Let’s Understand MLM Compensation Plans — Part 7
Oct 6th, 2008 by admin
As I promised in Part 6, I’ll now discuss Stairstep-Breakaway as an alternative to the Unilevel plan. Remember, with Unilevel you keep all your recruits, but your vertical growth gets stopped pretty quickly as a result.
Here’s the variation to that. All your personal recruits go into the first level under you, and you earn commissions from their sales. However, you do not earn commissions from sales made by the people recruited by your own recruits, or their recruits, that is by anyone in the second level or lower.
That sounds worse than Unilevel on the surface, but here’s the twist. If you meet certain performance criteria, which will vary by company, you will “break away” from your sponsor’s group and will now earn a commission from sales made by anybody below you, to an unlimited depth.
How can that be? Let’s go back to the group we gave you earlier. You recruit Louise, who recruits Alan, who recruits Susie, who recruits Nathan, who recruits Laurie, who recruits Carl, who recruits Ashley, who recruits Victor, who recruits Olivia, who recruits Oliver, who recruits Mary, who recruits Darcy, who recruits Elizabeth.
Until you break away, you will only earn a commission when Louise or you yourself make a sale. Meanwhile, assuming none of those people has broken away either, each will only earn commissions from their own sales and those of the person one level down. As it turns out, the company is paying commissions to only two people per sale under this scenario.
But then you break away and suddenly the company starts to pay you a commission on sales made by everybody down to Elizabeth and beyond. This becomes possible because nobody in between you and Elizabeth, except Darcy, will get a commission on her sale. Now the commission is going to three people, still a comfortable number from the company’s perspective.
You could potentially earn commissions from an infinitely deep downline, while the company would still pay only three commissions per sale, disregarding for the moment the people above you. Do you see how that works?
Get your mind around that much of it, and we’ll discuss some more particulars of the Stairstep-Breakaway plan in Part 8.
