Choosing or developing the correct compensation plan is critical. Your decisions in this area can have unexpected, far-reaching and highly detrimental consequences. A great many MLM start-ups come to me with a plan that they have gleaned from some or other MLM company. They have no idea what behaviors the plan drives and are unaware of the long-term implication. It sounds cool and they understand the mechanics, so they charge blindly ahead.
I have been called into many meetings with big companies who are trying to change their compensation plan. In their ignorance, to save some money or for the sake of expedience, they copied a plan from some other company. They regret their choice of plan bitterly as it is driving all the wrong behavior, creating incorrect structure and paying out too little or too much. And this is the exact same plan that some enthusiastic new start-up company is blindly adopting - what a mess!
I recommend you get an expert to advise you. The compensation plan is a critical part of your success and it needs to be perfect out of the blocks. At least 20% of your network will be driven by money and you need to make sure that they can believe in the compensation plan totally.
It is impossible to train your IBOs to understand the entire marketing plan from day one. You therefore need to break it into simple sections and provide intensive training in each section as they become relevant. For example, a new IBO needs to have a high-level overview of the compensation plan's best elements, an in-depth understanding on how to maximize the commission as a beginner and training on what is required to take the very next step in the business. At every step you need to measure your IBO's understanding and ensure that they are ready for any promotion they may qualify for. This can be achieved through sponsor training, weekend seminars, online courses and next step documentation.
As with the product, your compensation plan needs to be credible. If your IBOs do not believe they can earn the commissions you advertise, they will stop working and you will lose them. The very best way to gain commission credibility is to have a few parade horses. These are members of the team at all levels that are earning good money. There are several ways to do this:
1. Get the successful members on the stage to provide a testimony of their success. They can mention the impact that their commission is having on their life without mentioning their income. It could be as simple as paying school fees or as extravagant as living a large lifestyle. Remember, a new IBO is not likely to believe they can earn $100K per month so meet each group where they are. Having a person earning $100 per month can be very powerful if they can point to how easy it was to achieve.
2. Feature your top earners in various ranks on your website and in your newsletter. Don’t focus on their actual income, rather focus on the impact that the income made on their lives. $1000 per month is $12,000 per year and that may have afforded an amazing international holiday.
3. With each training session, especially the “Next Step” training, focus your IBOs on how their income will increase and make sure that your compensation plan will actually result in an increase.
The quickest way to destroy your business is by changing your compensation plan. The second quickest way is by having a compensation plan that needs changing. I cannot stress this enough. Get a professional to design your compensation plan. If you are hell bent on designing it yourself, please take the time to read my compensation blog post - and then get a professional to design your compensation plan!
Take a moment to measure your compensation strategy and training and give yourself a mark out of 20.