Network Marketing: How To Choose The Best Compensation Plan

Network Marketing: How To Choose The Best Compensation Plan

The best compensation plan is where you can earn a continuous stream of income every month and for the rest of your life.

Reorder consumable purchases

A continuous income comes from repeated products or services purchases from your customers or from your down-line group. No one can deny that bonuses or promotional or recruitment bonus are not important. But companies who usually give high profits percentages on member's recruitment will result in lower payout for residual income. As mentioned above, repeated income derived from sales of products or services is the way to go. You just have to prospect once, and your recruits will duplicate the processes all over again and again.

Fair and equitable

But a compensation plan needs to be fair and equitable. You do not want to join a company whereby you will lose your down-line who will eventually breakaway. Members who broke away are people who have successfully reached a certain bonus and status level in the company whereas you have not achieved the same requisite requirements as a leader to contain a higher performer down-line from leaving your organisation.

No break-away

This type of compensation plan has its pros and cons. The pros is that you can move on and form your own group and earn a higher percentage in revenue and commission when you can keep all your down-line intact irrespective whether they have done exceptionally well or is just a part-timer who are making an occasional sale or recruitment.

The cons is that whenever anyone breaks away, especially if the member is a top revenue generator, you will lose out on those residual income and over-riding commissions you would earn from his own and down-line group productions.

Unlimited recruitment

Of course, the ideal compensation plan is one that you are allowed to recruit an unlimited number of first layers of business builders to start with. This gives you a broader base to recruit more. This will go viral if your first layer and his down-line could duplicate it and clone it.

Revenue-sharing is best

A good network company should compensate on a revenue-sharing basis rather than on profit-sharing. Revenue-sharing means depending on the hierarchy level you are in the organisation, you will be duly rewarded with a certain percentage of over-riding commission or revenue based on your group sales each month. So as long as your group produces results, like new and re-orders of the company's products and services you will get paid.

Unlike profit-sharing, these are one-off bonuses for recruiting new members and the group sales at the end of the year. If a company were to pay high bonuses for new recruits that a member brought in, soon members will be more inclined to concentrate on recruiting and less on sales of products and services. This type of income is not residual in nature because the moment you stop prospecting, you will not earn anything.

Shun illegal pyramid scheme

Do not choose a company if it place high priorities on recruitment and less on sales of consumables. They are more interested in signing up new people. Normally these schemes require new recruits to pay a large sum of money as an initial investment before he got the rights to start to recruit his own down-line. There is no selling required and according to certain laws of your country, this would deem this type of business as a pyramid scheme which could be illegal. Learn to choose the best networking companies with massive opportunity for growth and earning of residual income.

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