Greetings Everyone! 

The “4th Pillar” in a successful and competent mlm/network marketing company is the “compensation plan.”

I’ll try not to get too carried away with this one. It is a “pet-peeve” of mine. Often times, this one pillar here (#4) is the dead give-away as to whether or not this is a legitimate mlm/network marketing company, or an illegal pyramid scheme. (Is the compensation plan driving the retailing of product, or recruiting only?)

High overhead costs (corporate fat) often “pre-dispose” an mlm company to a “business model” of recruiting, recruiting, recruiting, due to the pricing of the company’s “product” (the “business opportunity.”)

Binary plans, breakaway plans, unilevel plans, aussie two-ups, matrix plans, etc; what in the world does it all mean? And how do you figure it out? Which one is best? Let’s keep it simple; to me, the best compensation plan is the one which lets you get the most money for the least people. Now I know that sounds obvious; but this can get very “clouded” or simply very “misleading” to say the least, when mlm/network marketing companies go to work against you with their compensation plans.

Let’s take an arbitrary amount of desired monthly income; $5,000. I know of one company where you get $1 per customer (this one takes 5,000 people to meet our desired income.) I know of another company which pays you $5,000 per customer (this one only takes 1 customer to meet our desired income.) Perhaps I better clarify something here.

When I stated that the best compensation plan is the one which pays the most amount of money for the least amount of people, I meant a company where continual repeat purchasing of retailed product is going on. I was not talking about a company where they “front end load” you with so much product “disguised” as a business opportunity, that you then get this amazing compensation check from the company. (The problem here is what do you do now with all of this product you cannot possibly unload?)

On the other end of the equation; what about the company where you have to get 5,000 to join for our desired income? Did you hear me? 5,000 people is a lot of people. (The attrition rate or dropout rate is so high; it becomes almost impossible to even come near accomplishing this.) Even if there are those “rare birds” who actually achieve this; how many “dead bodies” did they “leave along the road” to accomplish this?

When the product is actually “disguised” as a business opportunity, be very careful here; lest you fall into an illegal pyramid scheme. Ask yourself if there is actually any retailing of product going on which is continual in nature by the customer? If you would not have bought the “product” without the business opportunity attached to it; be careful. If there is a “one-time only” purchase of the “product” to be setup in the business; be careful here. If the only ones buying “product” are the distributors; be careful.

Compensation plans always, always, always drive the behavior in the field. If the price of the product is too high for retailing, what do you think that means? It means recruiting, recruiting, recruiting. This is how the money is made; by selling the “business opportunity.” When the recruiting stops, the income stops; it is a one-time sale. There is no residual income from repeat product purchases from the consumer; be very careful here.

A good compensation plan is one in which part-timers can make realistic supplemental income; “residual income.” I know of one company who is a “6 Pillar Company” where you need approximately 150-175 people in your organization(downline) purchasing retailed product for you to make $5,000 a month in residual, recurring income. (That’s “walk-away” income; this is an amazing industry!)
Build it right the first time, and it will continue to pay you into your future; that is the promise of a successful and competent mlm/network marketing company!

Charles Stewart
firstcharlesstewart (Skype)
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