Who’s ever heard of a Consultant of the Month (COTM) program, or Party of the Month (POTM) club? In Direct Sales lingo, this is typically setup with consultants from twelve different direct sales brands. Each month, one of the consultants opens up a party, and the other eleven place a minimum-value order on that party. In theory, over the course of the year, you are guaranteed one good party, while supporting other direct sales sisters. Similar programs are called party trains and party ladders, and have the same basic premise. When you buy from others, they in theory reciprocate and buy from you.
Now – does it work, and is it financially worth it? Hmmm, I’m not so sure.
- It’s a great social experience to build relationships with consultants in other brands.
- You may try and love products from other brands that you wouldn’t have otherwise tried.
- In your month, you get to share your brand with others, in hopes of sales and prospects.
- You will hopefully have one good party every year.
- A year is a long time. If you are one of the first consultant months (typically based on random drawing), it will likely be better than one of the later months.
- Someone is going to have to administer and control the program, which also means being the police to make sure it’s fair and people are placing their required orders every month. There is bound to be someone that falls off the wagon over the course of the year, terminates her business, goes inactive, or just otherwise flakes out and doesn’t place her required order.
- There will likely be inequity in the price points of products across the various brands. You may have to spend more than $25 just to get a minimum order in for one (or more) of your months.
- Financially, is it worth it to buy from others, versus investing in your own brand? Let’s do the math.
Let’s assume that that the “average” commission (or consultant discount) for your direct sales brand is 25%. Yours may be higher or lower, but for this example, let’s assume 25%. Let’s assume that the required party order for the COTM program is $25.00, which means that each party is guaranteed a minimum party value of $275 (eleven orders at $25 each).
Program Party Math:
You will spend $275 retail (minimum, plus tax and shipping), to participate in a monthly program by buying from other consultants over the course of eleven months. This could vary depending on the price point of products from the various brands.
Your Own Party Math:
In the month of your own party during the Consultant of the Month program, you will make $275 retail (minimum), from the eleven other consultants. Assuming our 25% commission rate, you will earn commission of $68.75 on your party month. So, you’ve spent $275 over the course of your year, to earn a non-guaranteed $68.75 on your own party.
NOW… the question is, would you be better served to invest that $25 retail you were going to spend with other brands back into your own business every month at wholesale? $25 in wholesale purchase every month for 12 months, would be $300 in wholesale investment into your own business over the course of one year. This is enough to likely stay active with your own brand, and will yield $75 annually in commission when you resell those products through your own parties and events at retail price. (This presumes a business where you can invest in sellable inventory or display.) Or, that could be $25 per month spent on marketing your own business, with catalogs, cards, vendor events, paid advertising, business coaching, or other collateral.
There is no question that there is intangible and non-financial value to participating in Consultant of the Month programs – relationship building with other consultants, trying other brands you otherwise wouldn’t have tried, and sharing your own brand with others.
But the question you need to ask yourself, is whether it is financially worth it to spend $206.26 (that is the $275 you’ll spend, minus the $68.75 you’ll earn on your own party), versus investing back into your own business for longer term gain. Or, if the only reason you are doing a Consultant of the Month program is to guarantee your own month of sales, you may need to look at other methods to build your own business, get leads and sales, source events, get online with social media, and sponsor new team members.
I kind of love consultant math. And honestly, you should too. This type of analysis will help you make the best decisions for your business.