Saturday, April 22, 2006

Analyze Compensation Plan

Choosing a company to join, the most important factor i not the compensation plan. Whether the plan is a achieving important goals for distributors. Here are some compensation plan that should send you running in the opposite direction. Plans that dose nothing to discourage dead weigh distributors and non produceder. Plans that encourage intentroy loading or large investment in products. Plans that emphasizes gimmicks rather than product sales.

Four type of Plan,
Unilevel Plan the principal advantage of the unolevel plan is that it's easy for companies to adminiser for distributors to explain to potential recruits. Chief disadvantage is it's lack of flexibility in achieving some of the goals mentioned earlier. Stairstep breakaway plan, the oldest marketing compensation plan. A distributor advances in rank and breaks away from his or her original sponsorship line. Chief advantage is that it has a good track recode,is easy to modify accepted by regulatory agencies, and is driven by volume and performance. Primary disadvantage of this plan is that it is sometime so complicate that it's difficult to explain to New recruits.
Maxtix Plan,
Plan looks like a grid in which a distributor is limited to a cerain number of recruits at each level. In a 3X5 matrix, each level down to five can have only three down line distributors. Matrix can attractive to novice distributors if they sign on with strong leaders who help fill their grids.

Binary Plan,
A distributor is allowed to occupy one or more business center each limited to two down line legs. Compendsation is paid on group volume of the down line legs rather that a percentage of sales of multiple levels of distributor. Payment is volume-driven rathe than level-driven. Binary cite several adavantages first they like the weekly payout. Group cooperation is promoted because payout in on a group volume and requires balancing of volume in each leg to be eligible for payout. How much of the sales dollars does the compensation plan payout to distributors? Most plan pay 35 and 45 percent of the company's wholesale purchase volume, and about 30 percent of suggested retail volume. Look for a plan that divides the pie in your favor, without
going overboard. Orphan Commission.
Avoid plan in which Orphan commission return to the company. Plan should be structured in a way that orphan commission roll up to the next qualifying distributor
that month, rather than return to the company. This approach is also called compression orhan commission from terminated disributor should be handle the same way. Lock-in look for plan that has the lock-in feature that is when you reach a certain level, you lock in and cannot be demoted because of a temporary drop in monthly performance.

[c] Briley Knox

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