How Your Compensation Plan Helps You Retain New Distributors
There is always a lot of hype about the big money that can be made in MLM.
Presentations showcase income potentials by creating examples of checks that “could” be earned. They usually have very high $ amounts that get the prospect starry-eyed.
Some examples take a sampling of a downline’s highest monthly earnings and combine them into one hypothetical month.
Another example is to show a possible 4 or 5 level downline with 2 or 3 superstar builders.
Then the potential commission that could be earned by You, the potential upline sponsor, is shown.
The problem with these kinds of examples is that they do not accurately represent reality for the average person who joins an MLM.
Very few distributors ever create a lucrative downline with a handful of superstar builders, or distributors who make top commissions every month.
Additionally, no one ever mentions to the new prospect that to make a consistent 5 figure income takes several years of dedicated work.
A more accurate example of earning potential is to answer the 10K question.
How many people (distributors and retail customers) does a distributor need in his/her downline to make $10,000 a month in residual income?
Residual income does not count one time bonuses or superstar 1% payouts.
Residual income is only the commissions paid on group volume from product sales.
The 10K question also gets prospects starry-eyed since so few people can actually envision making that kind of monthly recurring income.
The demonstration that needs to be made to answer a more realistic question is to show how to make new distributors financially successful in the first 2 –3 months.
Most new distributors walk away from their MLM business because there is no financial reward.
A pay plan has to be structured so a new person working part time can start making a few hundred dollars a month within the first couple of months.
My fellow mentors, Bob and Anna Bassett , have called this the Half-K Question.
Their example asks how much money will a distributor make if he/she generates $500 a month in sales.
This could mean having one distributor in the downline and a handful of retail customers.
Find the commission the company pays for volume. It could be 5%, 10%, or up to 40%.
Commissions are figured counting volume points, but the percentage is paid on the dollar amount of sales.
If the commission is 5%, then multiply 500 by .05 to get your commission $ amount of $25.
A commission of 10% on $500 is $50.
A commission of 20% on $500 is $100.
This isn’t going to buy anybody a yacht just yet. But it does give a prospect a realistic idea of how hard he/she has to work to make a hundred bucks.
The first $100 is just the first step to achieving the $10,000 a month income. The next $100 is the next step and so on.
Know your compensation pay plan so you can figure out the Half-K Question.
Know how you will make your first $100 and know how easy or hard it will be for the people you sponsor into the business to make their first $100.
If you need help figuring it out, just ask!
Believe In Your Success, I Do!
Karen
mentor.karen.j.miller@gmail.com