The Perfect Compensation Plan

I’ve been working with MLM companies and compensation plans for over 30 years, and one common misconception is that there is a “Perfect Compensation Plan” that would work for any company. There are several reasons as to why there is no perfect compensation plan; and in my next few posts I will discuss some of them, which include product, build strategy, and culture and community.

First is the product you sell. In order to have the perfect compensation plan for a product, you have to know some key attributes about your product. Some of these are:

• How much product will a customer buy?

• Demographics—what percentage of the population would use your product.

• Knowledge and training required to sell the product.

• Amount of time a salesperson will invest in each sale.

Once you understand these product attributes, design your compensation plan to reward the activities that will sell your product. For instance, you need to compensate a distributor very differently if the product is something that requires sampling and a party, than if it is something the customer can decide they need in 2 minutes.

A compensation plan has to reward the sale of your product. If you can’t get people to sell, then you can’t build a downline that lasts. First, understand the product—if you don’t do that part, then nothing else matters.

Want help building the perfect compensation plan for your company? Reach out to us at MLM Compensation Consulting. We offer data-driven compensation plan design and analysis.