How to Make Money with MLM
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Research the compensation plan. Find out how you get paid. Ask what percentage of sales gets paid back to the distributors. Find out how fair the distribution is between old and new members.[8] Familiarize yourself with the different types of MLM compensation plans. Research the type your company uses and evaluate how fair and generous it is.
- A unilevel compensation plan pays the same amount to all distributors.[9] This pays well if you are a good recruiter.
- With a stair step breakaway compensation plan, your payments increase as your distributors’ volume grows. Once they reach a certain level, they break away from you. Many companies use this plan because it is tried and true. Be aware that once a distributor breaks away, you may need to replace her to make your monthly quotas if you have them. [10]
- In a forced matrix compensation plan, the organization of distributors looks like a grid. This means that a certain number of people you bring in to the company will work directly for you, or be on your front line. But after that, any other people you bring in will spill over, or be placed underneath them. This plan encourages team work.[11]
- A binary compensation plan allows you to have two distributors on your front line. After that, other distributors go beneath them. Sales volume must be balanced between the two distributors underneath you before you receive any commissions. This plan is simple to understand and offers fast growth. Be aware, however, that although binary plans are designed to operate legally, some companies do not run them as they are designed.[12]
- If the commission is too high, your company may fail. The higher the commission, the less value the customer receives for her purchase.
- "Downlines" are the distributors beneath you. For example, if you are seller A and recruit seller B, seller B is your "downline." You will probably earn a percentage of seller B's sales unless you are operating on a unilevel compensation plan.[13]Downlines greater than 5 may run into regulatory legal problems, since emphasis is on selling to distributors rather than the customer. This type of organization may be attacked as a pyramid scheme.
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