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Article Title: I Didn't Mean To Lie...
Author: Kim Klaver
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In today's New School session we were discussing how much you
earn on your customers - what the company pays you for customer
orders.
"I've been telling prospects and my own people for years that I
make up to 50% on customer orders. But today I realized that
that is not true. I only make 25% at most.
I will never say 50% again and will correct this wrong
impression with everyone in my group, so they don't say that
anymore either." -twenty-year vet in the business, eight years
in current company.
Others chimed in that they had been doing the same thing, only
they didn't realize they were actually telling a lie.
When a company charges $100 for a product set, and tells you
they pay you 50% when you sell it, how much do you expect to
get?
And if you pass that info on to a prospective distributor, i.e.
that the customer orders average $100, and the company pays you
50%, how much will THEY expect to get if they sell such a
product package?
But instead of $50, what if they they only get $25?
Happens all the time in companies that disguise what they
really pay out: they publish their product prices and the
promote big percents they pay you on sales, but they actually
pay you your percent on another, much lower price.
It's the PV (or BV), folks. (Purchase Volume or Business
Volume).
In the case above, the gal had just been repeating what she'd
heard for years without much thought, because everyone in the
leadership and at corporate were saying the same things.
Here's what happened to her:
She has typical orders of $50/mo from many customers. She gets
paid 50% yes, but not of that $50 the customer paid - but of
the PV the company assigns that product - which is half the
customer's price - $25
So instead of $25 (half of $50) she gets $12.50 for a sale.
(50% of the product's assigned PV of $25.)
That is 25% of the $50 customer order. Not 50%. But of course,
50% sounds better, doesn't it?
Naturally there's much explaining of the "complex pay plan" to
those who discover this.
Is there any purpose to assigning PV and BV numbers to products
other than to disguise the real percent being paid to the reps?
And the reps pass the big percents on as an incentive to
prospects to get them to join them because the "pay is the
best"?
If a house sells for $100k, and the broker's commission is 6%,
$6,000 is what is paid out (and divvied up however). It is NOT
6% of the "oops just revealed PV" of the house, only $70,000,
so the commish is $3,200. Hahahaha.
Am I missing something here, or shall we stop encouraging reps
to misrepresent to others (and themselves) what they're
actually getting paid on customers?
P.S. This is not about the reality that most companies pay a
commission scale, depending on one's level. It's about the
basis of the pay, which is less than advertised for any company
that has a double standard: public product price and its PV/BV,
that being the lesser amount they actually pay the Rep on.
About The Author: Kim Klaver is Harvard & Stanford educated.
Her 20 years experience in network marketing have resulted in a
popular blog, http://KimKlaverBlo
http://YourGreatThi
http://BananaMarket
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