The Industry of Opportunity
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"compensation analysis" Plan
One of the most important aspects to consider in a company is its "compensation
analysis"
plan — the set of rules that dictates how distributors earn commissions,
overrides, bonuses, and other compensation.
Four Major Types of Plans:
The Unilevel Plan
The Stairstep Breakaway Plan
The Matrix Plan
Binary Plan
A Little History "compensationanalysis"Plan
After decades of classic door to door direct selling by the Fuller Brush Man,
multilevel sales plans rose to popularity in the 1950s and 1960s (Amway, Mary
Kay, and Shaklee), which allowed distributors to earn money not only on their own
direct sales, but also to earn override commissions on the sales of the salespeople
they recruited, the sales of the salespeople recruited by their recruits, and so on
down the line. In the early programs — before the advance of computer
technology — it was difficult for a company to manage all the downline
information and payouts. So they usually allowed only "direct distributors" to buy
directly from the company. These people would then sell products to the
distributors in their downlines, collecting payment from them, and paying them
their commissions, bonuses, and overrides.
Today, thanks to affordable, powerful computers, as well as efficient delivery
systems such as UPS and Federal Express, there is no longer a need for direct
distributors to act as go-betweens. The new companies and most of the older
ones now allow all distributors to purchase directly from the company.
Go for the Goals when looking for your "compensation analysis" Plan
analysis"
plan — the set of rules that dictates how distributors earn commissions,
overrides, bonuses, and other compensation.
Four Major Types of Plans:
The Unilevel Plan
The Stairstep Breakaway Plan
The Matrix Plan
Binary Plan
A Little History "compensationanalysis"Plan
After decades of classic door to door direct selling by the Fuller Brush Man,
multilevel sales plans rose to popularity in the 1950s and 1960s (Amway, Mary
Kay, and Shaklee), which allowed distributors to earn money not only on their own
direct sales, but also to earn override commissions on the sales of the salespeople
they recruited, the sales of the salespeople recruited by their recruits, and so on
down the line. In the early programs — before the advance of computer
technology — it was difficult for a company to manage all the downline
information and payouts. So they usually allowed only "direct distributors" to buy
directly from the company. These people would then sell products to the
distributors in their downlines, collecting payment from them, and paying them
their commissions, bonuses, and overrides.
Today, thanks to affordable, powerful computers, as well as efficient delivery
systems such as UPS and Federal Express, there is no longer a need for direct
distributors to act as go-betweens. The new companies and most of the older
ones now allow all distributors to purchase directly from the company.
Go for the Goals when looking for your "compensation analysis" Plan
When choosing a company to join, the most important factor is not the type of
compensation plan, but whether that plan is achieving important goals for
distributors. Alfred White, senior management consultant at San Diego-based
Hamilton LaRonde & Associates, Inc. recommends evaluating each company you
are considering against the following characteristics of a good compensation plan:
Is it easy to enter into the opportunity? You should only have to buy a modestly
priced sales kit.
Are you rewarded primarily for direct sales, rather than for override commissions?
Are you rewarded for personally sponsoring others?
Are you rewarded for recruiting multiple levels?
Is the focus on selling products to the end consumer, rather than to your
downline?
Are you rewarded for training and supporting your downline?
Are you rewarded for high personal volume?
Are you rewarded for high group volume?
Are you rewarded for maintaining a monthly volume?
Does the plan provide for recognition?
Does the plan offer nonmonetary rewards and incentives, such as trips or cars?
Is the plan's monthly maintenance requirement reasonable - not so high that you
can never achieve it, and thus never receive compensation?
Conversely, here are some "compensation analysis" plan characteristics that should
send you running in the opposite direction:
A plan that does nothing to discourage deadweight distributors and
nonproducers.
A plan that encourages inventory loading or large investments in products.
A plan that emphasizes gimmicks rather than product sales.
Four Major Types of Plans
There are many different varieties of compensation plans out there. They often
have exotic names. But they tend to be variations on four major types of plans….
Last But Not Least click here to get free training on "compensation analysis"
or contact us at 903-253-0901
