Why Some MLM and Affiliate Programs Have Mandatory Sales Quotas or Seller Fees

Even some of the greatest MLM and affiliate programs have sign-up fees and minimum sales quotas. It can be frustrating. You want to sign up and you want to be involved, but you don't want the extra cost. Despite the frustration, there are actually legitimate reasons behind these fees and quotas.

One of the reasons is so that the person signing you up has an incentive to do so. They earn a certain commission from the act of signing on an affiliate. An individual having to purchase a start-up kit obtains the motivation to sell more products so that their money is earned back through commissions. Most people don't want to purchase the membership, only to waste that money by not earning sales. However, the purpose of the fee goes much further than that, especially if sellers receive discounts on their orders.

There is a tendency for sellers to purchase the merchandise for themselves because of an affiliate discount offered. However, if the profit margin is being split between a few other people and the company, the amount of money becomes quite small for anyone actually working to create an income as an affiliate or sales team member. Also, if there are no sales quotas, the seller is obtaining the discount without really working for it. If this happens with too many sellers, the company loses money and eventually goes bankrupt.

While it may be frustrating for individuals having to pay to become a sales team member, it can be frustrating for companies to have affiliates take advantage of the system for their discounts while not working for sales. Thus, membership fees and sales quotas are often necessary.

If you are creating an affiliate program or a sales team, and offering discounts to your members, you are advised to look into having sales quotas or offering discounts based on sales brought in. This encourages the selling and allows members to earn their discount. It enables sellers to feel good about their progress, as they are therefore being rewarded for their progress.



Need a contract written up? Need your program rules edited? Contact Your Words' Worth for a free consultation. 

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