Wednesday, February 19, 2014

Discounting Start Up Kit Good for Direct Sales/Party Plan Consultants?

January is usually the time when you see direct sales/party plan companies offering discounts on new consultant kits. It's the new year and it's one of the best time to start a new home-based business. It's a bargain when you consider how much products you're getting with a new consultant kit. Why do companies offer such a hefty discount on their start up kits- some as good as 50% off? The obvious answer is to ramp up recruiting. Nothing attracts new consultants as a discount on start up fees.

In direct selling, every company needs retention and revenue to grow and sustain growth. When it comes to retention, it can be flaky in this business. It's so easy to join but not easy to sustain. When companies offer periodic incentives i.e. kit discount or extra free products it certainly helps to attract new consultants. But is this strategy good for business builders that are looking for serious consultants and not wholesale shoppers?

Some consultants love it because they're more likely to see an uptick with new team members. And new recruits can mean more team sales. But it really depends on the structure of each direct sales/party plan company. Some people sign up just for the kit content without any intention of doing the business. Or they're signing up for the consultant discount which is quite generous with most companies. Why pay retail when you can save 20-30% which is standard with many companies. I signed up with an organic health and wellness company because the fee was so low and it allows me to save 20-30% on all their products.

In my previous post "sales quotas good for consultants ...", I think discounting a start up kit can be great for a consultant's business, if there's some type of monthly or quarterly minimums (ex: $300/quarterly) so consultants are expected to do more than just be shoppers. Of course, the flip side of the argument is that highly motivated people will work the business and people who aren't will find every excuse not to. I agree with this thinking 100%.

As a business builder, if your company is offering a deep kit discount, I would work with each new consultant and find out what their goals are. If they tell you they're only in it for the discount or kit content then you know how much to give of your time.

In general, I think it's always good to offer incentives to keep your business interesting and attracting new people.

Your thoughts?


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