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Two days ago on, 06/11/2008, I did a post called, “7 Questions To Know About Your MLM Compensation Plan”. On 06/12/2008, I answered question one.
Now we are ready to tackle question #2 and it is another big one.
Question Two: How many active people do you need on your team to break even after all expenses just from your recurring income?
I have found the most common break even requirements to be between 20 and 60 active distributors.
Think about all the people you have ever sponsored or even came close to sponsoring. How many of those people have ever built a team of more than 20 people?
The first reason you need to know the answer to this question is because the more active distributors that are needed for someone to reach break even, the fewer people will get there to become successful. The higher the number goes, the higher the turn over rate is.
From question one we learned that the average MLM compensation plan will require 2000 distributors to make you $10,000 per month. If everyone who joins your team is successful, then you need 2000 active distributors to earn $10,000 per month. But what if only one half or successful. You still need 2000 active distributors but you had to have 4000 people join to find those 2000.
But what if only one out of ten stick it out? Now your team needs to sponsor 20,000 people to get 2000 active distributors. And some programs are so difficult to reach break even in that you can figure that only one out of every one hundred will stick it out so you will need 200,000 people sponsored to get 2000 active ones.
What if you think your company has the best compensation plan in the world and one day after you have spent years building it, you discover how many people you really need. Best to find out now.
Hopefully you already know that network marketing is not a numbers game, it is about building relationships and teaching and mentoring. If you choose a business where almost no one can break even then you have turned it into a numbers game.
I build my business 95% with the internet and the telephone. If you are doing the same then you should also know that people on the internet are exposed to many businesses. If your business even seems hard to break even in after a couple of months, then they will move on to another business that promises them more.
To avoid this, you choose a company that gives everyone the best chance for success and can get them to break even quickly with the compensation plan.
You build relationships. If you have no relationship, it is much easier for someone to quit the business you sponsored them into.
You use a system like, Mentoring For Free, to train your people in everything they need to know to have success in network marketing. It must be a proven duplicable system. One that works for anyone, not the so called systems that are nothing but numbers games.
I have evaluated hundreds of compensation plans and I have found some that require very small numbers of people for a distributor to break even just on the recurring income, and I have found some that require over 400 people to break even.
You guessed it, people in the company that takes 400 people to reach break even believe that their compensation plan is the best in the industry.
I have found the most common break even requirements to be between 20 and 60 active distributors.
Think about all the people you have ever sponsored or even came close to sponsoring. How many of those people have ever built a team of more than 20 people?
So even with the low number, you can see you may have a problem. You want your compensation plan to require the fewest number of active distributors possible for break even to improve your chances and the chances of everyone you sponsor.
Mentoring For Free, training will help you learn to evaluate compensation plans and other information about companies so that you can put yourself in the best possible position for success. Then we will train you and everyone on your team in all the skills you need for success in network marketing.
If you have not been properly evaluating the compensation plans of the companies you tried to build, no wonder this all seems so hard to find success in the industry. If you are building something now, then stop and evaluate it. If you are looking for a new company then take the time to properly evaluate everything about the company that affects your success. We call it the 5 Pillars.
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