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MLM Commission Plan Quality Enroller Roll-Up Bonus
I really think a component of a successful commission plan is the ability for the bonuses themselves to trigger the members own greed to have them stretch to pick the ideal product start package that is ideal for the company as much as the member.
It is usually best to have three distinct joining levels. A small which may simply be a qualifying order of the minimum amount of points to qualify in the commission plan so around $75 or so. Then have a middle amount of $250 or so, and a top level of around $500. Depending on your risk tolerance and ability to put together a package of products that makes sense for personal use an aggressive $1000 entry level can also be good. Keep in mind some States limit the initial spend to $500.
The $250 and $500 levels should be carefully thought out based on product mix so they tell a story like Value Pack or Leader Pack where it is not seen to be front end loading by the member but rather an intelligent way to join that makes both business and product sense.
A single product company has a much harder time of hitting a valuable mix as you really just need to sell cases of the same item. This can lead to Front End Loading Claims.
Multiple product companies tend to have an easier time with this type of bonus and package mix as it is natural to “Switch Stores” or get a “Value Pack” of all the companies top selling items.
Once the packages are defined you would determine the total amount of bonus that can be paid. Normally this would be an amount not more than half the available PV. If you are using a 3 level deep QEB Bonus, we then would split this amount into 3 levels. 50% 25% 25% often works well.
For example a $500 package that can afford a full 500 PV as items all have an 8x multiple or better would pay a total of $250 in total bonus’s between the Fast Start Bonus, Quality Enroller Bonus and Matrix or Binary Bonus.
In order to find out how much you can put into bonuses, you need to calculate your overall matrix or binary expected payout first. Once you know this, you can then get an amount needed to have the appropriate number of PV to go into the Binary or Matrix vs. the upfront bonuses.
In a 50% matrix/binary/unilevel payout scenario, on a $500 package with the 8x margins, this would end up leaving you 1/3 or 166.67 in volume to use in up front bonuses, and 1/3 or 166.67 points to go into the Binary/Matrix/Unilevel. Doing the math, you want to pay out overall NO MORE than $250, so that leaves you with $166.67 in Bonuses Added to 50% payout of $166.67 on Matrix/Binary/Unilevel or $83.33 for a total of $250.
A common commission plan design mistake is to put $250 into up front bonuses, and $250 into the matrix/binary/unilevel thinking this was 50/50. Big mistake as that means all your initial packages would have a $375 total payout or a whopping 75% payout!
INS can certainly help to design an MLM Compensation plan should you need help with yours. We have a generous Share in the risk plan on MLM commission plan design available to all our MLM Software clients.
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