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PAY.TXT
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1994-10-26
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Payoff Pointers
All the above points are important, but you also
want to make sure you understand the company's
compensation and find it fair. If you devote a lot of
time and effort to MLM, and sales result, you want to
be sure you'll be treated well.
When looking at an MLM's compensation system, keep
these points in mind:
1. Frequency of payments. If you can promise
recruits they'll receive money more than once a month,
they'll be more likely to sign up.
2. Simplicity. A bonus-override system that's
too complicated to understand will discourage
prospective recruits.
3. Long-term bonuses. Such payments can give
your recruits incentive to stay with the program.
4. Marketability. If the product or service is
relatively easy to sell to consumers, distributors can
count on regular income, which will help your recruit-
retention rate.
5. Stability. Find out if the company has
changed its compensation plan recently. Has the
qualifying level been increased, the payout rate
decreased? These are all signs that you're not dealing
with honest people.
Another negative sign is a large increase in the
wholesale prices that distributors pay. The company
may say that price increases were forced by rising
costs, but inflation has been relatively tame for many
years. In fact, it has been holding steady at 3% for
the last two to three years. Certainly, there's no
justification for raising the price of mascara from
$7.50 to $12.50. When you see a move like this, it's a
sign that the company just wants to make money from its
distributors rather than work with them.
6. Minimums. Generally, there will be some
minimum amount necessary to remain a distributor and a
minimum amount of volume needed to receive bonuses.
Find out if your downline must be a certain size for
you to collect overrides and what levels of volume are
necessary for bonus commissions, leadership
commissions, etc.
7. Upside potential. Typically, an MLM company
will pay out about 35% - 60% of its sales volume in
total commissions. That is, out of every $10 order,
$3.50 to $6 will go to commissions, bonuses, overrides,
etc. If your MLM company is not in this range, find
out why.