Thursday, January 22, 2009

MLM-How to choose a compensation plan

Previously I discussed what to do before choosing a home-based business. Now I would like to give you a few things to look for in a compensation plan. (Make sure the company you are considering offers a legitimate product at a reasonable price.)

1. Is it easy to understand? Can you understand the requirements to earn compensation without hiring an interpreter? Can you explain it to a 6 year old?

2. Is it clear how much you must purchase in order to earn compensation on your down line? Are there several ways to earn an income? (Through retail sales of the product, fast-start bonuses, long-term residual income on your downline, etc.)

3. Does the compensation plan reward the part-time marketer as well as the full-time marketer? Most people who get involved with an MLM company are part-timers looking to get started earning an income so that they can eventually replace their full-time income from their J-O-B's.

4. Is it a balanced leg, binary system? This is by far the most difficult compensation plan to understand. Do you have to attain a certain amount of retail volume or sponsor someone to purchase a required amount before you can earn any commission. Is that amount more than most people can comfortably afford?

5. Is there a point system involved? Which for me does not make any sense at all. The amounts should be clear in dollars not points. This is equally as confusing in most cases as the binary marketing plans.

6. Expandable matrix compensation plans would be the ideal situation. I believe these plans can create laziness on the part of most, because they expect their up lines to do the work, while they earn a check. Compensation plans should be beneficial for all involved. Although it can be a good tool to motivate people to do their part to help their down lines once they see an income coming in through no effort of their own. Which, from my own personal experience rarely happens.

Once again, there is a lot more I could include, but I believe this list covers the most common types of marketing plans.

As an example of a company that I consider to meet the above requirements, I would like to suggest that you take a look at Jerky Direct. They offer a legitimate product at a reasonable price and the compensation plan is straight-forward and simple to understand.

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