Top 3 Tips To Avoid Compensation Plan Nightmares

When speaking to groups of people, I’ve often commented on how tragic it is, that there exists no school or class you can attend, to find out what to look for & what to stay away from in a network marketing opportunity.  

This checklist is meant to change that for you, so you can avoid wasting many months, & even years building your dreams with the wrong vehicle.  

Secret 1:  Skip the percentages & find out what the commissions are in REAL dollar amounts. 

Unfortunately, many companies like to explain their commission payout rates in ways that can be difficult for normal human beings to understand.
They speak in terms of product volume, commission percentage per level, ambassador bonuses, etc.
I believe this was one of the reasons I struggled in network marketing for so long before finally winning my freedom.

I thought all the ‘what if’ scenarios’ & big percentages sounded appealing without knowing what any of it meant to my bank account.

There is one question you must ask that cuts through all of the gibberish.
How much money, per customer/distributor do I earn on on a monthly basis for those who stay active on my team?

When someone says… Oh… well, you earn 7% of their product volume. You  want to ask them: “In dollars —>  What does that mean?”

Once you have this number, you can then do some REAL calculating as to what is going to have to happen to bring you to your desired monthly income. Without this number, you are making all your decisions based on hype, smoke & mirrors. 

For example, if the compensation plan pays $4.00 monthly residual income and your goal is $10,000 a month, you can instantly see that you’ll have to build a team of 2,500 people to hit your goal. 

Boiling down the comp plan to an actual – per customer dollar amount – allows you to see, in concrete numbers, what’s going to have to happen for your dreams to become reality. 

It also allows you to compare apples to apples without all the confusion that some companies try to throw at you in compensation plans that can be harder US Tax code to understand. 

Secret 2:  Find out if there are any quotas in the comp plan.  

I don’t know about you, but I got into this business to be free. I imagine that’s why most people decide to get into network marketing in the first place. That’s why, it really ruffles my feathers, when I see companies place all sorts of ongoing production requirements on their reps, so they can qualify for commissions that they brought to the company. 

For example, one of my friends, a top leader in the profession, built like a $15,000 income in a very well-known and respected network marketing company. Little did he know, that in their policies & procedures, ongoing monthly personal enrollments were required to collect your full residual income check. He called me, one day, absolutely beside himself, because the company had sent him a check for $250.  

They reasoned, that because he hadn’t produced his required monthly enrollments, they had the right to cap his check at the $250 amount. 

Trust me. If you’re going to invest your precious time building a passive income from home, you want to know about these sorts of requirements BEFORE you build a big team. 

Fortunately, there are companies out there who still believe in freedom and choose not to handcuff their reps with these types of shenanigans. 

Secret 3:  Find out how realistic it is for you to hit your income goals, even if no one else produces.  

One of the shocking realities I eventually woke up to, was that hypothetical growth charts, shared in most network marketing presentations, were totally unrealistic.  In other words, very unlikely to occur. 

You know, when they tell you that all you need is 2, who get 2, who get 2… and in 12 months, you’ll be making $40,000 a month?  Hmmmmm. Through years of trial and error, I’ve discovered for myself, that things rarely ever play out that way. There’s this little thing called the Pareto principle – also known as the 80/20 rule, which says that typically (for reasons unknown), 20% of the people are going to do 80% of the work. On the flip side, 80% of the people are probably not going to do anything.

If this is true, you do not want to be in the comp plan that requires everyone to produce, for you to hit your income goals. I recommend you work with compensation structures that allow you to hit your income goals even if nobody else does a thing. 

The funny thing about this particular point: When I started using this one idea in my business, I began to have more duplication than EVER before. Probably because my team could see that their income, really was in their hands, so they went to work and made it happen. Basically, all you have to do here is find out how much you will earn, when you enroll customers and/or business partners.

If the numbers are so low that building a decent income requires people outside of yourself, to produce, this might be a red flag. Having a healthy payout for your personal production places your destiny in your hands, and like I mentioned before, will likely produce better duplication because your team members will realize the same thing. …That they too can build a good income, if they just go out and produce. 

So, to recap….

Here are the 3 top secrets to quickly evaluating MLM compensation plans & cutting through all the B.S.

• Tip 1:  Skip the percentages & find out what the commissions are in REAL dollar amounts.

• Tip 2:  Find out if there are any quotas in the comp plan.  

• Tip 3:  Find out how realistic it is for you to hit your income goals, even if no one else produces.  

If you apply these 3 tips, in your selection of a great company and compensation plan to build your freedom with, I sincerely believe you’ll be able to achieve your dreams faster and with much less stress.

To your freedom,
Paul H. 

PS – This report has been produced by my mentor Paul Hutchings
PPS – You can connect with me on Facebook here.  At the very least, you can develop a new relationship for your business, and if there’s one thing I’ve learned from 10 years in network marketing, it’s that success in this business rises and falls with relationships.

To your success!