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Network Marketing MLM Compensation Plans –How To Select The Best One
Author : Jim C Green
In this article we take a look at the most prevalent forms of MLM network marketing compensation plans. What precisely is this, and what would you be looking for in selecting the best network marketing MLM compensation plan for yourself?
The MLM company compensation plan is basically the system whereby the independent associates are paid. The stucture is one characteristic. The formula used for commission percentages paid (occasionally according to level in the plan) is another factor. Besides payment on sales volume, most MLM network marketing compensation plans also pay out different bonuses, typically as a share of the MLM company's sales volume or profit.
Most MLM network marketing compensation plans can be described as one of four categories: binary, stairstep breakaway, matrix, or uni-level. Here is a brief description of each:
Network Marketing Binary Plan – The first level in a binary system is limited to two people and there can be infinite depth. Generally this type of plan requires more work, since MLM companies using this system pay only on balanced left and right volume. This plan can have the highest synergy, because of the ability to easily stack team members very quickly in a "power leg." Approximately 14% of MLM companies use a binary plan
Network Marketing Stairstep Breakaway Plan – The stairstep breakaway plan has unlimited associates on the first level with limited depth to generally 10+ levels. The plan pay includes two phases: stairstep which pays higher percentages according to your rank in the company and a breakaway phase paying additional levels after achievement of a certain sales volume. These are the oldest type of pay plan, and although still highly successful, not as common as they were in network marketing’s early era, due to lack of synergy. Approximately 39% of companies including Amway, Herbalife, Mary Kay, Neways, and Nu Skin still use this type of plan.
Network Marketing Matrix Plan – This type plan has first level width 2 to 7 and usually is 5 to 50 levels deep. This type of pay plan has been decreasing, possibly due to the problem of recruits who fill the matrix, but do nothing. Although Melaleuca uses a 5x7 matrix, no other major company using this model has survived. About 8% of existing companies use a matrix structure.
Network Marketing Unilevel Plan – Unlimited first-level width with a depth of frequently 5 to 10 levels. Approximately 37% of companies use this type of structure which has built-in incentives to both acquire and follow-up with clients. Unilevel plans are often enhanced with a fast start bonus and dynamic compression to improve team synergy.
What factors are most important in a company’s compensation plan? Factors to consider include the percentages paid out in product sales, and the possibility of bonuses. The best plans will incorporate the fairness of healthy upfront commissions as well as the prospect of considerable bonuses for the highly experienced professionals.
Most MLM companies that are worth considering will publish a range of actual pay statistics, such as median income by associates, possibly grouped according to level of participation. Part time distributors should have a much lower expectation of weekly, monthly or annual income.
A good indicator, instead of the quantity of millionaires produced by a company would be the number of six-figure earners. In our experience, the best companies “spread the wealth” more evenly, yet provide a means for the highest super-achievers to participate at extraordinary levels, maybe even into seven-figure income.
This review of network marketing MLM compensation plans has little meaning apart from the ability of a company to attract prospects. To do this, a marketing system is essential, in addition to quality products and, of course, an industry leading compensation plan.
Author's Resource Box
Jim Green is an MLM attraction marketing expert, who has been in over 10 years in network marketing. For further information on marketing your business, visit our attraction marketing system, training, and tools – powered by MLM Lead System Pro.
Article Source:
Articlebliss
Tags: mlm compensation plans, network marketing, pay, compensation plan
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Submitted : 2009-12-30 Word Count : 698 Popularity: 83