MLM Compensation Myths Demystified

There are some common misconceptions regarding compensation plans both for the distributor and the company that need to be explained further.

I will only be a serious builder once I find the best company plan.

There are people who do not work hard enough in their business, that they blame the plan for their failure. They blame the plan, the management, or even call them a scam. If you decide to leave a company for a better plan, make sure you leave strictly based on business reasons and not to justify your failure!

The compensation plan is not important; all I need to do is recruit people.

A good plan will make or break a company. When distributors understand the company's plan clearly and find that it works fairly for every distributor who works hard and income is generated accordingly, the down lines would not fall out and leave easily. In fact, when a leader of a whole group of down lines works, trains and motivates well, he would sustain the distributors' enthusiasm right from the start till he achieves success too. As a rule, the team survives only if the down line builder has exemplary qualities for them to emulate and together they would all be able to make money.

Other considerations like payout, maintenance and even the joining fee play a part in the company's survival. If a company has quite a high maintenance and their distributors are not making money, they will drop out even faster.

I must explain the entire plan to the prospect so that he understands.

A new person would probably understand only half of your plan initially. He would get very confused, so it is up to you not to try to make him understand everything about the business immediately .When he feels pushed ,he might not sign up even.

Keep the plan simple and explain in terms of benefits instead of features.

If you are starting your own network marketing company, outlining the benefits and writing in terms of potential earnings is more advisable because most people want don't want to think too much.

If I want to start my own network marketing company, all I need is a good plan only.

Ultimately, the success of a network marketing company depends on many factors. The most important factor is who is managing the company. Even a company that is making the most money will still fall apart if it is not backed by a solid management team. Yes, a good leader and a few more persevering down line leaders who can help support newbies and train, support and motivate them too.

Other factors also include having a viable product. A good product ensures repeat sales and cash flow for both the company and the distributors. The plan should be designed to complement and synergize with all the other elements. At any time, each element should not be designed at the expense of the other.

If the company has a high payout to the distributors, everyone will join the company.

If everyone in the company is enjoying extremely high commissions, you must observe the product more carefully .An expensive product does not necessarily mean that it is a product of quality or reliability If a product's mark-up is too high, it may be good for the distributors in the short term and distributors sometimes find the products too unreasonably expensive even for own consumption or use. Then when they themselves are not consumers or users, how can they convince their customers to do so? Customers can sense the sincerity of distributors in their sales promotion and this does not auger well for the sales in the long term. In this way high retail mark-up will hurt the consumers and devalue the product.

A product must rely on good repeat sales and reasonable mark-up at the retail level or else the company will not survive long. In their eagerness to make money fast, most companies simply grab any product and give it an exorbitant mark-up so that many builders would grab the opportunity to make fast bucks without any thought of its long term survivability.