How the compensation plan is weighted refers to how you make money. When looking at the compensation plan it should not be "front-end" heavy, meaning that you get the majority of your pay based on sponsoring / recruiting new distributors / associates. Working within a compensation plan such as this means in order to generate and maintain a substantial income and a residual income, you have to be a sponsoring / recruiting machine, and if you stop recruiting / sponsoring, so does your income! This makes it very difficult to leverage your efforts and to have true passive income! Beware that there are still some cases even today that are so "front-end" heavy, they border on pyramid schemes!
What you want to look for is a compensation plan that has a proper balance. It rewards you for sponsoring / recruiting new distributors / associates, it rewards you for selling product but the main money comes in developing both leaders within your organization and developing a loyal customer base. You should be looking for ways to generate a passive income, and that comes from developing leaders and a customer base. If the compensation plan you are looking at has incentives to do this, it is a win-win situation. First for you when you get started as you will be the individual being trained and mentored, then once your team grows, you will be able to do the same with distributors / associates in your organization.
This is plain and simple. It should not matter where you are in the structure of the network marketing company's total distributor / associate structure. Someone like yourself should have the same ability to make the income you want as someone who started 1 week, 1 year, or 5 years prior to you. Hard work should be rewarded and that should be what you are getting paid on, not the location you are in the genealogy tree.
If the compensation plan rewards you for the time in which you started and your placement in the genealogy tree, than everyone that starts after you, even those in your organization will have a more difficult time making the income they want. This is not sustainable long term.
When dealing with bonuses, this is where you will need to be very cautious. For many companies in the Network Marketing industry, they will use lavish bonuses (i.e. cars, trips, large cash amounts) to entice new distributors / associates. It must be remembered though that to achieve these bonuses requires a certain level of business volume. The more lavish the bonus, the more volume your organization must do.
We are not saying that the bonuses being offered are not obtainable, we are simply saying that you have to be aware of what is required to achieve them, and be realistic about achieving them.
Furthermore, while "prize" type of incentives are great, the best type are increased pay for a job well done. For instance, developing a certain amount of new leaders in a month, or the biggest increase in sales in a month is great as it has an immediate impact on your income, from achieving the bonus. It also will have long term benefits to your business because you developed people in your organization, who then in turn did the same in their organizations.
The final item that you will have to consider is you. Based on the information that you have been provided about the compensation plan, do you feel that you will be able to achieve what is required for success. Granted you may be new to this industry, your first goal will be filling your frontline distributors.
This is usually the qualification that network marketing companies have to signify when you can start making money. For instance, with most binary compensation plans, you only need to personally sponsor / recruit 2 frontline distributors / associates before you can start to get paid through the compensation plan. That number is higher in a Matrix compensation plan, usually 4 - 6, where a Unilevel or Stair Step compensation plans are usually much higher numbers.
While you current skill level will change with the support you will receive from your upline, you have to also feel comfortable with what will be required when you first start. If you have experience and are a very capable sponsor / recruiter, than a Unilevel or Stair step may be suited for you. However if you are new and feel that your sponsoring / recruiting skills need to be improved, you may want to look at a Binary or Matrix compensation plan. This way you can improve those skills as you are growing as a leader!
While the compensation plan of a potential Network Marketing company plays a major role in understanding if the opportunity is right for you, it is not the only item to consider. The support that you will receive, the ability to professionally grow, the stainability of the company and product lines are items that need to be accounted for.
The right compensation plan with the right company can be your ticket to the residual income that you have been seeking. What that right fit is varies for all of us. For you, we hope that this information has been beneficial to you in your investigation stage of looking at Network Marketing companies.
If you would like to personally speak with us, please feel free to fill out the form in our Contact Us section, and describe what it is that you would like to discuss. If you would like a one-on-one meeting, make sure to provide a telephone number and the best time to reach you.
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- Binary Compensation Plan
- Compensation Plan Basics
- Duplication in Network Marketing (MLM)
- Leverage in Network Marketing (MLM)
- Matrix Compensation Plan
- Residual Income
- Stair-Step Compensation Plan
- Unilevel Compensation Plan
- Why Network Marketing (MLM)
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