When I was introduced to the network marketing concept 35 years ago, it didn’t take me long to understand the incredible potential for making a good income.

What I didn’t understand very well however, was how important the compensation plan structure was to my earning potential.  I wish I knew then what I know now.

The compensation plan is critical to how quicky and easily you can make money in your MLM business. And believe me, not all compensation plans are created equal.

First and foremost, the compensation plan should favour the MLM rep more than it does the company.

Below are our top things you absolutely want to evaluate in a compensation plan. Discuss these points with your potential new sponsor.

Sales Volume Isn’t Flushed

The first company I joined flushed unused sales volume at the beginning of each month. At first I didn’t have any sales volume so it didn’t bother me. However, after a few months I found myself coming up just short of reaching the next sales volume threshold and having to start at zero again – very frustrating!

The temptation to order extra product to reach the next threshold was huge knowing that if you didn’t the volume would be flushed. I purchased more a few times, was congratulated for reaching the next level, but felt like I had cheated. Instead I would hound people to buy one more product so I could reach a new sale volume rank and not waste sales volume. It wasn’t good.

After a couple of years of not making any significant money I left the company.  Fortunately, we’re now with a company that doesn’t flush points.  Any excess volume simply carries over to the next pay period.

Sales Volume Accummulation Not Limited by Depth

As you start to build a network marketing business, the people that you introduce to the business are “level 1” people (or depth of 1) and the people they introduce would be “level 2”, etc. A growing business may be 10’s, 100’s or even 1000’s of levels deep. As I’m writing this Ruth & my organization is 1000’s of levels deep.

Many MLM compensation plans restrict the accummulation of sales volume by depth. For example, if the plan says it pays 5 levels deep (5-8 levels is common), then sales volume from anyone at or above “level 5” in your organization is added to your total sales volume and you earn commission on this volume. The argument you will hear that this doesn’t impact your earning potention is that you build your organization wide instead of deep.

When first getting started having an organization that’s 5 levels deep seems huge. However, if you plan to build your business long-term, you will soon reach the point where you may have more people in your organization below 5 levels deep than above. And you won’t be getting paid on those deeper levels!

In the above example, if someone came into your organization at “level 6”, was a natural at building a network marketing business and built a large organization, you would get nothing.

In our current business we accummulate sales volume on every sale independent of where they are in our organization or who introduced them. This is huge! And very profitable.

Easy to Understand Compensation Plan

I’ve been shown compensation plans that were so complex and confusing that I couldn’t understand how commissions were calculated.

I see this as a huge red flag!

A complex plans means there are lots of conditions and rules. Conditions and rules usually favour the company and not the associate. A complex plan also makes it difficult to know whether you’re receiving the correct amount of commission. I always wonder whether a company is attempting to hide unethical business practices behind complexity.

The biggest issue, however is whether the plan can be easily explained to others.  Can you picture yourself explaining the compensation plan to others with enough clarity that they would want to join you. It not, don’t waste your time and effort, there are plenty of other MLM companies.

Commissions are Based on Product/Service Sales (not Recruiting)

Some companies pay a one-time bonus for recruiting new people who purchase products or services. This is perfectly legal as long as they are buying something and the bonus is consistent with the value of the purchase.

Be cautious with a network marketing company that pays commission on the signup fees paid by new people. If commission is paid and no product/service is sold – do NOT join this company. This type of commission is border line illigal and may fall into the category of ‘ponzi scheme’.

Frequent Commission Cycle

Many plans only pay commissions monthly – ie 12 times per year. For a plan that flushes sales volume this time is needed to accummulate sales volume from zero. The better plans pay commissions weekly and in some sitiaution even daily.

The Ultimate MLM Selection Checklist Free Download


List of Network Marketing Companies (L-Z)

Lifestyles USA, LifeVantage, Limu, LiveSmart 360, Livinity, Longaberger Company, Lucky Charms, Lyoness America, M Studio, Inc., Maddy Moo Creations, Mandura, Mannatech, Inc, Market America, Mary Kay Inc, Max International, Mazu Global, Mega Holdings, Melaleuca, Inc, Metrin, Mia Bella (Scent-Sations), Mia Mariu, Miche Bag, Michele Baratta At Home, Migalo, Momentum Plus, Monavie, Moneylogic, Moolala, MoveMyNetWorth, Multi-Pure, MXI Corporation, My 1×1 Shop, My Shopping Genie, National Companies, Inc,Natural Health Trends, Nature’s Liquids, Nature’s Sunshine, New Image International, New Sun, New Vision, NEWAYS, NHT Global, Nikken, Nisim International, Noah’s Ark Animal Workshop, Noevir U.S.A., Nouveau Cosmeceuticals, Nu Med, Nucerity International, Numis Network, NuSkin Enterprises, Nutronix International, NuVerus, Nuvia3, Omnitrition, One24, Orenda International, Organo Gold, Oriflame U.S.A., Oxyfresh Worldwide, Inc, Oxygen4Energy, Paparazzi Accessories, PartyLite Gifts, Passion Parties, PeoplesWay, Pixingo, Pola Inc, Premier Designs, Inc, Prepay CPA, Primerica Financial Services, Princess House, Inc, Private Quarters, Procard International, Promedx Health, Pure Romance, Purely Gourmet LLC, Q International, Qivana, QNet, Racco Cosmetics, Rastelli Direct, RBC Life Sciences, Regal Greetings & Gifts, Regal Ware Worldwide, Regeneration USA, Reliv International, Rena Ware International, Inc., Rendi, Reserve Your Cup, Resorts 360 Vacation Club, ReVita, RevvNRG, Rexair, Inc, Rodan and Fields, Sabika, Saladmaster, Inc (Regal Ware, Inc), Salu International, Scent-Sation Inc (Mia Bella), Scentsy, SCNet Romania, Scriptures, Seacret, Self Indulgence, SendOutCards.com, SeneGence, Shaklee Corporation, Shelf Reliance, Shure Pets, Signature HomeStyles, Silpada Designs, Silver Coin Reserve, Silverline Club, Simplexity Health, Simply Fun, SimplySaid, Sisel International, Skinny Body Care, Snack Healthy, Soft e World, SomaLife International Inc., Soul Purpose, SoZo Global, Spa Sensations, Speak Asia, Sportron International, Stampin’ Up!, Stanley Home Products, Starlight International, StarScapes, Stella & Dot, StemTech HealthSciences, Inc, Stimulife, Story Time Felts, SwissJust Corporation, Sydney Andrews, Symmetry Direct, Tactic Trading, Tahitian Noni International, Take Shape For Your Life, Talk Fusion, Tastefully Simple, Teaporia, The Balance Company, The Happy Gardener, The Hemp Network, The Limu Company, LLC, The Longaberger Company, The Pampered Chef, The Right Solution (TRS), The Royal Network, Thirty-One Gifts, Tidings of Love, Tomboy Tools, Inc.,Touchstone Crystal, Inc.,Traci Lynn Fashion Jewelry, Travel Reaction, TraVerus, Trevo, Trivani International, TriVita, Tupperware, TVI Express, U Design Jewelry, U.S. Aloe, Ultra International, Unaico, Unicity International, Univera, Universal Wellness, USANA Health Sciences, Inc., Usborne Books at Home, Vantel Pearls in the Oyster, Vemma Nutrition Company, Veo Natural, Verdant Spring, Inc., Versativa, Vi-Tel Wireless, LLC,ViaViente, Ltd, Virgin Cosmetics Company, Viridian Energy, ViSalus Sciences, Vita Craft Corporation, Vitamark International, VitaMist Spray Vitamins, Viva Elite, Viva Life Science, Viviane Woodard, Votre Vu, oyager Health Technologies, Waiora International, Watchers, Watkins, Wealth Masters International, Wealth World, Wellness One World, West Bend Company, Wildtree Herbs, Inc,World Discovery Club, WorldVentures, Wow Green, XanGo LLC, XB Fit Energy, Ximo, Xooma Worldwide, Xyngular, Yanbal International, Yoli Inc., Young Living Essential Oils, Youngevity, Youth Flow, Youth Juice, Yanbal International, Yoli Inc., Young Living Essential Oils, Youngevity, Youth Flow, Youth Juice