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MLM Startup

Compensation Plan Design

You are a Champion!

We talked a little bit about building a Team in our last article but now we will talk about the most important part of a Network Marketing Company—the Compensation Plan. The design of this plan is more important than your products, management team, and board of directors or medical board, etc. Why? Network Marketing Companies have to attract strong leaders to their company by giving the Distributors a great plan that is absolutely the greatest.

Think about this for a moment…your company is a Network Marketing or multi-level pay company. By definition, you have given up other forms of marketing and distribution systems to implement this particular business model. If you are going to implement this business model it requires a great multi-level compensation plan to attract the best Business Builders in the Industry. Some of these people are looking for a fast buck but most of them are looking for residual (passive) income. Income they earn after they quit doing the business. Net Sales Growth is absolutely and positively the most important part of your business and if you can get it done better through a different business model then “go for it.”

Well, of course the products and science behind the products are the most important part and not the compensation plan—right? No! I don’t have to “sell” the quality products I use in order to receive their benefit and get the maximum discount (you can ask any experienced Distributor how). If I can make more money pushing XYZ why would I be pushing the quality product I buy? I might use them but why would I actively and aggressively sell them if I couldn’t make a good living doing so?

What does the compensation plan say about my Network Marketing Company? Hopefully, not Ho-hum but this is the best and greatest plan I’ve ever seen!

A big part of my business experience has been around engineers and their egos cause them to fall into a trap so, so often. We build the “best” product on the market for a fair price so why can’t you sell the products Mr./Ms. Salesperson? Because the customers don’t know about or don’t want your products! You designed them Mr./Ms. Engineer—they didn’t! How do we bridge that gap?

If I know about and like your products I may use them but it doesn’t mean that I will tell family, friends, and neighbors about them—ever! In fact, I remember well a customer who was getting great results on the products we sell but he wanted people to think he was getting the results through exercising (not taking great nutrition). He never, never, ever told anyone and would deny it if you suggested it was the products that helped him get good results. He kept the secret to himself!

How do I design the compensation plan? Take a tried (through the courts) and true plan and make it simpler and better.

What about overpaying the distributors and going broke? That’s why you take a plan designed by someone else that’s been around for years. No matter what you pay in compensation it will always be just a percentage of Net Sales.

If you will review industry statements you will quickly see that most Network Marketing companies have great margins and the key to profitability is simply Net Sales. Remember: “Retail Prices” are “almost” meaningless (see other articles on discounts) so how do I get the Distributors to rapidly grow the company?

THIS COMPENSATION PLAN DESIGN IS YOUR NO. 1 OBJECTIVE AND IF YOU DON’T UNDERSTAND THIS YOU WILL NEVER MAKE IT IN A NETWORK MARKETING COMPANY SO DON’T EVEN START!

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