MLM COMPASS – Direction To MLM Success; A Proven Duplicable System

Let’s talk about Question Five from my June 11th post, 7 Questions To Know About Your MLM Compensation Plan.

Question Five: What are the requirements to get paid on all of your potential pay line?

Understanding what I am talking about on this question is a little more difficult. But when you analyze a lot of compensation plans, after a while you begin to see how compensation plans are often put together so that most people can not be successful beyond a certain point. The requirements are too much for them.

If you are the company, this can be a good thing, because they may have things all worked out where they will never have to pay out all that money that they claim to be paying out to distributors. We call this breakage.

Breakage can be built into any compensation plan. It does take a little practice to see it though. But when you see a compensation plan that claims to be paying out more than 50% then you really need to start looking. To pay out large percentages, a company either needs a product or service with almost no cost to them like digital information products or they need breakage. Expect both.

Public companies have to produce reports for stockholders and potential stockholders, so this information can be very eye opening. You read on the web page of a company that they pay out 60% as an example and then you go to the public record to find that they actually pay out 30%. Things are not always what they seem.

Anytime you look at qualifications to move to the next level in a compensation plan, ask yourself if it really looks possible. If you have never built a large team before then that is a difficult question to answer. It takes some experience to be able to see this stuff.

The big space commander gurus can see that they have done it before and they know they can do it again. They like these requirements that make it hard for anyone else to reach the top because most compensation plans will pay them more if they are alone at the top.

I reviewed one company last year for a lady and noticed that they had an incredibly hard to meet requirement for people about half way through the steps towards the top of the pay plan. I was checking out her company’s pay plan because she was not experiencing any growth in her income. As soon as I saw the problem, I asked her if this was the level she was stuck on and of course it was. She informed me that she had talked to many people in the company that were stuck there.

The company had built in breakage to the plan right there. There was a huge amount of potential payout that they would never have to pay out. The next problem for these distributors is that they were making around $1,000 per month and had pretty large teams. They didn’t see making it over this obstacle to ever make a lot more money but they didn’t want to leave the company and start over with a better one. Unfortunately for them, they couldn’t see this in the compensation plan in the beginning. I saw it almost immediately.

I know people who have been consultants to network marketing companies. They tell me that the number one question they get asked by company management is, how can we keep more of the revenue and pay out less to the distributor. I guess that sums it up. They want breakage from distributors unable to meet qualifications.

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written by Don Standard \\ tags: 7 Questions, Breakage, MLM Compensation Plans