It’s almost been 9 years since I’ve had a “real job”. I went full time in network marketing in March 2003, and I’ve seen just about every twist on an MLM Compensation Plan you could ever think of. So here are my 3 main pitfalls to watch out for when you’re reviewing an MLM company and it’s compensation plan.
MLM Compensation Plan Pitfall #1: Qualifying your business so you can earn a residual income.
About 2 years into my mlm career I got duped into a company that really touted their no breakage, no flaws 9 levels deep compensation plan. But after spending a solid year and a half we all found that in a real world scenario the pay plan had one MAJOR flaw. If I enrolled you and you enrolled Joe and Joe enrolled Mary and Mary became a heavy hitter advancing to a high rank, she did NOT count as one of my qualifying legs because I didn’t enroll her directly.
In the real world we all know that leaders can come from someone you know who knows someone etc. So beware of the direct enrollment pitfall to qualify at those higher ranks that allow you to earn deeper in the compensation plan.
MLM Compensation Plan Pitfall #2: Balancing and Structure
This one about drove me out of the business a few times. You spend hours, days, months, and years building, recruiting, and making the company a lot of money. But unless you have the proper structure, you make very little on all that volume. Even if you introduce someone that otherwise would have never joined the company, there are a lot of compensation plans that unless you have 2 or more other “legs” with certain amounts of volume, you earn very little if anything from that person and what they brought to the company.
Now I know this is needed to some degree, but trust me, some mlm companies make you jump through some very tiny hoops to structure your business to earn any kind of residual income long term.
MLM Compensation Plan Pitfall #3: Global Bonus Pools and other Car or House Bonuses
A lot of mlm companies use their big global bonuses or car incentives to lure the masses in. But let’s face it, most of your “average” builders will never reach those high levels, therefore never earning in that part of the compensation plan. This takes a huge portion of the companies profuts and gives it ALL to the elite and very few.
I understand the big builders should be rewarded, heck I love the extra money from building a big team. But if you really think about it, the BIG team one person builds is made up of MANY small teams that many people built. Shouldn’t they all be rewarded a little something for those efforts and sales they brought to the company? I think so.
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