Network Marketing:

Compensation Plans

Network Marketing Compensation Plans should focus on products sales, don’t be enticed by gimmicks or exaggerated stories about how special and unique their pay plan is because it more than likely falls into one of the 4 basic compensation plans. You’ll regret it in the end if leap before getting all the facts.

Stairstep / Stairstep Breakaway: As far as compensation plans go the Stairstep is the oldest and most common of the plans available. As you progress based on your performance you advance as the name states on a stair step configuration.

The Stairstep is often combined with a Breakaway Plan hence the name Stairstep Breakaway. Which is the same as the Stairstep but with an added feature, which allows you to breakaway from your sponsor. The sponsor continues to get an override commission on sales of the breakaway group.

This Network Marketing compensation plan although the most common is often complicated and difficult for new distributors to understand, which makes it even more difficult for them to explain to others. This plan often leads to distributors stockpiling inventory and some companies have been know to have high monthly personal volume requirements.

That said this plan is considered old reliable because it has been around a long time and will probably remain in play for a long time to come. It is a plan based on volume and performance and has been accepted by the agencies that regulate the industry.

Tip: In a Stairstep Breakaway you will be rebuilding your organization each time someone you sponsor breaks away from your group. Also note that your upline may not encourage you to succeed beyond a certain point because of that very fact.

Unilevel: In this Network marketing plan you can build your organization as wide as you like. There is very little advancement with regard to rank and payout is usually based on a percentage of the volume that has been sold. Unilevel plans can limit your depth of sales levels in your organization. On the bright side it is a plan that new recruits can easily understand and explain.

Matrix: This Network Marketing compensation plan works best with a company whose’ products are bought by distributors for their own use instead of retailing them to consumers. It is a plan where new distributors are automatically place anywhere within the matrix. Which means You could sponsor me and I could be placed below someone other than You.

When it comes to success this plan has the worst record in the industry. It could be because this plan tends to collect a lot of deadwood, people who join and do little else to promote their business.

Binary: With a Binary plan you are restricted to two people on you first level and additional distributors are added below these two. Each side is called a leg and in order to qualify for commissions’ sales volume must balanced on each leg.

Many times your position is called a Business Center and you are able to buy more than one center to increase your income potential.

Those who like this plan feel it is simple to understand and easy to explain and they usually payout on a weekly basis. The Bad, this plan probably has faced the most criticism and legal problems.

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