Let’s debunk the “Pyramid Scheme” Misconception
Consultants, how many times have you heard it? “That’s another one of those pyramid schemes, right?” “That’s just a pyramid scheme!” When you’re excited about your new direct sales business, this kind of talk takes the wind right out of your sails. Husbands: if your wife has recently started in direct sales, you should spend a little time educating yourself about this before you say something hurtful or harmful. You might have said something like this already. It’s time to exorcise those thoughts through the process of education.
What is a pyramid scheme? Here’s an interesting article discussing them, but basically they are an investment “scheme” where you make your money by recruiting people to “invest” money which is paid to their recruiter. They, in turn, do the same, and that’s how they “get their money back.” The more people they “recruit” the more money they make. It can’t go on forever. There is no business model to this. It’s just an organized scheme and the earlier you are in the process, the more likely you are to earn something. They’re illegal in most countries. They’re kind of similar to a Ponzi scheme which has made the news recently.
The Direct Sales Business Model
How do pyramid schemes differ from direct sales? There’s a HUGE difference! Direct sales consultants run a business! This is a legitimate business model which has proven itself over time. Much like any “franchise” there is some initial investment to get started. In the case of Thirty-One Gifts, that can be as low as $99. In return for that, they get a product kit (which is worth more than the $99 anyway) and the opportunity to sell the company’s product themselves. They do not make money directly through recruiting others to the company.
The vast majority of consultants, even successful ones, make the majority of their money in direct sales through selling the company’s product to customers and earning a commission from those sales. There is huge benefit in recruiting new members to their team, though they do not make money just from the recruiting process itself. They DO earn commission on the sales of their recruits, however. And they are earning that money by training their recruits on how to run their business productively, keeping them engaged, informing them of news from the company, and many other duties and responsibilities.
The greatest income earners in direct sales are those individuals who develop a large team. In addition to earning a commission from their personal sales (usually 25-30%), they have the opportunity to earn a small percentage on the sales of the people they recruit to their team (usually 5-10%). As their recruits get recruits of their own, they too are part of the team and there’s a small percentage on their sales, too.
In Thirty-One, there are different levels in the company. This is going to be present in every company, probably with different name titles and commission percentages.
• A Consultant is a person who has joined up to sell.
• A Qualified Consultant has had at least $1000 in personal sales volume since signing with the company.
• A Senior Consultant has 2 or more personal recruits who become qualified. They get 2% commission on their recruits’ sales, in addition to 25% on their personal sales.
• A Director has at least 4 personal recruits who become qualified, and their whole team has to have at least $4000 each month. In return for maintaining those qualifications, directors earn 28% on personal sales and get 3% commission on their team’s sales.
• A Senior Director is a Director who has a number of recruits and at least 2 of them become Directors themselves. They have to meet the director’s number above, but also have to have at least $12,000 in total volume in their team and the teams of their Directors. They get 30% on their personal volume, 5% on their team’s sales volume, and 3% on their Directors’ teams’ volume. They also get 2% on any director’s teams that are in their directors’ teams.
• Executive Directors have 4 Directors under them and have to have $20,000 in their total downline volume. Their personal commission improves to 32% and their commission on their team sales goes up to 7%.
• Senior Executive Directors have 8 Directors under them, $36,000 in total downline sales. They top out at 34% personal commission and 9% commission on their personal team volume.
Consultants: How many times have you heard those questions about the “pyramid scheme?”
Husbands: What do you think about the business model? Is it different than you thought? What level consultant is your wife?