One of the questions I hear the most is “what is the Best Network Marketing Compensation Plan?” Which one is better a Binary or Uni-level? A Matrix or Stair Step Breakaway?
Today I'm going to help you get an answer to this question.
It's Not In The Name
I mentioned 4 compensation plan types: Binary , Uni-level , Matrix and Stair Step Breakaway , but there are also some hybrid plans that will combine several plan types into one compensation plan. All these plans have their own strengths and weaknesses. And considering the four personality colors, one plan may work with your personality and a other plan could be your worst nightmare.
Now back to the question, ” what is the Best Network Marketing Compensation Plan?
This is what I have learned from a great leader in the industry:
“The best compensation plan is where you make the most money, with the least amount of people
You're Probably Not A “Wham Bam Thank You Ma'am Sponsor Monster”
Let's take a closer look at that answer!
The most amount of money, with the least amount of people.
I can hear people think: ” I only have to sponsor 1 person and I will make 7,000 dollars. ” But that's not what we are talking about here. We are talking about walk away, monthly recurring, residual income. So no sponsor bonuses, or build the builder bonuses, no star ship space commander bonus or something like that. Income coming out of selling your product or service to an end consumer.
Beside on average, people will only sponsor 2,7 prospects during their entire career in network marketing, so to base your future on recruiting would not be the smartest thing to do!
The Magical Formula .
When you look at compensation plans they all seem rather dazzling, with all their numbers and levels and so on. But there is a formula to determine if you're compensation plan is paying out right. It's called: The 10K Formula.
With this formula you can rather easily figure out how many active people you will need in your organization to make 10K a month.
First we take a look at the compensation plan and look at the percentages that they pay out on retail sales and down how many levels.
You're in a compensation plan that pays you for your personal retail sales 15%, and on your first level 5% second and third level 4% forth and fifth level 3% and sixth level 5%
Now add all these percentages together and divide them by the number of levels.
15 + 5 + 4 + 4 + 3 + 3 + 5 = 39/6 = 6.5%
This is the average percentage you will receive on retail sales in your organization. To determine how many people you will need in your organization to make the 10k a month you have to look at average amount of money customers spend on your product or service. In most companies this is 100 dollars. Now take the average percent of this $ 100 so you know what you make per sale and then dividend 10.000 by what you make per sale and you will get how many people you need.
6.5% of $ 100 = $ 6.50
10,000 divided by 6.50 = 1,539 people to receive 10K a month
The lowest amount I know of is around 450 active people in order to make 10K a month. Now figure this number out and see how much work you have to put in!