MLM, Network Marketing and Party Plan Pay Plan Guts !

ROD COOK B.s., M.A., M.B.A.

As one of 3 true MLM, Network Marketing or Party Plan compensation plan designers in the world with original copyrighted MLM pay plans I often weep when I see new companies launch! I look at over 1000 new companies a year! I love this great industry, but I see doomed companies jumping off cliffs everyday! MLM Party Plans simple are getting very competitive. Things are changing! This is my list of factors that make compensation plans work (or fail). Almost of the biggest failures violate these general guidelines that fit all types of compensation plans.

  1. Has this MLM pay plan been carefully studied and researched? The biggest disaster in the MLM NetWork, Marketing, and Party Plan Industry today is copying! New Company A copies the MLM (or Party Plan) pay plan from a "Hot" MLM, Network Marketing, or Party Plan program that is booming! The problem is Hot Company B is about to go broke and fold because they are pay out too much. New Company A's owner’s copy B's plan and proceed to go broke too! It’s amazing that so many new company owners can't do mathematics or have the common sense to ask an expert!
  2. Can you sell this MLM compensation plan? – Today, (especially with the Internet) the main cry is "The MLM, Network Marketing, or Party Plan has to be simple to explain (but strong)." Can I explain with a napkin sketch to a complete neophyte, how new distributors make money? That doesn’t mean there can’t be underlying complexities to award big hitters! They just need to be modular and separated so there is not a patchwork approach. People want a simple roadmap and convenience in their lives today. In the last few years the big boomers have been companies with simple modular bifurcated plans, strong products, and a good story in either pure MLM or Party Plans.
  3. Does the MLM pay plan encourage retailing ?– The crux of any MLM, Network Marketing or Party Plan, program today, with the heat on from regulators (they want 50+% of sales to customers), is how to retail products/services! Retail (regulators are a little confusing when they say retail) doesn’t mean that you don’t have to have a retail price on the products/services. It means that you need CUSTOMERS who sign up THAT DO NOT belong to the pay plan!? Are there incentives in the program for establishing and maintaining customers? If the thrust is 100% recruiting MLM type distributors in the long run forget it, your plan it is doomed. Some MLM Attorneys say they can defend your plan if you have smaller numbers of customers when you start out. Why? Logically you have to build a sales force first. The more customers you plan to get the better! Party Plans generally do not have a problem with this unless they push packages.
  4. Does the MLM compensation plan attract new MLM recruits? – This is difficult because the hottest plans are often illegal MLM pay plans (pyramid schemes)! They offer big pay for little effort. Balance this in your mind – In an honest program there has to be some provision so the serious new trainee/ recruiter will be able to recoup their expenses. Party Plans are good at this but, pure MLM takes more thought! The sooner you can move a person to a full time position (their primary income comes from your MLM company) working to build their downline the better! The plan has to be justifiable on the basis of legality, good attractive products, and an attractive MLM, Network Marketing, or Party Plan pay out.
  5. Does this MLM compensation plan reward MLM BG’s and keep little ones happy? - The very top guns need bonuses that pay deep or they won’t stay. "MLM Big Guys and Girls (MLM BGs)" want big bonuses on top of depth bonuses. If not, the "Big Guys (MM BGs)" are going to be after the company to pay them more (with the threat they will leave). The problem arises when the "MLM BGs" short sightedness comes up with a solution that takes money from the "little guys!" They then leave, and the "MLM BGs" decide to leave because their MLM downlines are fading!
  6. Does this MLM pay Plan encourage team building? - Are there benefits to the recruiter to go work "down" in depth with his or her MLM or Party Plan downline? Will they work with their a new distributors warm market? Are there incentives to build teams of talker/mailers? Can a new distributor search up his MLM upline and find support? It should not matter how deep the new person is! Can an MLM upline distributor benefit long term from working with a person 10 levels below them?
  7. Does this MLM compensation Plan retain distributors?– The break-even point (where MLM distributors will stay) of any comp plan is where distributors make enough money to pay for the products they use. The focus here is on the amount required for monthly qualification vs. how much the distributors are using or selling. This is a competitive point in todays MLM, Network Marketing, and Party Plan arena. If we can get a new MLM distributor to $250 a month they will not leave your company easily. A good goal is try to get distributors to $500 a month with a strong mix of customers. They will stay working for you part time for years.
  8. Are there incentives in the MLM pay plan (Party Plans included) for training? – Training is a core value of Network Marketing that is often ignored in compensation plans because of the past history and legal restrictions on training. It is "touchy" to pay MLM commissions to trainers however direct commissions can. Design a training platform in the comp plan. Build trainers and leaders! Ó


    Rod Cook is one of the major researchers in the Direct Marketing arena. He designs revolutionary new MLM and Party Plan pay plans. He has almost 40 years of experience in Network Marketing (MLM). He and his staff of reporters at the MLM WatchDog review and analyze almost 1000 companies a year. He has done this for 10 years of publishing and is one of the most knowledgeable persons in the world on the subject of MLM Companies, their sales psychology and pay plans. He consults with many companies and top MLM Distributors.

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