Even if companies have different business models, they can borrow useful sales, management, and personnel management tools from each other. Svetlana Zere, an entrepreneur and professional manager, talks about this, citing experience in the MLM business as an example.
Based on her own practice of sales development in the international network company doTERRA, Svetlana shares approaches that can be useful to managers and entrepreneurs working in traditional business.
– I have been in business for over 15 years as a leader, entrepreneur and owner. During this time, she gained experience in different companies: the TUT.BY portal, where she built a sales department and developed a women’s resource, a jewelry retail project, the launch of business conferences, training courses and seminars, as well as her own online school. And always a very large part of the work was related to sales: creating a system for attracting and retaining customers, training managers, motivating and fulfilling KPIs. In any project, I was responsible for the final financial results.
Last year, I drew attention to the MLM business model: I started developing the doTERRA brand in Belarus – it is a large international chain company that produces essential oils.
Frankly, there were a lot of doubts: before, the network business was associated with me “snatching”.I have always focused on achieving results through high-quality alignment of processes, training and development – what I used in practice, during my MBA studies, etc.
Having worked in a network company for a year, I realized with some surprise that the approaches that are inherent in companies with other business models can be successfully used in network projects. And vice versa: the tools for motivating employees and increasing sales, which are used in the network business, can be implemented in many areas in principle.
Why do I think so? The approaches that I will talk about I myself have used in practice: and in 1 year my team and I attracted 1,800 new clients and more than 580 partners (people who build their own teams). Without any self-promotion: this is the result that a company (across all countries where it is present) achieves on average in 4-5 years. So I realized that it doesn’t matter what model the business operates on. If it is conducted honestly, transparently, the approaches in management, marketing, sales are similar to each other.
I’ll tell you about a few ideas from the MLM model that I use myself. Perhaps they will be useful for sales departments of companies from different segments.
Help “About business”: MLM (multilevel marketing) – multilevel or network marketing. Using this model, the company builds a system of direct sales of goods or services through independent distributors. These employees independently search for buyers, as well as develop and manage their own sales system, attracting new distributors to it.
A potential candidate who is looking for a job is not the least interested in how much and how he will earn. Especially when we are talking about sales. When it comes to salaries for salespeople, every company will have a different approach. Typically, items of income for sellers include:
- A certain fixed part of the payment (fixed). Someone has 5%, and someone 90%
- Percentage of sales. Here we often see certain KPIs and indices, by which the same percentage is multiplied – depending on how much the plan is fulfilled, a new or old client, large / small and a bunch of other indicators.
And that’s all. ROP has about the same – only other ratios in percentages. At least this was the case when for seven years I created and managed a sales department on a large portal, attended numerous trainings where we exchanged experiences with colleagues.
What can sales teams of almost any company think about? About making a variable fix, which also depends on the efforts of the sellers.
- For example, if only three partners are involved in a month, then the fix is paid small: say, $ 50
- If there are already 9 regular customers (who are retained for 2 months): then, let’s say, $ 250 per month. If there are 30 regular customers, then already $ 1500, etc.
I want to draw attention not to the order of numbers (in companies with full-time employees, the size of the minimum fixed part is stipulated by law, etc.), but to the approach. Not only the variable, but also the fixed part, I repeat, flexible. It also changes depending on how many regular customers the manager has.
In this case, a manager (or rather, a sales specialist) has the potential for growth – he not only attracts new ones, but is also engaged in retaining existing customers.
To motivate newcomers – depending on the growth of regular customers – you can make a conditional job growth: something like junior, middle, senior manager. Well, or come up with any beautiful name you like. I repeat: the case is based solely on my experience in the MLM business. But I see that with this approach, the people I work with are fulfilling the set KPIs for sales.
Leadership and Mentoring Award
In the network business, when a person becomes a clear leader, that is, reaches certain sales volumes per month, he is paid bonuses. The amount, of course, depends on how big the sales structure he has built. Someone can earn $ 100, while others can earn tens of thousands per month. So: to pay such bonuses, a so-called leadership fund is formed.
When can this be done? In growing companies or divisions. For example, in TUT.BY, which started in 2008 from five people and grew to several dozen, there was a division into sub-departments, tasks, regroupings. Deputies, heads of departments, etc. were born. For the growth and motivation of employees, you can create such a fund.
By the way, in the MLM business, one-time bonuses can also be paid for nurturing leaders – that is, for mentoring and adaptation (when a newcomer is attached to an experienced leader). Very, very nice. We have directors as they think: “Oh, the ROP has a large percentage as it is.” But why not pay your head of department a bonus if they’ve turned an aspiring salesperson into a sales shark?
The very perfect formula
I remember how, while managing the sales department, my colleagues and I tried for a very long time to come up with that very ideal formula: how long should a client be considered new, and when should he be assigned permanent status?
What is the difference in payments (percentage of the transaction) should be for the new and for the old client? Now I regret not having thought of looking at the experience of network businesses: they would have developed a competent system faster.
If we talk about the field of sales of goods and services (for example, FMCG), I would suggest a formula that is taken from my current experience:
- For new clients, each partner receives a certain percentage (in my case, it is 20%) of the purchase volume – within 2 months from the moment of registration of the client. The experience of the network business shows that this is the optimal period, after which it becomes clear whether the client will stay with you or not
- After that, the client becomes permanent, and other interest is charged for him. They are 3-10 times less, depending on the position the manager holds in the company.
This fits perfectly into the KPI formulas for sales departments. The only thing, for them, I would take the average indicators for the entire department as a percentage of the bonus. Or differentiated payments – depending on the amount of the attracted order.
13th salary – as a bonus for founders
In the MLM business, there may be a bonus that is paid to the founders – the team that launched the product to the market and opened it.
The amount is calculated as a few percent of all sales in the country – for the year.
In Belarusian, Russian companies, this can be organized within the framework of the same 13th salary – encouraging those who make the largest volumes and have been from the moment the company was founded. Instead of an option. The employee will then understand that his contribution as a pioneer is always appreciated. But legally, he will not be tied to the company as a shareholder.
⇒ If you still have questions on the topic, you can contact an expert at: [email protected]