Handling the Pyramid Objection
When a pyramid objection comes up, ask your prospect to think about a typical business where there is a sales rep and a sales manager. Like car sales, or insurance sales. Draw a picture showing only one sales manager (make him the color blue) with sales reps working for him. Make sure you make the statement, “The manager is only valuable to the sales reps if they have experience selling what they’re asking the sales reps to sell.” Then ask, “Does this make sense to you?” Or “Do you agree with this?” It’s very important to get them involved in this discussion.
Once they are involved with the discussion, I normally probe a little with “Does the sales manager normally make a little more money than the sales reps?” Which most people will answer “yes”. I then ask, “Is what I’ve just drawn a pyramid because sales reps work under a sales manager? Is it a pyramid because the sales manager makes a commission off what the sales reps sell?” This is where the discussion normally opens up. Try to keep them on just answering what has been discussed up to this point. Meaning, if they try to take it further and ask or say something else, reply with, “We’ll get to that…right now just tell me if this is a pyramid.” After that is settled, then move on.
Ask them, “What happens when there are more sales reps than the manager can handle?” What you’re leading them to answer is, “The company needs to hire another sales manager.” Then you can say, “Good! Where can the company get this new sales manager from?” You are trying to guide the prospect to see that either the company can hire a new person from Monster(dot)com (or wherever) or they can take one of the existing sales reps and make them a manager.
Guide them towards seeing that the better way would be to take an existing sales rep and make them a manager because they are already knowledgeable on how to sell that product. If they were to hire a new person they would have to educate that person on the products and the way the company operates. But, that new person wouldn’t have the respect of the sales force because “He’s never done it!”
But if they take an existing sales rep and make him a manager - he would know the product, know the way the business and company operates and would have the respect of the sales reps. But regardless of which place the company chooses to get this new manager, you’ve now added a new manager. Now draw another manager (beside and to the right of the first manager -- the blue guy in Step 1) with sales reps below him.
Then ask, “This is the way that most companies grow their sales force. Does this make sense?” Get their agreement. Then label the top of the picture “Multi-Width-Marketing.” Then say, “Multi means more than one. Width means that it grows laterally and marketing means that they are all marketing the product. Make sense? Any questions on this?”
Once all of this is settled in their mind - then move forward. DO NOT MOVE FORWARD UNTIL THEY UNDERSTAND UP TO THIS POINT. There can not be any confusion AT ALL.
Then say, “Let’s just take the same picture and draw it a little differently”. Circle the man in blue and his sales reps and say, “I’m going to draw this sales manager again.” Draw it on your paper. Then say, “Instead of hiring a new manager from Monster(dot)com we’re going to take a person who already knows the product, the company and the business and make them our new sales manager. Since it will be one of these sales reps, I’m just going to keep the drawing the same by drawing a new sales rep under them.”
You don’t need to draw 3 levels to make the point. So just draw two levels to begin with. Then, label level 1 and level 2. Then write at the top “Multi-level Marketing and say, “Multi meaning more than one, level meaning growing vertically and marketing meaning that everyone is marketing the product." This should give you the basics of how to handle this objection once and for all.
Remember, the sales rep should make a bigger commission than the sales manager on each individual sale. Explain this to your prospect. Maybe your company pays a 35% commission on all sales made by the sales rep... which lets your prospect know that they are making a pretty good commission on every sale.... but the manager would make only 4% of that, or maybe just 4% of the difference between the retail price and the 35%. This lets your prospect see that even though someone else is making money from the efforts of their sales, they will see that this amount is very small compared to what they are making. Good "managers" should be holding training calls and role playing sessions, crafting presentations for their downlines to send their prospects to, and holding meetings to announce company news and product offerings. They should also be actively trying to sell the products or services that their organization provides.