Network Marketing Comp Plans: 3 The Matrix
Webinar: Matrix pay plans explained. Daren Falter, author of How to Select a Network Marketing Company, presents his Webinar series ”Network Marketing Compen…
Understanding The Compensation Part 1
Understanding The Compensation
Plans In MLM Companies
”Sorting through the various compensation plans, can be tricky.
Your understanding of them could make all the difference in the world.”
Why Understanding Compensation Plans Are Important
There are many types of compensation plans out there. Some of them are so complex that it requires a degree in mathematics to figure out how much money you will get in your next commission check!
Most people tend to neglect understanding compensation plans. They feel that it is not important at the initial stages. This is a very bad mistake. If you are not very clear how to ‘place’ your downlines, you will LOSE A LOT OF MONEY and in some cases, some of your downlines will lose vested interest if you fail to place the right people under them.
Remember, losing 10% may not seem like a large amount but when you calculate in the long run, your sales volume could total up to THE THOUSANDS and it is even worse when it is not YOUR money because if you cause your downline to lose money due to poor planning then you will lose the trust in your leadership which is something money can’t buy back!
Uni-Level Versus Multi-Level
What are the fundamental differences between or uni-level or better known as single level marketing and multi-level marketing? Well for starters, it is more than the amount of tiers which commissions are paid.
Allow me to explain how the mechanics affect a person’s vested interest.
Single level programs – prevalent amongst the majority of the world’s pay scheme where it involves a merchant paying an affiliate or sales person, is more beneficial for the merchant (or in the network marketing scenario, more beneficial to the sponsor). Marketing as an affiliate can be very beneficial, when you have the right system set up.
Multi-level programs on the other hand, pay many levels of marketers. In some cases, no all, the person who personally sponsors someone and gets a sale from him, only gets a small percentage because a lot of the commission goes to his upline(s).
So you how will this affect me in my MLM company?
* Certain MLM compensation plans usually pay more commission to those who personally sponsor someone. If their downline sponsors someone, the upline gets a lot less money.
On the other hand, certain plans pay MORE to someone who builds their group (in essence, volume generated by one’s downline – this ensures that the sponsor will not leave their downline without any help) . Ardyss International has a 100% matching bonus for their distributors. When the sponsor helps their downline to achieve success Ardyss pays their sponsor 100% of what the distributors earns up to $60,000.00. This is very rare in MLM companies. It is important to recognize at which level you are getting the bulk of your money!
* There are many programs OUTSIDE the network marketing company that promotes supplementary material to assist the network building process. These programs are usually SINGLE LEVEL programs that provide a secondary income to the main business.
The reason this is very important to recognize is because these tools are helpful for prospecting and providing cash flow that more and more marketers are using it.
Single level supplementary programs are also viable because a network marketing company do not allow the rep to build more than one multi-level program at the same time.
* Single level programs allow the affiliate to make money for THEMSELVES ONLY. You see, if an affiliate recruits another affiliate for single level programs, the ‘sponsor’ does not get any money as a result of his ‘downline’s’ sale. This is know as a captive audience. In many ways it can hurt representatives who are aggressive in marketing their MLM company on line.
In other words, recruiting an affiliate only creates ANOTHER competitor! This is different for multi-level programs because the affiliate can profit from another affiliate so that vested interest is still there.
As a matter of fact, some network marketing companies even pay only a SINGLE level for the initial entry level sale of any new rep that is sponsored, so do NOT simply give away your sponsored downlines to the people in your group… you can lose a lot of money that way! Ardyss allows their representatives to move their down lines within their organization and still benefit form that person’s sales.
In part II of this article, we will explore a number of popular network marketing compensation plans.
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