Clawbacks, MLM Tools, and Your Direct Selling Company

MLM tools
Back to News April 29, 2019

Clawbacks, MLM Tools, and Your Direct Selling Company

Sorry to begin this article with a dirty word, but it needed to be said. Nobody likes clawbacks. They usually represent something that went wrong in the processes of your direct sales company. Maybe your sales rep didn’t connect your customer with the right product. Perhaps your product literature wasn’t clear about exactly what your product is or does. Maybe your warehouse staff pulled the wrong product from your shelves. Or it could be that the right product got sent out—and then got damaged during shipping. In any case, when a customer is unhappy, your top priority is to make things right in such a way that they won’t become an ex-customer. And that’s absolutely the correct approach. But it doesn’t end there. Each clawback can cause a ripple effect of unpleasantness for your sales reps, as well as your bookkeepers. Unfortunately, most MLM tools aren’t well equipped to handle this sort of thing.

Why Clawbacks Test the Limits of MLM Tools

OK, to be fair, a clawback doesn’t necessarily mean your organization messed up. Sometimes customers are finicky or fickle. They order a product, realize it doesn’t make them look or feel as good as they expected, and send it back for a refund. And because you guarantee satisfaction with all your products, you graciously comply. But yes, in other cases, there’s a goof on your end. In any case, you need to record the clawback as quickly and accurately as possible. Most MLM tools are perfectly capable of simply reversing a sale. The problem is, for direct selling companies, not all sales are created equal. Let’s say your customer is returning a blue blouse because she doesn’t like the color. She doesn’t want a comparable item—she wants a refund. Reversing the transaction is easy enough for most MLM tools. But that’s just the beginning. Did the customer pay full price, or were you running a “Buy One, Get One 50% Off” promotion at the time? You’ll need to be able to refund the exact purchase price. And that purchase price may have affected the amount of sales commission you paid. So when you reverse the commission, you’ll need to get that right, too. How will this reversed transaction affect your sales rep’s bonus points towards earning a free luggage set? Do you settle incentives on a weekly or monthly basis? Can you catch the transaction in time before the totals are updated? And if this blue blouse was the purchase that pushed the sales rep over the wall to Platinum Distributor status….well, it’s unfortunate to lose it over something so small, but fair is fair. You’ll need a seamless way to ensure that he or she remains at Gold level for another month. (After all, if you just let these sorts of transactions slide through, you might end up with sales reps and their cooperative friends “gaming” your system to reach new levels.) Typical MLM tools aren’t powerful enough to consider the entire ripple effect of each reversed transaction. Make sure you choose a platform that can turn clawbacks from a dirty word into a fairly simple matter.

Here’s a Solution That Can Handle Clawbacks

Thatcher’s Prowess isn’t like most MLM tools. For every clawback, it’s smart enough to know exactly how the reversed transaction will affect sales commissions, incentive points, distributor tiers, and much more. Learn all about our MLM tools.


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