There are many types of compensation or commission plans out there, and one of the first things people look at when entering into a new business venture. This is especially true when joining a network marketing company. On this page I will go through the most common types of plan that are around today and explain some of the pros and cons of each. In Network marketing there are generally two types of people who stick around in the business, the retailer, this is someone who just sells product and makes a profit from it, and the team builder, this is someone who recruits people into the business and they become one of their team. So now as well as selling product and making profit the team builder also earns a bonus from what his/her team member is selling. Essentially it is duplication and using time leverage to earn yourself more money. It is the business builder that would look a lot more closely at a companies commission plan before joining, because building teams pays WAY more than retailing on your own.
Here I will talk about the most common types of commission plans we find today in the world of network marketing.
This type of compensation plan is very similar to the unilevel matrix plan. The major difference with this type of plan is that you are limited to having a certain size front-line. Lets say that 10 was your cut off, anyone else you recruit would automatically move to a distributor in your down-line that still has room.
This plan is very restrictive and quite often ends with distributors feeling like slaves. The plan only allows a front-line of two. New distributors are then placed in your down-line. Now here is the odd part. Both legs of your front-line have to match in terms of sales before you get paid a compensation cheque. For example when leg 1 reaches £500 in sales you have to wait for leg 2 to reach £500 in sales before receiving your bonus cheque!
This type of compensation plan is probably the most common. The distributor can build a front-line (People you personally recruit) to any size. Your down-line can also build as far down as they like. There isn't a limit to the size of organisation that you can build. It is very common to be paid commissions as far down as 7 generations. However some companies will only pay as far down as you are wide. Say you have 10 front-line distributors you will be paid 10 levels deep. If you recruit another 10 front-line then you will be paid 20 levels deep. You will often hear of car and travel incentives offered to distributors by a company that uses unilevel matrix compensation plans.
This plan to me is the worst of all. Once recruits have reached a certain level they can break away from your team to form their own "NEW" group. The company does pay the original sponsor of the group a compensation cheque, however this is a one off and can never match the potential earnings that could have been received if the group had stayed as one.
Out of the ones above I have touched on, the Unilevel matrix and the forced matrix are the most viable options, although these can vary quite a bit also from one company to another. So when finding a network marketing company to work with really try to understand their commission plan and look at the structure of it, make sure it fits well with what you are trying to accomplish and achieve in terms of financial reward.
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