The first thing that you should understand is that there are many MLM compensation plans available. Thus, you need to look at the different plans before deciding on the right one for you. Before joining an MLM company, it is important to understand the compensation plan it has to offer. First and foremost, you need to know the amount you will be paid.
This will help to avoid any misunderstandings or confusion. It is advisable that you should first choose the MLM compensation plan, then later find a company using this plan. Going for the plan first is an important strategy that will help in making a wise decision.
There are four popular MLM compensation plans. This article will look at these plans so that you can know what to look for in each of the plan.
- Matrix plan: This plan allows you to have a certain number of people in the first level. For example, a 3 by 7 forced matrix plan will allow you to have 3 people at the first level. After sponsoring people, it is important to place the distributors beneath a person in the down line. The distributors will have 3 on the initial level. The benefit of this plan is that it helps your down line to build another down line. It will be possible to help others earn commission, regardless of whether they are sponsoring others or not. This is one important issue that you should look at in MLM compensation plans. You can place a new distributor beneath another person, where they will still get something. However, you will be getting the biggest commission. The disadvantage of this plan is that it encourages laziness. In addition, you can lose cash after building many levels.
- Binary plan: This plan limits you to have only 2 individuals in the front level. After sponsoring the 2 individuals, you should place others under them. In this plan, you are paid on the weakest leg. However, the payment depends on the MLM Company. This is an essential thing to look for in the MLM compensation plan. The plan provides a supportive environment where you can help others. The popularity of binary plans has increased. The disadvantage of these plans is that it also encourages laziness.
- Breakaway plan: Just as the name suggests, in this plan your distributors usually break down after achieving a certain level. After breaking away, the sales are not considered as yours. You will be provided with a bonus on a quarterly or monthly basis. The disadvantage of this plan is the breaking away, which makes you lose a large part in the down line.
- The last plan is the uni-level matrix: This plan allows you to sponsor many people in the front line, but you will be limited in the levels that you will be paid for. For example, if you have 50 levels, you can only get paid for the first 20 levels.
Many MLM compensation plans offer various bonuses. It is important to look at the bonuses that are being offered by the plan. The bonuses include retail, sponsorship, fast start and leadership bonuses.
Your Professional Success Coach
You make a great point in your post…people need to understand compensation plans FIRST, then look for a company that has the pay plan that fits the individual’s needs best.
Refreshing approach! Nice summary of some of the more common pay plans.