Saturday, September 22, 2007

MLM Compensation Plans - The Good, The Bad and The Ugly Part 3

So, in Part 1 of our discussion regarding mlm compensation plans, we looked at the good and bad points of the Stairstep Breakaway and Matrix compensation plan designs.

In Part 2, we looked at the good and bad points of the Binary and Unilevel mlm compensation plans and how their design could either benefit or hurt potential distributors.

So where do we go from here? With all the top mlm companies and network marketing companies to choose from, how does a potential distributor choose a company to work with if all the compensation plans have both good aspects, as well as serious pitfalls?

Good questions indeed! Luckily I think there is a solution to this situation -- a light at the end of the tunnel, so to speak.

But first, a quick rundown of what to look for if you decide to join a company that has one of the Big 4 mlm compensation plans:

Stairstep Breakaway -- Make sure the company has a very generous payout on open volume (volume that is outside of the volume under your breakaway distributors), because that is all you'll be paid on if your open volume level isn't large enough to qualify you for generational payouts. There are some companies out there that qualify under this criteria if you look hard enough, but not many. Again, the big drawback here is that you'll lose out on business volume you've built if your new business volume (open volume) isn't large enough. Generous payout on open volume can help ease the pain of this.

Matrix -- While I love the team-building and support concept of the Matrix, I still have a hard time with a plan that breeds laziness and a reliance on someone else to do the work. Unless a Matrix plan is designed to reward personal sponsorship, people tend to squat and wait, adopting a type of welfare mentality. Downlines in a Matrix plan tend to grow in a very odd pattern, since the workers build their business and the squatters just sit on their position and hope for spillover. Therefore alot of your business volume produced could be outside of your payout levels, since your personally sponsored leaders may reside in positions far down in your group matrix.

Binary -- To be blunt, unless you're a heavy hitter with lots of industry contacts I wouldn't go near a standard binary. Too much volume is left on the table uncollected by the average distributor, which can never be good for both distributor morale or company longevity. These plans are great for companies and full-timers but very tough on the little guy. Enough said.

Unilevel -- While this is one of my personal favorites in plan design, there are still a few drawbacks. If you're a seasoned pro, you won't like payout volume being cutoff at a certain level -- if you have a group that goes wild you'll miss out on alot of volume down deep in your business. If you're the typical part-timer and the company is touting a 12 level payout plan don't get too excited -- you will probably never come close to building a group that deep, so you'll be forced to collect low commission percentages on the few levels that you do build. Good unilevel plans pay large commision percentages on the first 1-3 levels, and in doing so create a way for the average representative to get into profit quickly. As the saying goes, reps that are making money in a program don't leave the program. For the full-timer, look for a plan that also pays infinity style commissions for your legs that go deep.

If all of this is a bit overwhelming and you're feeling like there isn't a compensation plan out there for you, fortunately there are a few top mlm companies that have taken the best aspects of each plan and blended them into a new plan design. These are typically called hybrid compensation plans, and they can be quite attractive to both the full-time pro and typical part-timer.

In Part 4 of the series, the final installment, I will highlight 2 hybrid plans that have recently gained popularity due to their appeal to both part-time and full-time distributors.

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