Compensation Strategies for Growth Presented by: Dan Jensen & Andi Sherwood 1
Dec 26, 2015
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
[email protected] Winners of the 2007 DSA
Partnership Award
Dan Jensen
Andi Sherwood
Brian Jensen