MLM Network Marketing Compensation Plans

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.

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.