Our team has world class experience in reviewing compensation plans. We will review your compensation plan and can provide you with invaluable suggestions and input to your plan. The client will determine what is best for their company’s objectives.

Informational Purposes

How To Avoid Launching a Comp Plan that will bankrupt You!

The following factors need to be considered when you develop your plan:

  • The type of people the company is trying to attract e.g.”heavy hitters”, experienced MLM people, upper or middle class professionals, etc.
  • The percentage of the revenue your company is looking to pay back to the distributors.
  • What your company wants the distributors to be rewarded for, e.g. recruiting, training or retailing. This decision can greatly affect the type of distributor culture that develops.

A new network marketing company needs to design their plan carefully. Prospective distributors will only join if they understand how they will be paid. The financial implications of the compensation plan, company policies, and commission and bonus levels should be carefully evaluated in a start-up company.

A good compensation plan will:

  • open doors to as many participants as possible.
  • retain the highest number or level of participants as possible.
  • encourage the highest dollar amount of purchase involvement at the earliest point in time, preferably within the first 120 days.
  • facilitate the highest possible level of dollar investment in promotion of the program, creating strong desire to share the program with others.

*Note: The company’s mission and mission statement, if properly established, will go hand-in-hand with the compensation plan in creating a desire in its participants to share the program with others – incentives that go beyond merely the attraction of money.

In summary, the compensation plan is the means by which distributors are compensated for building the business. Often the distributor receives a percentage of the trade of his/her downline (i.e. a residual), and gets bonuses (e.g. infinity bonus, leadership bonus) for achieving titles.

Some of the most popular compensation plans are:

  • Unilevel
  • Binary
  • Party Plan
  • Forced Matrix
  • Stair-Step/Breakaway
  • Hybrid
  • Australian, 2-up

Most MLM companies who are more than 25 years old use Stair-Step Breakaways or Party Plans. In the last 15 years most companies use unilevels, binaries, forced matrixes and party plans.

The following are approximate percentages of start-ups in recent years:

  • 50% Unilevel
  • 16% Binaries
  • 14% Party Plan
  • 12% Hybrid
  • 5%   Forced Matrix
  • 1%  Stair-Step Breakaway
  • 1%  2-ups
  • 1%  Coded

It is our belief that most distributor compensation plans can be successful. It is simply a matter of how the plan is promoted. Of course, the quality of the distributor training program offered by the company and leaders within the organization plays the major role. The distributors are the ones that need to be convinced that THEIR marketing plan “is the best”! Naturally, this also applies to the products or services offered by the Company, “People Buy What You Sell Them.”

A well-balanced plan is important, be aware of the different variations of your marketing plan. When designing your Compensation Plan, you must…

  • Be Fair
  • Build a Well-Balanced Plan
  • Consider the various Orientations
  • Consider Customers, Representatives and Management
  • Build in Distributor Retention
  • Establish an Ongoing Training Program
  • Ensure the Opportunity is being Presented Properly
  • Lastly, believe that your plan is the best!

Common Types of Compensation Plans

Understanding MLM Compensation Plans