Let’s Understand MLM Compensation Plans — Part 8
Oct 16th, 2008 by admin
I said in Part 7 of this series on the compensation plans of MLM that I would discuss some more particulars of the Stairstep-Breakaway plan. So here goes.
You’ve broken away from your sponsor’s group and now have the possibility for limitless vertical growth in your own group. That’s great. But what happens when one of your recruits breaks away from you? Remember Louise? Let’s say Louise breaks away. Do you lose her and everybody beneath her? It doesn’t seem terribly motivating to know that you’ll eventually lose your best recruits, does it?
The answer though is that you won’t lose her. You’ll just earn a lesser percent on the sales of her entire group. This is not a bad thing, however.
For one you’ll get that percent no matter how large she builds her group. Also, and this is more important than it sounds, you will no longer be responsible for all those people who are now in her group rather than yours. Learning to train, motivate and guide a large group is one of the challenges that’ll come with your success, and you’ll welcome the relief when someone takes over some of those people. You’re also likely to get a nice bonus when one of your recruits breaks away. It’s a good thing for everybody.
Now, what about breakaways two or three or four levels down? Will you continue to earn a percent from those groups, too? Well, that depends on the company. But at some level you will not. It’s the problem of unlimited vertical growth again. The company can’t keep adding commissions every time someone breaks away.
However, you yourself will continue to have opportunities to promote to higher levels – supervisor, manager, director, or whatever the names are for your company. This is the stairstep side of things. And with each promotion, your pay structure will become more advantageous. Perhaps you’ll earn a higher percentage from sales of your own group. You’re very likely to earn higher percentages from breakaway groups that continue to pay you. And you’re also likely to be able to dip farther down and keep breakaway groups at lower levels. MLM companies want you to stay motivated, and the good companies give you strong incentives to do so.
Okay, that should give you a pretty good picture of the Stairstep-Breakaway. Here are some red flags, though. You’ll want to avoid companies that have unrealistic sales requirements for you or your group in order for you to earn commissions from breakaway groups. You’ll end up losing your own recruits under that scenario. You don’t want a situation where you can fully lose your own personal recruits. Also, some companies with this MLM plan give guaranteed income to new recruits. Sounds good until you realize that this income has to come from somewhere. It comes from less attractive rewards for good performance.
To my way of thinking, the only reason to get into MLM is to make a lot of money from your own success, not from handouts. If you’re intent on being a star and finding that pot of gold at the end of the rainbow, the Stairstep-Breakaway plan is the one I’d recommend.
If you’re more of an MLM socialist, then you may incline to one of the two plans that I have left to discuss. See you for Part 9.
