Understanding the types of network marketing compensation can be difficult. There are many types of plans, and choosing the best one is not always easy. Different network marketing companies go for different plans, complicating the issue further. Generally, the compensation plan depends on the volume of your sales. This article discusses various types of network marketing compensation plans and how to choose the best plans.
Types of Network Marketing Compensation Plans
1. Binary
The Binary Network Marketing Compensation Plan has two branches, each in a different business. The aim of this compensation plan is to ensure that each branch sells some minimum volume. If there is one branch that sells a lot, while the other fails to take off, then you will lose a percentage of your compensation.
2. Stairstep
The stairstep compensation plan is where most Network Marketing distributors start. You are promoted to a different level each month depending on the volume of sales.
3. Breakaway
Once your Network Marketing business reaches a certain level, a part of it can break away and become an independent business. Though many distributors feel they are losing what they worked so hard on, the breakaway compensation plan has its merits.
4. Matrix
A computer program assigns a member to the group the person must work with. It decides the position that the member can be assigned to. Of course, if you think that the person is more suited for another position, you can overrule the computer’s decision.
5. Unilevel
The Unilevel plan involves no promotion. The company pays you a standard amount once you have made the minimum volume of sales agreed on.
Parts of Network Marketing Business
Depending on the areas of the Network Marketing business where you will be paid, the compensation plan is divided among the business. Some of these parts are discussed below.
1. Retail Profit
The compensation plan for the retail profit area generally includes 50 percent of the package.
2. Representatives
If you are able to make a successful team of company representatives, it generally translates into some kind of benefits package for you.
3. Leadership Bonus
If you train successful team leaders who help the company by expanding its affiliate business and boosting sales, the company rewards you in some way.
4. Other Rewards
If you are highly successful in your business, the company may give you a bonus, including a free holiday trip or some other reward to show its appreciation to you. This does not generally count as a predetermined compensation plan, but is a pleasant surprise for most distributors.
Additional Help
If you have any other questions regarding the network marketing compensation plan, you can approach small business consultants for help. Choosing the right network marketing compensation plan is the first step towards a highly successful business.
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site smallbusinessconsultingdotcom