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How to Ensure Your Compensation Plan and Software Work Well Together


Peanut butter and jelly. Milk and cookies. Batman and Robin. Everybody knows these famous pairings work well together.

Can you add your MLM compensation plan and software platform to the list? Today’s direct-to-consumer companies are flexing to take advantage of social commerce opportunities. Modern direct selling takes a multi-channel approach with referral and affiliate marketing programs working alongside traditional multi-level marketing models. It drives growth, but integrating the strategies can be complex.

More than ever, ensuring that your compensation plan and software programs work well together is critical for successful, long-term growth. Put another way, your front-end compensation needs to work seamlessly with your back-end compensation system – and it all needs to align with a thoughtful, cohesive growth strategy that appropriately rewards desired behaviors.

Your software is what keeps everything in sync. But in the rapidly evolving direct selling environment, it can be tempting to combine multiple plug-ins that offer a short-term solution but leave you without a holistic way to track and view compensation payouts. So, how do you ensure your compensation plan and software platform work well together? Here are three signs that your company is optimizing the pairing.

1. Compensation is connected

Your front-end compensation for retail or direct sales pays representatives where the sale occurs. Affiliate marketing programs that pay commissions based on sales via affiliate links are another type of front-end compensation. Customer referral bonuses that reward customers for referrals that result in sales are also considered front-end compensation.

Back-end compensation accounts for the overrides and bonuses based on sales team performance. This type of compensation focuses on driving team success, encouraging mentorship, and rewarding leadership.

From strategic planning through software programming and automation, front-end and back-end compensation must be connected. If your growth strategy calls for expanding social commerce and affiliate marketing, you will need to shift dollars to front-end compensation. If your front-end and back-end compensation are disconnected within your software platforms, it’s difficult to gauge the impact of changes.

2. End-to-end journeys for customers and sellers are mapped – and supported by reporting every step of the way

Connection happens when you’ve mapped out a seamless progression for both customers and sellers. For example, the journey should offer new customers the opportunity to move beyond purchaser by earning rewards for recurring purchases, referrals, and loyalty. From there, make it easy for them to take the next step to become an affiliate or enroll as a rep and start building a team.

The map defines a path, but your software keeps track of who is where – and projects the compensation amounts along the way. Modern direct selling requires up-to-the-minute information that enables sales management – and sellers themselves – to know where they stand, what they need to do to get to the next level, and how much they can earn throughout their journey.

Your software program needs to work with your compensation plan to track and report all relevant activities as they happen. It should also empower sales leadership to proactively encourage behaviors and actions to drive sales. Compensation dashboards can display key information, while comprehensive reporting provides the detail behind who’s making sales, earning bonuses, and achieving milestones.

Integrated compensation and software platforms can leverage accessible, timely information to produce automated alerts that notify sellers of opportunities and the actions they need to take. Based on the urgency, alerts can be set to appear on the seller’s dashboard, sent to their email, arrive via a text message – or all of the above. 

3. Company leaders have a 360-degree view of how money is coming in and paying out

If your comp and software solutions are a hodge-podge of disconnected front- and back-end processes, it’s difficult to keep your finger on the pulse of the business. In today’s fast-moving environment, overall visibility and data-driven decision-making are crucial.

A unified software solution should give you a 360-degree view of sales and commissions, including the details about who orders, what’s ordered, the promotional discounts applied, and the commissions paid. In addition to vital, real-time business insights, the integrated data allows you to monitor sales trends and identify any deviations from your plan as they happen. Most importantly, you’re able to track payouts as a percentage of revenues and identify any potential issues early.

Integrated software solutions also give you the ability to model different plan changes – including changes to commission rates, volume thresholds, and qualifications – to gauge the impact. This means you’re able to project how the changes will affect your selling team in terms of payouts and rankings, as well as the overall effect on your bottom line.

Finally, unified software enables you to easily tie an end-to-end sale to an exact payout, which is essential for compliance. Integrated data and automation make it significantly easier (and more accurate) to determine the ratios for front-end versus back-end sales and break out sales to customers and reps.

By seamlessly pairing your comp plan and your software solution, you don’t just avoid the hassles of bringing together different data sets from different systems for analysis. You – and your sales teams – have accurate information at your fingertips to optimize sales and business planning, which sets you up to take advantage of growth opportunities as they arise.

For additional information see “The Rise in Social Commerce“.

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