisions should support your business model and product strategy
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Career Path
CAREER PATH
PAYOUTS
Do This Get That
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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
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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
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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
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Focus on the Behaviors
Selling
Recruiting
BuildingManagers
Building Leaders
RetentionFive
GoldenBehaviors
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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
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How much should you pay?
• Design now for future payout• Pay more, get more behavior• Payout stabilizes at maturity
($100m/year)
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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
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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
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ww.danjensen-consulting.com360-852-8300
[email protected] Winners of the 2007 DSA
Partnership Award
Dan Jensen
Andi Sherwood
Brian Jensen