Archive for category Compensation, Rewards, and Incentives

Comp Plans: EVOLUTION (Part 2)

(See also – Part 1: The best compensation plan in the world)

It’s impossible to understand the variations in compensation plans without defining MLM.  So, what is MLM?  Go to Google type in “what is MLM” and you’ll get an onslaught of varied opinion.  The best descriptions are those that start by defining it from a surface, face value approach.

Multi-Level Marketing:

Multi:  More than one.

Level: Generation or degree of separation.

Marketing:  “the total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.” (reference.com)

So, what is MLM?  Any business where “participants in the marketing program may recruit other participants”[1] and where “commissions, cross-commissions, bonuses, refunds, discounts, dividends, or other considerations in the program are or may be paid as a result of”[1] a sale of a product or service “for valuable consideration”[1]  “through independent agents, contractors, or distributors, at different levels.”[1] Read the rest of this entry »

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The best compensation plan in the world… (Part 1)

So, what is the best compensation plan in the world? Well, let’s look at all the factors. This issue is often the subject of much debate and conjecture, typically filled with trite cliche phrases like, “building deep is where the profit is” or “going wide is the key to a stable business.”

Is it really just that simple? Could I end my soap-box right here before it starts by leaving in your minds just these two simple phrases? Oh, how I wish. This decades old scuffle won’t end that easily, won’t end with this article and this topic wouldn’t be much of a topic at all to blog (read: rant) about if it really was that simple… now, would it?

No, this is not a simple topic. Many might tell you it’s simple by stating phrases like, “The binary is the best comp plan in the world,” or “I will only build in a matrix,” or “The first thing I look for in a company is to see if they have an Australian plan.”

Before we can “wash our hands” of these comments we have to first clearly understand:

  1. The evolution of MLM compensation plans
  2. Elements of the various MLM plans
  3. What elements (bonuses/structures) encourage which kind of human behavior
  4. How different MLM plans might function within different
    – demographics (old/young, male/female, liberal/conservative, etc)
    – product pricing (company cost & retail/wholesale pricing)
    – consumption behaviours
  5. How goals are critical in choosing the best compensation plan Read the rest of this entry »

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