Since you don’t want to end up like this (in the group of quitters), it is vitally important that you take the time to study your compensation plan at the beginning of your MLM career. Asking important questions now will save you time, effort, and money, especially if you discover this plan is not the right one for you.

Here are the advantages and disadvantages of four primary network marketing compensation plans:

1. Stair step breakaway. The advantage of this compensation plan is that you can go as wide as you want. If you have 50 people, everyone can be placed on your front line. If you have 5 out of the 50 people who are doing well and want to really build, you can build 5 legs underneath them and not really worry about what everyone else is doing.

   The disadvantage of this plan is that if you place a heavy hitter under a dud, you won’t qualify for your company’s bonuses and commissions. Also, the fact that there is a break away component isn’t good. For example, if you have 5 legs with $10,000 worth of volume in each leg, when your downline reaches a particular volume, they can break away. Sometimes, this can be as much as 10-12% of your volume. Other times it can mean losing all the volume. This is not a pretty picture is it?

2. Matrix. A matrix plan basically means how many people you can have on your frontline and how many levels deep you can build your team. Matrixes can be 3×5’s, 5×7’s, 3×9’s, etc. For example, if you are in a 3×5 matrix, you can have 3 people on your frontline and can go 5 levels deep. Many times with a matrix, there will be a lot of talk about “spillover” which sounds wonderful to many people.

   All the “spillover” talk leads right into the disadvantage of a matrix. All the “spillover” mumbo jumbo really promotes a welfare mentality. People think they won’t have to do any work. As professional network marketers, we know this is not the case! It’s not a “sit back and let all the people come sailing in” type of business. You have to build relationships and talk to people.

   Another disadvantage of a matrix is that you have to guard your front line positions very carefully. These positions are really like gold. If your upline sponsor puts a dud in your frontline due to “spillover” and wants you to build for them because you are an awesome builder, you’re toast! Make sure nobody ever does this to you.

   Also, it’s very likely that you will be able to build deeper than 5 levels. Unfortunately, with a matrix, you won’t get paid on volume for the levels that go below our example of 5. This is not a good thing at all!

3. Aussie 2-UP. It isn’t known where the word “aussie” comes from, as this doesn’t really have anything to do with Australia. Anyway, in this plan, you would give the first two people you sponsor to your upline. Everyone else you get to keep. What is the advantage of this type of plan? Hmmmm, let’s see. Zero!

   Since the industry standard is that most people only sponsor just 2.7 people in their network marketing company, can you imagine having to give them away right from the start? Ouch! Now, if you are a hard-hitting, sponsor monster that loves to sell big ticket items as promoted by many aussie 2-ups, this is the plan for you. For the rest of us, this just doesn’t work.

   Keep in mind as well that with aussie 2-ups, there really is no residual income. The day you stop selling is the day your income stops. So, carefully evaluate if this is the type of plan you want to commit to.

4. Binary. This plan promotes having a two-legged team. The advantage with this network marketing compensation plan is that it pays on volume and you can build the two legs as long as you want. The disadvantage is that you have to balance both legs and the pay is based on the legs being balanced.

   You have probably heard people bragging about having thousands of people in their downline with this plan. What they don’t tell you is that they are barely making any money because all the people are in the strong leg. They also don’t tell you they are struggling to build since they can barely get the weak leg moving. Unbalanced legs equal no money! Keep this in mind when you look at a binary MLM compensation plan.

Before you enter the world of network marketing, it is crucial to your success that you understand the type of compensation plan each company offers. Do not scan the plan and sign quickly on the dotted line. Read each section carefully and ask lots of questions so you truly know how you will be compensated and what your requirements are for compensation. Knowledge is the key to your success.

—————
iRepNetwork.com
Lead Generation and Team Building Tips and Tools
—————

What do you think? You are invited to comment (just click the title link):
Understanding MLM Compensation Plans

If you like this post, please support us and our sponsors by visiting the source:
Linda Stacy's Business Opportunity Connection.