It is common for distributors to be recruited based on an attractive compensation plan. Instant monetary benefits, promises of instant wealth, and enormous payouts are often advertised by companies. However, no company has ever been successful based on its compensation plan alone. An out-of-this-world compensation plan often gives the company an initial jump start, but time will prove that a great compensation plan alone isn’t enough to sustain a company.

Of course, a competitive compensation plan with great incentives are important, but “ground breaking” plans are more often a mirage for poor products, that you may have a hard time selling, or poor company management.

In the short term, “unprecedented” compensation plans may work, but they are not sustainable in the long term. Great products, which attract quality distributors and customers, and an organized management team, are what carry a company long-term.

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Why Do People Join?

You might think that the main reason to join is for the money, but believe it or not, that is number four, five and number six on the list.

1. Number one on the list in the studies is that people join because they like and believe in the product;
2. Second on the list is, “I like being my own boss”;
3. Third, “I like working from home”;
4. Fourth, “The harder I work, the more I make.”

Again, earning extra income is obviously important, but it would be a mistake to ignore the “intangible” factors that pull people into the business.

Why Do People Stay?

Company owners and distributor leaders are always asking, “Why do our representatives stay with us and what can we do to support their retention?”  On a list of the top five factors, take a look at where earnings comes in… number five, and then think about what you are doing.

The top five reasons that distributors stay:

1. A favorable response to the products;
2. They relate to the leadership, management and owners of the company;
3. They relate to the leadership of the sales force, i.e., the top distributors and their sponsors;
4. They relate to the vision of the company.  If it’s about women’s empowerment or about health, they relate to it; if it is about helping households save money to create a better life, they relate to this vision;
5. And maybe you will be surprised… or not… but the fifth ranked reason that distributors stay with companies is “earnings.” Go figure.

Why do Distributors Leave?

Finally, one of the industry’s leading direct selling companies pondered the issue of the departure of its distributors. So much so, that the company conducted a series of “exit” interviews with distributors.

Again, although money is important, the answers demonstrated the glue of the company-distributor connection as relationship-driven. Almost across the board, the answer was “communication,” or lack thereof. Consultants need to feel that somebody is responding to them, that they are communicating with them. If consultants feel ignored and this is true in every realm of business, they vote with their feet and they leave.

The following factors were disclosed as leading to departure:

1. Poor Communication;
2. Inferior Support;
3. Inadequate Leadership;
4. Lack of Training.

What Can We Learn as Companies and Distributors?

Of course, the necessity of a competitive compensation opportunity goes without saying. After all, network marketing is a business opportunity. With that in mind, however, the driving force that bonds us all is quality product and attention to relationships. Actually, this should come as no surprise.

Watch the videos in which MLM Attorney Jeff Babener discusses why distributors join and stay with direct selling companies:

Why Do Distributors join MLM Companies?
Why Do Distributors stay with MLM Companies?

For more information and updates on the direct selling industry visit www.mlmlegal.com and www.mlmattorney.com.

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Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call Charity before September 1st to receive a discount! 503-226-6600 or 800-231-2162.

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