MLM Network Marketing Compensation Plans

Essential Keys to Motivating Your Distributors

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For a direct selling company, your independent distributors hold the key to your success. Think of them as a volunteer army that needs to be continuously motivated to stay active. Financial rewards are only a part of what motivates distributors: they also need recognition and the feeling of being part of a worthwhile community. However, money is important, and getting your pay plan right is essential to the success of your direct selling enterprise, whether it is just launched or seeking to grow. So let’s take a look at MLM network marketing compensation plans.

The Real Function of an MLM Compensation Plan

Here’s a mistake to avoid: confusing your MLM network marketing compensation plan with wages or salaries paid to employees. Direct selling is different. Your compensation plan has one overriding function: motivating actions that grow product sales and recruitment. There’s a challenge here: as distributors develop and achieve higher ranks in the organization, the activities you want from them need to change. Your MLM network marketing compensation plan must be designed to adapt so that it motivates different behaviors at different levels of the organization.

Designing this well is critical to your long-term success. If your plan fails to motivate optimum activities, this can weaken your sales and recruiting. On the other hand, one of the main drivers of growth can lie in the effectiveness of your MLM network marketing compensation plan.

Types of Plans

As you get to know the field of MLM network marketing compensation plans, you discover there are many different types of plan. Four common ones are listed here:

  • Unilevel
  • Matrix
  • Binary
  • Stairstep Breakaway 

If you know something about the industry, you may already have a favorite among these. People often ask the Sheffield consultants about their favorite kind of plan. However, when it comes to choosing  your MLM network marketing compensation plan, this is the wrong mindset. The best kind of plan will depend on your product, the people your product is designed for, and your sales methodology. When it comes to compensation plans, there is no “one size fits all.”   Every business has its own assets, character and objectives: the pay plan must be designed to match these.

However, no matter which type of plan you choose, your goal is always the same: to stimulate the activities among distributors that will increase sales and recruiting long term.

The New Hybrid World

Today MLM network marketing compensation plans need to take account of the many facets of the modern direct selling industry. In addition to the traditional multi-level organization of distributors, these many include:

  • One- or two-level affiliate systems
  • Customer referral reward programs
  • Influencer marketing
  • Professional resellers
  • Online marketing by the company (with an associated bonus pool for distributors)
  • Group selling or parties, both in person and online 

With so many different ways to market your products, it’s important to maintain the correct balance within your MLM network marketing compensation plan, ensuring that distributors never feel the company is competing with them, or that their best efforts at growing the business are going to waste. A thorough understanding of the new world of direct selling is something you can and should expect from whoever designs your MLM network marketing compensation plan.

The Dream of “Simple” MLM Network Marketing Compensation Plans

Many people are looking for a “simple” compensation plan.  Company founders unfamiliar with the industry sometimes complain if they are presented with a complex plan. But would you want your computer to have a “simple” processor?  Of course not. You expect your computer to be complex on the inside. At the same time you expect it to be simple to use. The same principle applies to MLM network marketing compensation plans. The plan needs to be sufficiently complex to reward different distributor activities at different levels of the organization. At the same, it should be easy for people to use from day to day. This is achieved by the way the plan is taught, not by the way it is designed. 

A new distributor will be overwhelmed if you try to explain all the details of the entire plan. All distributors need to know are the actions required to make money as fast as possible.  When it comes to MLM network marketing compensation plans, your attention should be focused on teaching the optimum actions, not explaining all the different levels of compensation. By consistently taking the right actions, distributors will learn in a practical way how the pay plan works. Financial reward reinforces the optimum activities, and these get repeated. This is the best way for a distributor to learn the plan. 

The Sheffield Group will provide you with the optimum design of your MLM network marketing compensation plan. But more than that, we’ll help you teach the plan in the most practical and effective way possible.

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How Sheffield Can Help You With Your MLM Compensation Plan

Sheffield’s inhouse team brings exceptional mastery in all aspects of designing MLM network marketing compensation plans. However, pay plan design is just one of our strengths, and founder Mike Sheffield is renowned as an industry thought leader in all aspects of direct selling company launch and growth.

While the right compensation plan alone cannot guarantee your success, getting this right will help you draw the greatest  benefits from all the other components of your business. Take a look at the scope of services and resources the Sheffield Group can offer your company:


  • Concept and Product Review
  • Compensation Strategy
  • Marketing Strategy
  • Sales Pathways
  • Product Positioning
  • Distributor Recruitment Strategies
  • Financial Modeling
  • Culture Development


  • MLM Software
  • Branding and Design
  • Website and App Development
  • Online Positioning and Marketing
  • Social Media
  • Executive Recruitment
  • MLM Law

Your Next Step

If you’re looking for MLM network marketing compensation plans from the most experienced team in the direct selling industry, your next step is clear. Get expert advice! Your first conversation with a Sheffield executive costs nothing, so now is the time to reach out and make an appointment. Simply call us, or click the Message link below.

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