How to Break Down a Network Marketing Comp Plan for
Identifying Great Companies
This article
gives a brief overview of the most commonly used network
marketing compensation plans, also referred to as MLM
Compensation Plans. Care is given to identifying
and expanding on a key
feature of comp plans known as Breakage. The most
commonly used pay plans are outlined including the
Binary, Matrix, and Unilevel with
Dynamic Compression, and Stairstep Breakaway. A good company management
team will design a network marketing comp plan so that both novices and
experienced professionals can succeed in their MLM
Business. Our team will be offering comp plan
guidance, ideas, and detailed instructions at the
Zrii Convention in SLC,
Utah in May 3008.
One Key
Element in Selecting Top Network Marketing Companies is
to Fully Scrutinize Their Compensation Plan Which is
Also Referred to as the Comp Plan or Pay Plan
If
you join and become a wholesale member or independent
distributor of an MLM company simply to acquire the
product or service for your own consumption then the
network marketing compensation
plan does not really matter that much.
However, if your intent is to earn money working from
home and earn lasting residual income -treat it like a business and not like a hobby
and closely examine the pay plan or marketing plan and
ask pertinent questions.
The
executive management team and owners of network
marketing companies design MLM Comp Plans either to
strongly favor the owners, or to establish a good
working relationship and fair partnership with the
independent distributor base or sales force. Inherent
to public MLM companies is the fiduciary responsibility
to financially reward the share holders so in these
cases the Independent Distributors are generally not
paid as well as in private
MLM Opportunity companies. The objective
in selecting desirable Network marketing companies is to
discover opportunities that have a minimum of a 50/50
split of the gross revenue between the owners and the
distributors.
No Breakage Provides Extra Financial Incentives
MLM
Comp Plans are most often stated in terms of levels of
pay having to do with organizational structure, or
layers of distributor positions under you in the network
of members. One key element to examine is the term
"Breakage". Some network marketing companies claim
wording such as "....you can earn up to 67%" on your
overall business volume...", while in reality this most
oftentimes does not take into consideration the
computation process of breakage. Simply stated breakage
results in generating extra revenue for the company. It
is desirable to seek companies with no breakage comp
plans where if one member does not qualify for the pay
it is (at least) paid to other more advanced members in
the network above (ie. Upline) that have qualified at a
higher Rank due to being higher producers, versus
breaking away to the company. By working only with
no breakage companies this element of evaluation
provides an extra financial incentive to stay ahead of
your organizational members in sales volume and Rank
Advancement and collect any breakage amounts yourself
versus it passing to upline.
Look For
Network Marketing Companies that Offer Many Different
Types of Methods of Earning a Check
Some
companies have as many as seven different ways to earn
income, and other multi-level-marketing companies may
have a little as two ways to earn income. Common sense
dictates that the more ways to get paid the better
especially because different people possess different
variable skill sets and excel in different types of actions or
business building behaviors that can generate earnings.
Income generally falls into these categories:
-
Fast Start Income or the income you earn by
signing up or enrolling a new wholesale member
-
Fast Start Generations Income where you get
compensated because people you personally
recruited (or people that they recruited etc),
enrolled, or signed-up, are becoming productive and
enrolling new members
-
Matching Bonus Income where you earn for
example a 15% matching bonus on other peoples'
monthly paychecks that you personally enrolled
-
Monthly Signup Bonuses and matching bonuses where you get a
financial share in a bonus pool based upon enrolling
for example at least five new members that month
-
Infinity Bonuses where you get for example
1.5% of the total business sales volume in your
organization simply because you've attained a higher
rank.
-
Residual Income is paid based upon repeat
product or service purchases and is usually paid
monthly for the reorders in your organization or
network. This is especially powerful in the
unilevel with dynamic compression comp plans.
The Names
and Terminologies Used In Network Marketing Companies
Marketing Plans and Types are Extensive
Generally the pay plan type describes the structure or
design of the desired network of member participants.
Each compensation plan has its inherent benefits and
shortcomings. The Binary Compensation Plan has all members
building two primary legs. Strengths are simplicity, but
an example of a weakness is that you may only get paid
on one leg, or you may only get paid when your lower
volume leg attains a specified volume or percentage. If
you want monthly income and your Binary leg does not
reach its objective you may have to wait longer to cycle
and get a check. The Matrix Compensation Plan generally has
members building for example a 3x9 matrix which consists
of three positions, or legs, directly under you on your
first level with nine down in each leg. Taking the
Breakage example above if people drop out which is
normal (ie. Attrition) then you earn less on your matrix
unless the pay plan allows stipulations to compensate
for this such as the ability to fill in the blanks with
new members. The Unilevel with Dynamic Compression is a type of comp plan that is becoming more
popular because it allows members maximum flexibility to
build as many legs, or business units, as desired.
The
Zrii Prosperity Marketing Pay Plan
with Dynamic Compression feature ensures that if there
are any gaps due to breakage computation system itself will
compensate for this and automatically pay it out to the
other members by rolling up automatically. A great
management team will design a equitable system that attracts
both the novice home business operator and the
professional network marketer. One final variety
is the Stairstep Breakaway offering lower
percentages of payout as a rule, and oftentimes leading to
additional investment in order to qualify for monthly
income which is not recommended for further evaluation
due to the inherent disadvantages plus being outdated.
There are also special plans such as the Australian Two
Up which generally don't stand the test of time.
The Upline and Downline Team
Members Support Each Other
You shouldn't need an expert in order to
analyze and break down an MLM marketing plan. If
you can't understand how your paycheck is calculated and
earned with a little professional coaching from your
upline, then chances are your downline won't comprehend
the pay plan either. Start with simple steps by
recruiting some repeat customers and then elevate and
focus your efforts
towards heavy hitters. Avoid pitfalls and pyramid
schemes in multi-level marketing companies likely to derail your earning contributions
through working closely with members achieving a higher
rank and pin level. Our
Zrii marketing strategies
are proven effective and deliver returns.
