Distributors are paid through compensation plans. These plans consist of rules. Distributors get commissions on their sales but rules are the ones that actually decide how much the distributors would get. Every MLM company makes two types of rules, positive and negative, to control the distributors. The positive rules enable them to acquire incentives while on the other hand negative rules warn them about going haywire.
Generally the rules can be of four types:
● Rules for governing the distributors
● Rules for qualifying for various commissions.
● Rules to curb the distributors from committing legal mistakes that would jeopardize the well being of a company.
● Rules to make the distributors disciplined.
Some companies pay the distributors, commission on the sales that had been made by them and some percentage of commission on sales made by the people forming their downline. In some companies distributors get 7 % commission for products or services sold by their direct recruits and 5 % on that made by the next level of recruits. This sequence goes on for other levels of recruits too.
There's restriction in some companies on the number of levels of recruits a distributor can be paid for. In some companies number of levels allowed are equal to the number of sales made, while in others, some other parameters are set. There are some procedures too that enable a distributor to create and head his or her own chain of distributors on achieving some targets of sales.
There is one more issue related to the returns of MLM that needs to be dealt with. It is regarding the debate, "which plan is the best of all the compensation plans with distributor's point of view?" Whoever works in the network marketing business claims that their individual company's plan is the best. It's true to some extent. Some companies pay better bonuses on personal sales and less on sales made by the other three levels, whereas there are others that pay pretty good amount for sales made by the recruits on lower levels. Beyond these there are some that distribute the bonus equally for all the levels of sales. Irrespective of all these if you are capable enough no one can stop you from making money. Be sure that you are making the right move, dealing with the right people because there are too many fake companies floating in the market that deceive people to make money for themselves.
People think that MLM is like getting salary for almost nothing. That's not true. The top most distributors too make sales and get paid for that. Only a part of his commission is from the other's work. Some youngsters are not aware of these facts and figures. That is why some companies take them for a ride. They lure them by saying that they can get richer in few days and would have to do nothing but get people to make sales. People should stay away from such cheats.
Getting into MLM business without knowledge would not give you any returns. Instead you would lose lot of money. Initially these expenses would seem to be nothing, but once you are a dropout, the money that you have spent on sample products, commuting charges, purchasing the prospectus, consultation fees and buying stuffs like books and tapes would suddenly add up to your expected one month's salary.
This business is just like any other business. A lot of hard work, planning, time and dedication are required to make it an established and successful business. Don't expect to build Rome in a day. It is next to impossible.
Joseph Then operates Sign ups company that helps thousands of online MLM marketers increase their downline for the past 5 years. They have served over 3,000 customers with over 50% as repeat customers. You can visit the site at http://www.trafficforless.com