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Last updated on 2024年5月30日

Here's how you can understand and navigate the compensation models in Direct Sales.

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Direct sales can be a rewarding career path, but navigating its compensation models is crucial for success. These models often determine how you earn and the effort required to reach your financial goals. Understanding the basics of compensation in direct sales sets a strong foundation for evaluating opportunities and strategizing your approach. Whether you're considering joining a direct sales company or looking to optimize your current sales strategy, grasping the nuances of these models will help you make informed decisions and potentially increase your earnings.

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Isaí Juárez

Regional Automation Manager | BDM | Robotic Welding, Assembly, Inspection and Automation Solutions

1 Unraveling Types

Direct sales compensation models vary widely, but most fall into two main categories: single-level and multi-level marketing (MLM). In single-level direct sales, your earnings come directly from the products you sell, with no emphasis on recruiting others. MLM, on the other hand, includes earnings from your sales and those made by individuals you recruit into the company, known as your 'downline.' Understanding these fundamental types helps you choose a model that aligns with your personal sales style and goals.

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Isaí Juárez

Regional Automation Manager | BDM | Robotic Welding, Assembly, Inspection and Automation Solutions
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If you are coming from industrial / manufacturing, then the direct sales compensation is probably the most common you have encountered. MLM is easier to find in other segments / industries such as retail or consumer goods.

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Sergio Manchego

Graphic Designer/ ?Model?/Seller/ Advertising and Promoter
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maximizar personal sin ser invasivo ni exponerlos bajo presión por lo contrario entender el juego de seducción entre el asesor y el cliente.El ser humano es un ser social; la economía es una ciencia social y la empresa o el individuo lleva el peso del deseo, del desarrollo económico comercial y publicitario. Es imprescindible entender tanto los objetivos de la empresa como el asesoramiento individual teniendo en cuenta inteligencia emocional , relaciones interpersonales de empatía y simpatía en función de no caer solo en en la tecnicidad de la teoría fría de las ciencias duras interpretando claramente cuando tomar y recomenzar el análisis funcional de la consulta desde el pensamiento lateral.?

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Diego Castro

Empreendedor e Investidor
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Para entender e navegar pelos modelos de compensa??o em vendas diretas, comece estudando os principais tipos: comiss?es, b?nus por desempenho, e incentivos de equipe. Analise detalhadamente o plano de compensa??o da sua empresa para identificar metas e requisitos específicos. Participe de treinamentos e converse com líderes experientes para obter insights práticos. Monitore constantemente seu progresso e ajuste suas estratégias conforme necessário para maximizar ganhos. A transparência e o entendimento claro das expectativas s?o fundamentais para otimizar seu rendimento nesse setor.

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2 Commission Rates

The lifeblood of direct sales is the commission rate , which determines the percentage of a product's selling price that you earn. Rates can vary significantly between companies and products, so it's important to know the specifics. Some companies offer higher rates for more expensive products or for meeting certain sales thresholds. Scrutinizing the commission structure will ensure you know how much you need to sell to meet your financial objectives.

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Isaí Juárez

Regional Automation Manager | BDM | Robotic Welding, Assembly, Inspection and Automation Solutions
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Commisions are not for everyone. Make sure you truly know yourself and see if you're willing to take the risk and put in the work associated with this model. The risks are higher, but so is the potential reward.

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Andrew Atkinson

B2B tech sales, Entrepreneur, Crypto Trader
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Here are three examples of commission structures in order of increasing risk: 1. Salary plus commission: You know you are at least getting X every pay cycle to cover bills and expenses. 2. Booking demos with qualified leads: Your job is to get people to the next meeting then you are done and get paid. 3. Commission for deals that close only: This is the highest risk because you might be great at getting people to the demo, but the account executive doesn't have a high close rate. There is nothing wrong with picking option 2 or 3. Just have a clear picture of what would happen in the worst-case scenario and if that is not tolerable move up the list.

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3 Bonuses & Incentives

Beyond commissions, direct sales companies may offer bonuses and incentives to motivate sellers. These can be based on personal sales milestones , team performance, or recruitment achievements. Bonuses might include cash, travel, or product discounts, and they can significantly boost your income. Understanding the criteria for these incentives is key to maximizing your compensation and setting appropriate sales and recruitment targets.

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4 Downline Dynamics

In MLM models, your downline's performance can impact your earnings. You may receive a percentage of the sales made by your recruits, and sometimes, their recruits too. This structure can create passive income streams , but it requires you to build and maintain a productive team. Grasping the intricacies of downline compensation is essential for developing a successful team strategy and ensuring a sustainable income.

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Andrew Atkinson

B2B tech sales, Entrepreneur, Crypto Trader
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MLMs are a great opportunity to have a "business within a business." You can benefit from a proven model and still have a virtually unlimited upside. Nothing beats making money while you sleep! Recruiting can be challenging. People will line up for a "job opportunity," but tend to shy away from MLMs. It is deceptive to advertise that you are actually hiring anyone. For many a regular job is less headache. If you are the type of person that doesn't mind putting in a bunch of extra work to build a team a MLM might be for you.

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5 Advancement Opportunities

Career advancement in direct sales often comes with increased earning potential. Moving up in rank within a company can unlock higher commission rates, larger bonuses, and additional downline earnings. It's important to understand the criteria for advancement , such as sales targets or team size, so you can set realistic goals and timelines for your career progression.

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6 Managing Expectations

Finally, it's crucial to manage your expectations when it comes to compensation in direct sales. Income can fluctuate based on market trends, seasonality, and personal effort . Recognizing that direct sales is not a 'get rich quick' scheme but rather a business requiring dedication and skill will help you approach this career with a realistic mindset and prepare for the ups and downs of sales.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Here's how you can understand and navigate the compensation models in Direct Sales.

1

2

3

4

5

6

7

1 Unraveling Types

2 Commission Rates

3 Bonuses & Incentives

4 Downline Dynamics

5 Advancement Opportunities

6 Managing Expectations

7 Here’s what else to consider

Direct Sales

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Here's how you can understand and navigate the compensation models in Direct Sales.

1

2

3

4

5

6

7

1 Unraveling Types

2 Commission Rates

3 Bonuses & Incentives

4 Downline Dynamics

5 Advancement Opportunities

6 Managing Expectations

7 Here’s what else to consider

Direct Sales

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