What to Look For and What to Avoid in an MLM Compensation Plan.
With a bad comp plan the only thing duplicatable is attrition! Look for these all important “Look Fors” and “Avoids” and save yourself time, money and your credibility!
I will admit freely that it wasn’t until my eighth or tenth MLM program that I really paid much attention to compensation plans. My thought (I’m giving myself credit here that I actually sat down and thought about it) was that the technical details of a comp plan were ancillary to emotion, timing, ‘awesome’ product, and just the fact that I wanted it to be so. In fact, nothing was farther from the truth. Without a decent and fair comp plan, distributors become discouraged and drop out almost immediately and the duplication which is the cotter-pin that holds an MLM group together and enables growth is non-existent. To repeat, with a bad comp plan the only thing duplicatable is attrition!
Let me get right to it and innumerate a few key points. These are things that are important to either look for or avoid if you want to make money in an MLM company.
And remember, MLM is a business. You will forgive me if I use personal experience but it my personal experience from which I learned the hard way. You are welcome to research and compare any comp plan to the one that I prefer and as they say “Show Me the Money!”. Naturally I prefer XanGo’s Compensation plan, because of its Dynamic Compression. (You can learn more at BestCompensationPlan by clicking on ‘The Opportunity’.
1. Look for a company that pays you your commission on 100% of the volume of product or service moving through your group.
Avoid companies that pay on ‘bonus volume’ which can be 75% or less of the true volume. Would you rather be paid 20% on 100 dollars or 25% on 75 dollars? I tend to like things a bit more straight forward. How can you figure out what your check will be if every product has a different BV or whatever? Again, too confusing.
2. Avoid companies whose comp plans include ‘breakage‘ (which is currently to my knowledge ALL but two!). Breakage is what happens when a person who is qualified to receive commissions on say three levels based on their achievement so far has distributors on their 4th, 5th etc. Since they are not qualified to receive those commissions where do they go? Well, as I said, in all but two comp plans that I know of, they go to the company.
In my particular case I do not have that problem. My companies compensation plan computer program looks upline from that distributor for the first distributor who is qualified to receive those commissions and they are paid to that person. This can make a substantial difference in your check but more importantly it is creates a bond and trust between the company and the distributor that they are in this together and not working against each other.
3. Avoid matrices and especially avoid ‘Spillover’ plans. Statistical analysis was created for a reason! To predict as far as is reasonably possible, what is likely to happen!
Case in point. A company is currently launching a ‘TREE’ matrix program that promises that everyone will benefit from anyone who signs up in the company after you do. (I believe you get a dollar). One little glitch… you need to sponsor 10 people is all for that bonus! (Anyone seen that hilarious Capital One commercial about the knight who slays the dragon and then the King reads him the ‘fine print’?). Here is an example of the kind of people you can expect to work with and find in that kind of program. I couldn’t believe this guy was for real but he is. Read the entire post. The company is selling opportunity where it can’t even ship product, and this guy promoting the Berry Tree plan says toss the product if you have to just to get in!
Berry Tree Pre-Launch Hypester
Now suppose that hundreds of people sign up for this MLM welfare program just to get a position so that they can get something for nothing. Many (probably all) are going to avoid that ‘messy detail’ about the ten people. Can you say ‘reverse momentum’? The statistical industry average for all companies is that the average distributor sponsors 2.9 people. This is a train wreck waiting to happen. The comp plan that is left without the ‘dollar bonus’ lets you have 4 on your first level, THEN you may have eight or something on your second and omigosh… 512 on your 3rd! Wait… not all hope is lost… SPILLOVER (avoid like the plague).
Spillover was invented by a disgruntled sadist who’s mother filled her garage with soap in an MLM fifty years ago and he put a curse out there called spillover. It was to ensure that subsequent generations of MLM’rs would be stuck with hoards of greedy distributors who would do nothing all month except to call their upline and ask why their check isn’t bigger and anxiously await their downline report to see if anyone fell in.
Watch what the company promises people in their marketing of the comp plan. Oh, they’ll pull them in this month and maybe next but then YOU get to deal with all the disapointments and griping. In short, stay away from trying to sponsor anyone by promising that they will get something for nothing and won’t have to do anything because you’ll spend countless hours in frustration wondering why on earth they are expecting something for nothing and won’t do anything.
To paraphrase Lord Chesterfield (1694-1773):
I give you freely the lessons of my 20 something years in this business and do not begrudge you the success it will help you achieve at far less price than I have paid.
Regards!
