Top Network Marketing

Continuing on from my previous post…

Last time I was talking about marketing plans, and especially those with a two-tier, front-end/back-end structure.  If, as I said, nobody earns very much from the “front end” of this plan, at what point does the big money come in?

Well (if it comes at all) it comes from the back end of the plan.  Once a distributor reaches the top of the “stair-step,” front-end scale, for commission purposes that whole group "breaks away" from their sponsor’s "personal group."  Meaning that the sponsor doesn’t earn even the small margin that we conjectured last time on that group volume.

However, that’s not the end of the story.  With this plan the upline may become entitled to a commission – typically starting at 4 or 5 percent — on the breakaway group’s turnover.  (Indeed, to earn a sizeable income with this plan, your whole objective is to build more and more breakaway groups, which themselves need to grow and spawn other groups under them.)

You’ll notice I said may become entitled.  That’s because this override cuts in ONLY if certain conditions are met each month.

Here are some typical conditions:

• The upline sponsor must continue to personally buy a set minimum of the company’s products each month.
• He or she may have to service a minimum number of retail customers.
• The sponsor has to satisfy a personal group volume requirement, without counting the breakaway group’s volume.  In other words, this volume can only come from other sources — but come it must.  It can be quite a shock to the system, when volume you’ve become used to counting is suddenly taken out of the equation.
• The breakaway group itself may have to produce a minimum volume requirement.
• The sponsor’s commission rate will usually depend on how many "qualifying legs" he or she has in that period.  A “leg” is defined as a downline group emanating from a person in your front line.  A qualifying leg is a leg containing at least one qualifying breakaway group, or that produces a certain amount of turnover.

(With all the rules and conditions this plan has, you can see why it’s not possible to say that $X of group volume will earn you $Y of commissions and bonuses!)

By the way, by “minimum” I don’t necessarily mean “small.”  I just mean that the company sets whatever minimum figure of turnover it considers appropriate for a group to qualify at different levels in their payment plan.  It might be 2,000 wholesale dollars (or points) per month; or it might be 10,000 dollars, or even 25,000 dollars.  Obviously, this is something you need to know in advance of making your decision.

Having worked a number of these plans myself (as I said earlier, lots of the bigger, older companies use them), and gone all the way to the top in one case, my main concern with them is that they seem inherently difficult for the part-time person and the non gung-ho person to succeed at.

When I say succeed, I mean to earn at least one or two thousand dollars a month on a lasting basis — say for more than a year or two. 

Part of the problem is that, yes, we all know that in the real world you have to accept postponed gratification — to gather the wood before you can light the fire.  But what happens in practice with this type of plan is that only the most committed, energetic, never-give-up people ever reach that “critical mass” and momentum that propels them on to a big, profitable, self-sustaining business.

Now I’m not suggesting any of this is unfair:  just that you need to be aware of it.  It would be foolish to go in with no idea of what was really required to earn various income levels in the plan. 

Remember: what I’ve said about this plan is based on my observations and experience over a ten-year period.  However, I don’t expect everyone to see things the same way.  And of course, there are no doubt some variations out there that address some of these problematical situations.

But in any event, I’d rather see you put your hard work into a company where the distributor earnings are spread more evenly through the ranks, instead of all bunched at the top.  And where part-timers can earn a fair reward for their efforts.

I’ll return to the subject of MLM payment plans shortly.  Fortunately, there are more modern plans which are, in my opinion and experience, much more productive!