Decision to Transition Comp Plans by Michael Sheffield

If you are considering the “Decision to Transition” of your present compensation structure to an MLM model, please take note!

Radical change may be necessary, but don’t jump on the first fad compensation plan that rings your chimes.  Your corporate and product mission along with distributor culture must be considered.  Adopting a plan that maintains your long-established principles while incorporating current trends should be your goal.

Today’s plans must address the following:

1.     Cost of new distributor sales kit should be modest making it easy to get started.

2.     Early payout of initial commissions and bonuses paid weekly is becoming the norm.

3.     A good plan provides bonuses balanced between the beginning MLMer who is just trying it on for size, the committed part time distributor truly working the business, and the totally committed leader focused on building a significant downline sales team.

4.     Reasonable Distributor maintenance qualifications to receive bonuses.

5.     Auto-Ship ordering for continuity when applicable.

6.     A balance requirement between distributor personal retail sales and rewards for building organizational sales volume.

7.     A “Plus” plan.  This means no disincentives for recruiters created by lost profit centers as the downline advances that might encourage leaders to suppress downline advancement.  All earned bonus levels are in addition to those previously earned, never in place of them.

8.     Distributor ranks and titles should be permanent once received, but distributor bonuses should be “Paid-as” the position for which they actually qualify during the pay period.

9.     Compression of levels or generations should occur to properly reward performers through maximum depth of income stream.

10.  The plan should be “Capitalistic” in its design to reward the business builders who contribute regularly to the company growth.  Beware of plans that are “socialistic” in design dividing available profits among many and encouraging a something for nothing philosophy.

If you are a traditional direct sales company considering transitioning to MLM or an established MLM just trying to play catch up in the evolving marketplace, a competitive compensation plan tied to today’s technology is only part of the equation for maintaining and growing your market position. You will be competing for your distributor’s time, not just their product sales or consumption loyalty.  Show them how to leverage their time while geometrically growing their income and you will put your company in the winner’s circle. Some companies are recognizing these opportunities and rushing to reinvent themselves. Others are watching intently and will soon follow, if only out of the need to stay competitive. As we have heard it said many times in business, “Lead – Follow – or Get Out of the Way!”