A breakaway traditionally only happens when differential bonuses are in play. A downline sales agent rises to the same rank as their upline leader and therefore has the same commitment level as their upline leader. This results in a loss of income to the upline leader and the newly promoted out team leader is deemed to have broken away. The upside for the company is that they now have a new leader driving their sales and growth. The downside for the initial leader is that they lose their differential bonus. As you can imagine, no leader in their right mind wants to help their downline get promoted and break away. They therefore do all in their power to prevent this from happening and, in so doing, stifle the company’s growth.
Over the years I have consulted with many companies who have adopted the stairstep breakaway compensation plan and are stagnating. They are not breaking out new leaders and the sales are nowhere near where they should be. My first task in these situations is to establish why new teams are not breaking away. There are various ways to incentivise leaders to break out new members but one of the most powerful is to pay them well for doing this.
To counteract the negatives associated with the differential bonus and to encourage the team leaders to promote new leaders out, a breakaway bonus is normally implemented. This bonuses can be paid several levels deep and can increase in value as the leader breaks out more leaders.
Let’s say we allocate 10% to the breakaway bonus. If Mary, a leader, breaks out 1 new team leader, she could qualify for and receive a 2% bonus on the new breakaway team leader’s total sales volume. If she breaks out a second team leader, she could receive 4% on both team leaders. By the time she breaks out her 5th team leader, she could be earning a 10% breakaway bonus on the total volume of all 5 teams. Thereafter, every team she breaks out will earn her a 10% breakaway bonus.
In this example, Mary now manages 5 team leaders who are doing the sales and earns 10% on their activity, without having to actually run their teams. The company would encourage Mary to keep developing and breaking out new teams, as this would be very lucrative for both Mary and the company.
This is just one example of how a breakaway bonus can be used. You could also apply this concept to downline breakaways. If Mary breaks out John and he breaks out Jillian, Mary could earn a percentage on her second-generation breakaways.
If you want to grow your turnover you need to give your leadership a solid financial incentive to break out new teams. The faster your leaders achieve breakaway, the faster your business will grow.