The World of Direct Selling

Mid-Year Sales Performances of Six Public Direct Sellers

August 14, 2017

Sponsored by: Having completed the first half the year, we now have public companies’ second quarter reports. We will be reviewing in this article, six of the world’s largest public direct sellers’ growth figures: Avon, Herbalife, Natura, Nu Skin, Tupperware and USANA in alphabetical order. AVON Following the less-than-satisfactory results in the first quarter, […]

Global Direct Selling Industry: 2014-2016

August 7, 2017

Sponsored by: Based on WFDSA’s (World Federation of Direct Selling Associations) reports (*), direct selling industry’s sales volume increased by 1.9% in 2016. While growth is almost always a positive thing, this last year’s rate was considerably lower than those achieved in 2014 and 2015 (6.1% and 7.6%, respectively). Global sales volume for 2016 […]

The Most Notable Ponzi Schemes in History

July 31, 2017

Sponsored by: A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors, as explained by the SEC. In other words, it is a scheme where old investors are paid off with funds raised from new ones. In the legitimate world, individuals […]

Executive Q&A: Martin Koehler, President Worldwide at PartyLite

July 24, 2017

Sponsored by: We have Martin Koehler, President Worldwide of PartyLite this week. He held various executive positions at PartyLite after he joined in 1999. Martin is PartyLite’s global president since August 2016. Could you tell us about your education? I completed a degree course in communication sciences, psychology and sociology at Ludwig Maximilian University […]

The 5 Steps a Venture Capitalist Takes to Value Your Business

July 17, 2017

This week’s article is from Daniel Murphy, Co-Founder and Managing Principal of Strategic Choice Partners. Dan has over 30 years of experience holding senior finance and operating roles at TJX, Pepsico, Panera Bread, Princess House and Immunotec. For the last 15 years Dan has served as both a CEO, CFO and COO for two party plans […]

Vorwerk: Europe’s Direct Selling Power

July 10, 2017

Sponsored by: Some say direct sales is not a business that can be sustained for many years, and some others claim it is not the 21st century’s selling model. One of the best answers to these is Vorwerk, the Germany-born direct selling conglomerate that turned 133 last year that is still growing! Ownership and […]

WFDSA World Congress in Paris: THE Place to Be!

July 3, 2017

This is an advertorial The XV World Congress, co-hosted by the World Federation of Direct Selling Associations and the French DSA will take place in Paris, on 1st to 3rd of October 2017. France, the 2nd largest direct selling market in Europe, is proud to host the 2017 Congress which will be THE place […]

Executive Q&A: Angela Loehr Chrysler, President & CEO of Team National

June 26, 2017

Sponsored by: This week “Executive Q&A” on The World of Direct Selling features Angela Loehr Chrysler, President and CEO of Team National. In 2002, Angela became Executive Vice President of Team National. She worked closely with her father, Dick Loehr, founder of Team National to learn all aspects of Team National’s business. Dick stepped back […]

The 9 Overlooked Benefits of an Attractive Customer Program

June 19, 2017

This week’s featured article is from Brett Duncan. Brett is a founding partner with Strategic Choice Partners, and an experienced executive specializing in marketing, communications and digital strategic consulting. He has worked in direct selling since 2002, and has served the industry as a strategic consultant since 2014. Guest Post by Brett Duncan The 9 Overlooked […]

In 100 Words: International Expansion

June 12, 2017

This new article in “Wisdom in 100 Words” series on The World of Direct Selling covers “Expanding into New Countries”. While the potential of increasing the existing business is enormous with this move, the risk of damaging it is also there. The question was as follows: “What would be your best advice to a direct sales […]

Question:
When designing a compensation plan how many downlines should come direct to the company?

Answer:
The number of downlines that come direct to the company has a big impact on how quickly your compensation plan matures and hits it’s highest possible payout levels. Too often however, the founding management of a direct selling company fails to consider the impact of this issue. Here is the rule: the fewer lines of business that come direct to the company, the faster the payout will reach the maximum possible payout.

I find it useful to label the options in this situation as employing an “open neck” or “closed neck” plan. If you think about the shape of the plan as being like a bottle versus a jar, then an “open neck” compensation plan is like a big pickle jar with a very wide top. A “closed neck” plan is more like a Coca Cola bottle with a very narrow top. In closed neck plans that have a small and fixed number of founders (often 10 or less) all of the downline volume gets consolidated and squeezed into the narrow opening at the top of the plan thus quickly pushing the few folks who are direct to the company to the very top payout levels of the plan.

Clearly there are pros and cons to both approaches. The important thing is that founding company executives need to think about these pros and cons in the beginning when designing the plan and setting the policies that will govern the plan and the company’s relationship with the field leaders. Moreover, it is critically important that those of us who help companies design compensation plans explain the impact and outcomes of these choices to company founders. Once a company is several years down the road with one approach or the other, it is very difficult to change.

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