The Marketing or Compensation Plan


The compensation plan is very important. It shows how much work you need to do to get paid this much. All marketing plans have their own advantages and disadvantages. Different companies offer different margins for their products. The key to remember in margin comparison, if the company pays the distributor too low, you might not survive; if the margin is too exorbitantly high, you might earn a lot, but your retail customers will suffer and the business might not be long term.

Before I share with you a few more popular type of marketing plan to give you an idea about what company will offer what, I wish to highlight two things in every plan: DEMOTION and MAINTAINANCE

DEMOTION means dropping from one MLM position to a lower one (usually resulting in a loss of future potential income) or your remainder quota required to reach a certain target is increased (the volume achieved in the past do now count towards the grand total anymore) Demotion is an important factor to consider in every marketing plan as someone who suffers demotion suffers a sudden loss in income and could be very embarrassing to others.

MAINTENANCE (sometimes called autoship) is the minimum amount of sales volume (usually every month) a distributor or serious business builder has to buy either his own personal volume or combined with group sales in order to maintain his rank, be eligible for bonuses, overriding commission or sometimes even maintain his distributorship. Having maintenance or no maintainance all has its pros and cons. I will highlight 3 scenarios to give a clearer picture.

A) MANDATORY MAINTENANCE

Some companies require you to purchase products every single month. This is good if you have built a large organization and it ensures you have guaranteed income every month. Not good if you are forced to maintain and you are not making money in your business. If you are in love with the product and don’t mind paying for it every month then it is fine. But this can cause a person who is not seriously building or is still struggling with his business some pressure and it is one of the main causes of drop out in MLM.

If the maintenance is too expensive, people might shun the company. However, the upline with a lot of people in his group can build a large stable income this way. Some companies may not require you to maintain at the early stages and increases the maintenance after they achieve a certain rank.


B) NO MAINTENANCE

This is very good for people who have just started their business or for people who is just casually ‘trying out’ an MLM. There is no pressure and a person can be in an MLM for years but still at the same rank.

The bad news is that it might not be good for the long term (because no maintence means no downlines need to buy anything) unless your group is in love with the product or if you and your downlines have built a solid customer base and the demand of the product it there.


C) OPTIONAL MAINTENANCE

This is also very good for people who just started or the casual type. They will only ask you to buy a certain volume of products when you want to override your commission from the company. This is also very good in the sense that you are not pressured to pay maintenance and you only pay when you are making money.

There is one problem with this, however. Among the serious business builders if the downlines are not producing any sales, even having a large organization will not pay you well if not at all (just like a zero maintenance company, no downline sales means those in the middle will not maintain, causing a chain reaction all the way to the uplines at the top). This is a hollow organization where your rank/title means nothing without income.

Next, I will go in detail about the more popular types of plans…

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