Thursday, November 10, 2011

Analyzing MLM Companies; Comp Plans

MLM Comp Plans are a major consideration, but not be all end all of Analyzing MLM Companies

People usually fall into one of two categories. The ones who never read the comp plan, and those that spent days picking apart every detail.

I already have a page detailing several of the most common types of MLM Comp plans, so rather than repeat that here, let's look at the big picture. 
What do you want to look at when analyzing an MLM Comp Plan

The first thing to look at is the break even point. Forget all the silly bonuses. Few people ever qualify for them anyway. For this exercise, assume your only goal is to use the product for free by making just enough to break even. This has to be residual income. You would not want to be recruiting every month just to get free product.

So look at your comp plan. How many people do you need in your organization to break even? It's simple math. If you make 5% per person, you need 20 people. If you make 10% you need 10 and if you make 25%, you would only need 4 people. While 25% does happen (ask me how I know), the industry average is around 6 to 7%. So, in with most MLM Comp Plans you will need to have at leats 15 to 20 people in your organization just to break even. With odds lime that, it's no wonder so many people quit. 

From this point, you can easily run the numbers to see what you would need to earn $100, $1000 or even $10000 a month with that Comp Plan. 

The biggest thing to consider in a comp plan is, it has GOT to pay the part timer. Your first goal with a new distributor should be to get them a check. If they need 20 people to get a large enough check to break even, how easy is your job? Is it any wonder the attrition rate is so high in network marketing? The great thing is, it does not have to be that way. With a little bit of education, you can increase your odds of success significantly.
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