Most of the articles I have written over the years while working with network marketing, referral marketing, direct selling and party plan companies haven’t been controversial. This is NOT one of them.

The Issue

Several times each year, we learn that a client of ours or a prospective client is planning to (or already has) inserted the owners at the top of their genealogy.

Usually, they were previously independent representatives of other companies, so they are used to being in the genealogy. It feels natural and right to be in their own genealogy. It might even feel exciting to “double-dip” by earning money as a representative in their own sales force while being compensated as an owner with the company’s profits.

Watch the video below to learn more about why you should never put yourself into your own company’s genealogy.

Lesson Learned

Don’t put yourself or any of your employees into your genealogy. If you’ve already done it, get yourself or your employees out of there as quickly as possible.

Agree or disagree? Feel free to contact us with any questions you may have at 503.244.8787.

Another Hot Issue

Should Your Company Have A Master Distributor?

A master distributor is a person you put at the top of your genealogy, the one in whose downline every other independent representative will be placed. Master distributors are optional.

Should your company have a master distributor? I think now is a good time to explain the pros and cons of such an arrangement. Then, you can decide what’s best for your company.

Initial Recruiting

The growth of all direct selling companies depends on recruiting new independent representatives.

In the beginning, most owners of new and young companies do the initial recruiting themselves and they continue to recruit until the number of new recruits enrolled by their independent representatives each month consistently exceeds a target, or until the company’s monthly sales are high enough to conclude the company can stop enrolling representatives.

There is another option, the master distributor option.

Some companies search for a top recruiter with years of experience, one who has previously built a large downline in one or more companies, who is looking for an opportunity to build again, but this time with a special arrangement. The arrangement includes the privilege of sitting at the top of your company’s genealogy. In this position, all new representatives will be placed in his or her downline. This means that the master distributor will earn compensation upon the sales volume of all of your independent representatives for many years.

The person at the top of the genealogy is announced and promoted as the company’s master distributor. While he or she is an independent representative, the master distributor has a special inside relationship with the home office.

The perception in the field is that if the master distributor believes something the company is doing is good, then it is good for every other independent representative.

The fear in the home office is if the master distributor becomes unhappy with something the company wants to do or has already done, the master distributor will leave, and that some of the top leaders will follow him or her to the next gig.

The master distributor is put into a position of power, unlike any other independent representative. Some people say that having a master distributor is like having a second president.

Do you want to have a second president?

Counting Legs

Several times each year I am asked how many independent representatives should be on the front line of a direct selling company. In other words, how many legs should a company have?

My answer is as many as possible, but I recommend a minimum of 20. The purpose is to strategically prevent anyone independent representative from having too large a percentage of a company’s reps in his or her downline.

Why does this matter? Some independent representatives whose downlines include a large percentage of the company’s reps realize they have a lot of power which can make company owners nervous, fearful, and concerned.

What Not To Do

If you choose to have a master distributor, make sure he or she is not the owner of your company. As I explained in the video above, placing owners or employees into your genealogy is always a bad idea.