Posts Tagged ‘MLM Compensation Plan’

Understanding how an MLM’s compensation plan works is one of the most important factors in choosing an MLM company.  MLM compensation plans are NOT created equally.  There are binary plans, unilateral plans, aussie 2-ups, stairstep breakaways, etc. If you want to simplify your analysis and bypass hours of research, simply figure out how big your MLM downline needs to be to make the monthly residual income you desire.  There are MLM companies that require as many as 40,000 distributors in your MLM downline to generate $10,000 a month in residual income and other companies that require as little as 500 to make the same amount.  This is the difference between working for $1.25/hour and $100/hour.

If it is your goal to make $10,000 a month in residual income, figure out how much residual income you will make per sale, per distributor.  If a particular MLM company requires you to maintain 10 active customers to receive compensation on all levels, calculate what the residual income is per customer. If you make an average of $1.00 per customer for all levels in your MLM downline, then you will need to maintain 1,000 distributors, each maintaining 10 customers.  If you make an average of $.10 per customer, you will need to maintain 10,000 distributors in your MLM downline, each maintaining 10 customers.  Calculating the size of your MLM downline can be tricky depending on how complicated the compensation plan is for a particular MLM company.  But it CAN and SHOULD be done BEFORE you join any MLM company.  And, the key is to calculate your desired income based on RESIDUAL income, NOT bonus money.  The bonus money is a one-shot payment.  The residual income is paid month after month and SHOULD continue even when you aren’t recruiting. When you reach your residual income goal, the MLM company should NOT require continued recruiting in order to receive your monthly residual income checks.  If it does, RUN.  The best MLM compensation plan will allow you to make the most residual income with the smallest number of distributors.

How an MLM compensation plan is structured impacts the behavior in the field.  If there is more money being paid out for signing up new distributors, then the behavior in the field will be focused on recruiting and sponsoring.  If more money is being paid out in residual income, then the behavior in the field will be focused on sales.  You need to know this information BEFORE you join any MLM company.  If you hate recruiting, you don’t want to join an MLM company that is a “recruiting” MLM.  If you hate selling, you don’t want to join an MLM company that is focused on sales.

So, does this mean you have to love doing one or the other to achieve MLM success?  Absolutely NOT.  The bottom line is you will have to do some of BOTH with ANY MLM company, but to different degrees.  To achieve MLM success with any MLM company you need laser targeted leads and a system to train your MLM team.  You need to ATTRACT MLM leads to YOU.  You be the hunted instead of the hunter.  This will make recruiting and selling EFFORTLESS.  An MLM lead generation system is essential to your MLM success.