How important are network marketing compensation plans…

I was asked the other day about certain elements of pay plans.  All this might sound a bit like rambling, but a lot of it was important so I posted it here too…

There really isn’t any such thing as an infinity bonus. They sound good on the surface but since you qualify to get them, then others can qualify too. So as soon as someone below you qualifies for the same bonus, they cut you out of that bonus on that leg. Long story short, your leaders will always cut you out of your infinity bonuses. Since virtually all of your downline comes through those leaders, infinity bonuses don’t really exist. This type of plan forces you to go very wide to make any real money. Again, lessons you learn with experience.

With a breakaway you can get payed six levels (or what ever the plan calls for) of groups deep. So you pop off a direct, or what ever the company calls it, and you get paid a percentage of that group’s total volume. Then so on and so on as more leaders develop. Theoretically you could get paid 1000 people or more deep.

With a unilevel if it paid six levels what that is saying is you will get paid six people deep. In other words, I sponsor you (that’s my first level) you sponsor Jane (your first level my second) Jane sponsors George (Jane’s first level, your second, my third) down to six levels of people. It isn’t paid on group volume it is paid on individual’s purchases. A plan might pay 7% through all six levels.

In the end, all pay plans are the same in that if you work you get paid and if you don’t you won’t. But company’s drive how you work with your team by how they pay. Some plans are better than others but generally, not much better. When I see people trying to sponsor others by saying something like; you should join me because we have the best pay plan in the industry, all I can think is that guy is clueless.

The reason I say that there is no “best pay plan” isn’t based on math. Math is a useless indicator because people have different passions. And network marketing is after all a people business.

A guy/gal who is passionate about helping people to “buy term and invest the difference” wouldn’t be a very good distributor for NuSkin no matter what the payplan was because NuSkin simply doesn’t sell insurance.  Also, someone may be passionate about working with binary pay plans. Anything besides a binary wouldn’t be right for this person no matter what the math was.

So all I have to say is there are a few really bad pay plans out there but there isn’t a best one. Or a pay plan isn’t a good reason to join a company. Passion for the products, compatibility with the team and company philosophies and values, ability to work with and learn from a mentor who is successful with that company. I’d start there, then look at company history, owners, and the reasons people have been terminated from the company.

My point is comp plans aren’t what you should consider first, and for most perhaps not at all. If you have find products you love, a value system that matches your own, a successful mentor who will teach you how to succeed, honest competent owners, then what would it matter if you got paid 2% less than with a company that doesn’t have all these things?

To your success,

Greg

Greg Arnold is a successful network marketer with over 30 years experience.  During that time he has been a top level distributor, a company CEO, and a consultant.  He enjoys being a distributor most of all because of the time and financial freedom it provides.


Comments

How important are network marketing compensation plans… — 2 Comments

  1. Most MLM compensation plans are similar, commision-based, and for the most part very fair. If you work hard you will earn profit, but part of that profit comes long after your initial investment of time and effort in the form of overriding residual income. So in the beginning stages when you are growing your organization, profits (if any) are trivial. However with time and a lot of hard work your earnings can and will grow exponentially because you would have succeeded in leveraging other people’s time and effort as well. This is when things get very lucrative and how you are ultimately compensated by whichever network marketing company you are aligned with.

    Having brought similar business-minded leaders on board to move the company’s products or services you become much more productive overall. You get compensated very well for this and that should be your motivatin for not trying to go it alone but rather to help others start their own businesses within your network. Divide and conquer. Small pieces of a much bigger puzzle. Network marketing is not for everyone and definitely no get rich scheme, but unlike the corporate world, everyone is out to help you, especially your upline. Their success is dependent on yours so they will do everything possible to help you because as you grow, so do they.

    When was the last time your boss at your regular job or even fellow co-workers tried to help you out? MLM offers the most free market ideals around, but also a very communal, team oriented mentality. The best of both worlds Cheers!

    Gopal (The Musical Mad Scientist and Entrepreneur)

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