There are some common misconceptions regarding compensation plans both for the distributor and the company that need to be explained further.

I will only be a serious builder once I find the best company plan .
There are people who do not work hard enough in their business, that they blame the plan for their failure. They blame the plan, the management, or even call them a scam. If you decide to leave a company for a better plan, make sure you leave strictly based on business reasons and not to justify your failure!

The compensation plan is not important; all I need to do is recruit people.
A good plan will make or break a company. When network marketers understand the company’s plan clearly and find that it works fairly for every distributor who works hard and income is generated accordingly, the down lines would not fall out and leave easily. In fact, when a leader of a whole group of down lines works, trains and motivates well, he would sustain the distributors’ enthusiasm right from the start till he achieves success too. As a rule, the team survives only if the down line builder has exemplary qualities for them to emulate and together they would all be able to make money.

Other considerations like payout, maintenance and even the joining fee play a part in the company’s survival. If a company has quite a high maintenance and their distributors are not making money, they will drop out even faster.

I must explain the entire plan to the prospect so that he understands.
A new person would probably understand only half of your plan initially. He would get very confused, so it is up to you not to try to make him understand everything about the business immediately .When he feels pushed ,he might not sign up even.
Keep the plan simple and explain in terms of benefits instead of features.
If you are starting your own network marketing company, outlining the benefits and writing in terms of potential earnings is more advisable because most people want don’t want to think too much.

If I want to start my own network marketing company, all I need is a good plan only.
Ultimately, the success of a network marketing company depends on many factors. The most important factor is who is managing the company. Even a company that is making the most money will still fall apart if it is not backed by a solid management team. Yes, a good leader and a few more persevering down line leaders who can help support newbies and train, support and motivate them too.

Other factors also include having a viable product. A good product ensures repeat sales and cash flow for both the company and the distributors. The plan should be designed to complement and synergize with all the other elements. At any time, each element should not be designed at the expense of the other.

If the company has a high payout to the multi level marketers, everyone will join the company.
If everyone in the company is enjoying extremely high commissions, you must observe the product more carefully. An expensive product does not necessarily mean that it is a product of quality or reliability If a product’s mark-up is too high, it may be good for the distributors in the short term and distributors sometimes find the products too unreasonably expensive even for own consumption or use. Then when they themselves are not consumers or users, how can they convince their customers to do so? Customers can sense the sincerity of network marketers in their sales promotion and this does not auger well for the sales in the long term. In this way high retail mark-up will hurt the consumers and devalue the product.

A product must rely on good repeat sales and reasonable mark-up at the retail level or else the company will not survive long. In their eagerness to make money fast, most companies simply grab any product and give it an exorbitant mark-up so that many builders would grab the opportunity to make fast bucks without any thought of its long term survivability.

In MLM or network marketing businesses, compensation plans are what distributors really want to look into as that is how he is going to earn his income from commissions from his and his downlines’ volume of sales. Compensation plans differ in every organization. It is indeed very overwhelming or even confusing for a newbie to comprehend the big circles and small circles at the first sponsoring or introduction into the business.

Therefore it would be an advantage to sponsor someone who is familiar with network marketing in the first place. However if a newbie is introduced then the distributor has to be patient and slowly familiarize him or educate him with the compensation plan and help him along the way in his new found business. The distributor has to find the right compensation plan that works for him and that can help him earn money. Therefore what’s most important is that he understands the plans well especially on how he can earn his commissions based on his downlines’ volumes and his own volume of sales.

Distributors will always be looking for new downlines to join him in his organisation. But before he goes a step further in roping in his downlines, it is almost imperative of him to master the knowledge of his company’s compensation plans. One will never know when one would meet someone who might have just left another company and is well versed with compensation plans already. How can the distributor be a good leader, exude the type of confidence so needed to influence others into the business if he himself is not well trained in the business yet?

It is not true that people join an MLM business because of a superior compensation plan. More often than not distributors might already know his new downlines as he would like to share his money- making venture with them too. Or they could be his customers who have confidence in his products or services and give him repeat sales. It can be said that it is actually the leadership, influence and confidence that attract new downlines to a good distributor. There could also be that chance opportunity that a company collapses, distributors have a fallout with his upline and there you are, some well trained people waiting to join you in your company. You will never know!

Now that we have set the record straight, knowing your plan and their plan well will bring you one step to closing a new sale or sponsoring a new distributor from another company.

It sounds unethical to pinch downlines from other companies. There is actually no rules that say you can’t really. However be careful not to do this within your company as you might be disqualified or terminated in your distributorship. Some form of competition is healthy but it would be better for the distributor to sponsor new people out of the company. Remember, your downlines might also want to leave you to join other companies too! Then it is time to realize and look into the reasons and improve in areas like leadership qualities, support and motivation that you might have failed to provide them with.

Having said so much about compensation plans of MLM companies , it is then advisable that a distributor invests a lot of time and effort at learning the details of his own company plans as well as other companies’ plans too. It would benefit him a lot to attend as many opportunity meetings as possible to gain more knowledge about compensation plans and other aspects of the business in order to succeed in his network marketing business.