Understanding the mlm compensation plans is paramount for success in mlm business.
What are the most commonly used mlm compensation plans ?
How do they differ from each other?
Is there such a thing as the best compensation plan?
Most of the members in network marketing spend a lot of their time, money and lives in the business. These same members don't spend time on learning their companies compensation plans
There are different types of compensation plans are present in the market now, which are the favorites for network marketing companies. Each plan includes of three basic elements, namely:
Commission type, that is, the sum of money that is paid out to the down line members each month for their activities during the month
Rules that lay down the criteria distributors need to meet in order to qualify for commissions or rewards and benefits from the company, and
Structure. The rules in a compensation plan that determine where a distributor will be placed in an organization form the structure of the compensation plan.
Any compensation plan that does not have all three elements will probably not be sustainable in the long run.
The four most commonly used types of network marketing compensation plans are...
The binary plan
The uni level plan
The breakaway plan
The matrix plan
Most major successful network marketing companies use one of these compensation plans to reward their distributors.
Each network marketing compensation plan uses a combination of different commission types.
For example a compensation plan may use differential commission to pay for product sales and level commission to pay for sales management.
Note also that each plan has its own advantages and disadvantages.