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Designing MLM incentives that work


If the commission plan is the meat and potatoes of an MLM company, the incentives and promotions are the dessert. Can a company live without these desserts, and should it? That is the $64,000 question that every network marketing company executive and sales leader has to ask themselves.

“Give me enough ribbon and I will conquer all of Europe.”

Another way to put Napoleon’s sentiment is, “Recognition: babies cry for it and grown men die for it.” This is the basic case for MLM recognition and incentives.

Network marketing companies must decide which activities are so important, they are willing to pay commissions or else create an incentive or recognition program for them. It is important to remember, if a company is creating incentives or providing recognition for things that do not help build its business, it is just doing busy work.

How do you avoid getting caught in this trap? Start by remembering the activities that created your company’s long-term success. (If your company is new, do some research.) For example, note how you recruited and retained distributors, found customers, got customers to try new products, and got the field behind a product launch. Ask relevant questions including, “Does our product lend itself to a holiday special?” “Will customers refer other customers if given proper incentives?” These questions and more need to be answered and stored in a company’s “memory.”

Next, based on this information, consider the activities one at a time and build an incentive or recognition program around getting the distributor force to re-focus on them. We all need periodic re-focusing because, like in the winter season of the year, some activities occasionally go dormant.

So, is the answer to find a few good incentives and stick with them? Yes and No. Now we are back to my dessert analogy. Dessert can be the spice of life, unless it is always green Jell-O with whipped cream. This is the challenge. Yes, there has to be some consistency. And yes, your business is built on some pretty basic principles and activities. However, that doesn’t mean your incentives and recognition have to be basic and boring! This is one area where companies can constantly improve. When I talk to distributors, a common frustration is that company incentives become predictable. What is even worse is that the winners become predictable, at which point the activity no longer is an incentive.

So, rotate your incentives. You can’t tell distributors to focus their efforts on five things at once. A much better way is to have an incentive to focus energy on one important activity for a month or two, then another incentive to focus attention on a second important activity for a month or two, and so forth. After you have worked your way through all the activities, the company starts over. What about activities that are so important for a company that they merit ongoing incentives? That is what the commission plan is for; it’s a permanent incentive plan. When properly done, incentives and the commission plan are two sides of the same coin.

I have seen the fun and innovative side of incentives–companies with talented and creative people who have the vision of creating incentives and recognition for activities that are building the business. They keep finding new ways, new methods, and new rewards to keep their programs fresh.

I attend many company conventions and I never cease to be amazed at what good companies and their top sales leaders can come up with. Most companies start their recognition program by printing a list of distributors who advanced in rank in their monthly magazine or newsletter. They also print Top 10 Lists. That is certainly a great start, but as companies grow and rank advancement lists get bigger, individual names get lost, and a new distributor has no chance of getting on a traditional Top 10 List. The company then must think of how it is going to recognize a hot new distributor that is building a strong business, because if it can’t, there is a new startup company down the street that is not too big to provide that distributor the recognition he/she needs.

Great sales leaders are the great motivators distributors get much of their motivation from. Therefore, sales leaders should do certain kinds of recognition. At many company conventions, you see top sales leaders who provide identifying ribbons to their downline in an effort to tie the group together. Leadership weekends and recognition certificates are other examples of programs effectively created by sales leaders. Most of these incentive and recognition programs are simpler than ones run by the company because of record keeping issues.

One tip to remember is that timing is of the essence when it comes to incentive or recognition programs. For example, did you know that for many MLM companies, July and August are two of the slowest recruiting months of the year? Have you ever considered that since Labor Day in the U.S. is the traditional end of summer when vacations are over, everyone is ready to go back to work? For many companies, September is a good time to run a business building incentive to shake out the cobwebs, so to speak. January is also a good time for a business building incentive because everyone is getting back to work from the holidays.

Remember the five keys to making sure your incentives are good business:

Relevance. make them appropriate for your business.

Rotation. Rotate them between the different important activities for maximum effect.

Innovation. Create new and different incentives, even though you are promoting the same activities.

Recognition. Recognize your up-and-coming sales people and sales leaders, or some other company will.

Collaboration. Incentives and recognition are everybody’s business–from the company, to the sales leaders, to the sales people. Companies need to work with their top leaders in creating recognition and incentives, and then provide the information to help them do it.

It is amazing how much a well designed and well executed incentives and recognition program can help a company, and how little it costs in comparison to anything else that gives that kind of benefit. A company that is running an effective incentives program is something to behold!

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