- From my postbag the two burning issues appear to be; products, how important are they and how to choose the right ones, and the marketing or compensation plans, how can you understand them easily. We’ll look at products next time, but this month we’ll concentrate on how to make sure that you’re properly rewarded for your efforts by choosing a company with a lucrative compensation plan.
Compensation plans are probably the biggest minefield for distributors -- never mind for novices! Most companies seem to deliberately design their payment structures to be as difficult as possible for the average person to understand. Many of the plans SEEM to be totally different to each other. So it can be impossible for the novice to accurately compare them. It’s like trying to compare a VW beetle (bug) with a Ferrari without knowing anything other, than how many wheels they have, and what colour the car is.
There are only 3 types of comp plan in the industry, however much the companies would like to make it look as though there are thousands! So let me give you a simple example to use to compare accurately one with the other.
One of your first jobs will be to recruit some people who would like to make some extra money along with you. Let’s assume for now that you find 3 people who want to do just that. Then let’s assume that they do what you did and they recruit 3 people each. NOW STOP THERE! I know that many companies go on and on and on with the example but I’m interested in what you might reasonably do in your first few months in the right company. So you’ve now got a small group of 13 people including yourself. You all buy from the company £75 ($100) of products per month for retail sale.
I know of several UK companies where, if you did exactly what I’ve just described, you would not make one penny in bonuses from the company! One of them even advertises that it’s probably the highest paying plan! Going to the other extreme I know of one company where you would make £300! ($450) And there are hundreds that would pay you somewhere between £30 and £75 monthly. All for doing EXACTLY the same thing.
Now perhaps you can see why the marketing plan is one of the most important things about choosing a company. Because you can have the most fantastic company in the world with the most amazing products and a lousy comp plan unless you’re a businessperson of the calibre of Richard Branson or Anita Roddick your chances of making money are not high! On the other hand if you have a great company with terrific products and an excellent payment plan even a novice can make a respectable income quite quickly.
So if you’re trying to compare vehicles and you don’t understand the comp plan ask the person who’s telling you about it, to work out this example for you, on their company’s plan. Ask them “What would I make in my first month at the bottom position (First month and bottom position are very important for true comparison) if I sponsored 3, who sponsored 9 and we all did £75 of products at wholesale, NOT including my retail profit?”. If the answer isn’t a useful amount of money, that appeals to you, then keep looking. If you already understand a little about comp plans you might find a copy of a little American booklet called “Secrets of network marketing plans revealed” is a useful thing to ask your prospective sponsor for.
I’m back next month with some questions for you to ask about products.
This article was originally published under the title “Who wins? You or the company” in the UK in Business & Premises magazine in May 1997. ©1997 ESG
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