One area of confusion when it comes to multi level marketing (MLM) is how they are compensated. MLM pay plans are as unique as the opportunities themselves. According to MLM consultant Rod Cook, there are over 10,000 MLM pay plans. Some of these plans are simple, while others are complex.
Details on compensation plans is just as important as selecting which business you are getting involved with. Some plans are generous and simple to understand, while others are complex, difficult to follow and can cause you to lose your business if you do not follow the plan precisely. You want a plan that is easy to understand and that will be simple to explain to your potential downline members. Some independent business owners want a plan that will allow them to make money right away, while others will consider plans that take some time to earn, but will have a bigger payoff. Another thought to consider when analyzing MLM pay plans is the legality of it.
Some of the major types of MLM pay plans are Stairstep, Breakaway, Unilevel, Australian, Matrix, and Binary. To add to confusion, there are variations of the major plans, such as, Stairstep-Breakaway, Conventional Unilevel, Bottom-Heavy Unilevel, Compressed Unilevel, Automatrix, Forced Matrix, Unilevel Matrix, and Hybrids. You need to read the details and the fine print where the MLM pay plans are concerned because many companies actually use a combination of 2 or more plans and their rules might have a slight variation. These variations, no matter how small, are important to pay attention to because it can mean the difference between getting paid $10 or $1000.
Plans will often include terms such as matching, training bonuses, sales volume, initial order requirements, bonuses, fast starts, spillover, power lines, power legs, downline placements, group volume, rank and cumulative qualifications, and retention rates. Most plans also go into detail about what qualifies one as an active participant and what is a qualified sale or referral. Some companies are flexible about member activity and referrals, where others have strict guidelines that must be followed to a tee, such as the number of active referrals you must have in your downline before you can receive your check.
If there is anything you do not understand in a compensation plan, then you need to ask and get clarification in writing. I recommend contacting the company directly in addition to communicating with your sponsor. Although your sponsor may be able to answer your questions, companies often make changes to their plans and you want to ensure that you have all the information you need to ensure you understand your responsibilities. Any legitimate MLM business will be happy to provide you the information you need in a format that is easy to understand.
MLM pay plans are not created equal. They all have their advantages and disadvantages and it is in your best interest to put as much thought into selecting a plan as you do in selecting a company.
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