MLM Software and Sales Automation Software to MAKE you as well as SAVE you Money!

Single Level Roll Up Quality Enroller Bonus Explained

Permalink 03/14/12 22:10, by admin, Categories: Commission Plans, Study, MLM Startup Consulting , Tags: mlm commission plan, mlm compensation plan

Link: http://www.internetnextstep.com

The rule to be qualified to earn is you have to have purchased at least that $500 kit or higher to earn this bonus on someone you personally enroll.

There are 2 ways to do this Quality Enroller Bonus(QEB) in an MLM Commission Plan. Simple or Multiple levels.

Simple would be to say that there is a bonus paid ONLY to the qualified upline for the package.

So if person A joined for $1000, enrols person B who joins for $500, who then sponsors person C for $1000, the bonus would work in its simplest form.

Person A is Qualified at the $1000 level.
Person B is Qualified at the $500 level
Person C is Qualified at the $1000 level.

Person A earns $170 for Person B.
Person B earns $170 for Person C. Notice NOT $340 as he is not qualified with a $1000 package.
Person A earns the difference on person C as person B is not Qualified for it. $340 - $170 = $170.

This is a simple single step Roll Up QEB bonus for an MLM Compensation Plan.

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.

Contact us today to learn more about INS MLM Software or our other MLM related services or request pricing by Clicking Here.

Internetnextstep.com Consulting Ltd.
http://www.internetnextstep.com
Your MLM Software, MLM Consulting, and MLM Commission Plan Design Experts
+1 (604)-998-2256

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MLM UP Front Bonus, MLM Sponsor Bonus or MLM Cash Bonus Explained

Permalink 03/14/12 21:02, by admin, Categories: MLM Software, MLM Startup Consulting , Tags: commission plan, compensation plan, sponsor bonus, up front bonus

Link: http://www.internetnextstep.com

A simple fixed amount bonus paid to anybody who enrolled a member with that particular item or product package.

You can do this for only those who purchase the same or higher level package, or straight bonus to anybody regardless of personal purchase.

You will need to consider if just purchasing the signup or distributor kit qualifies for this bonus should you decide to employ this bonus type. If you decide to use this type it is recommended you attach a minimum point purchase personally to qualify for it.

I am not a fan of this type of bonus without forcing the member who wants to earn the bonus to purchase at least the same level of package, as it is too expensive to the company and tends to reward the weak vs. incentivize members to join with a particular higher than minimum product package.

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.

Contact us today to learn more about INS MLM Software or our other MLM related services or request pricing by Clicking Here.

Internetnextstep.com Consulting Ltd.
http://www.internetnextstep.com
Your MLM Software, MLM Consulting, and MLM Commission Plan Design Experts
+1 (604)-998-2256

Send a trackback »

How to Start an MLM Company

Permalink 03/11/12 23:34, by admin, Categories: MLM Software, MLM Startup Consulting , Tags: how to start an mlm company, mlm company, mlm consulting

Link: http://www.internetnextstep.com

We have just completed a page that will keep all information on "How to Start an MLM Company" together in one easy to find place.

http://www.internetnextstep.com/how_to_start_an_mlm_company.htm

INS can certainly help to educate you on How to Start an MLM company as well as help you 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.

Contact us today to learn more about INS MLM Software or our other MLM related services or request pricing by Clicking Here.

Internetnextstep.com Consulting Ltd.
http://www.internetnextstep.com
Your MLM Software, MLM Consulting, and MLM Commission Plan Design Experts
+1 (604)-998-2256

Send a trackback »

Why Successful Companies Would Choose the MLM Sales Channel

Permalink 02/29/12 14:02, by admin, Categories: Motivation, Study, MLM Startup Consulting , Tags: mlm company, mlm sales channel

Link: http://www.internetnextstep.com

Why would a Successful Small Business or even multinational business decide to sell their products through the MLM or Multi-Level Marketing sales channel?

We should start with an honest interpretation of what Multi-Level Marketing, Network Marketing or MLM actually is.

What is MLM?

The MLM Industry has been around for over 100 years. According to the DSA’s figures, in 2009, worldwide sales by the Direct Selling Industry were $117 Billion. This is not a small number!

MLM is simply a method of moving products or services from the manufacturer to the consumer, eliminating as many distribution steps as possible.

In its most current form of MLM companies doing things honestly and ethically, a Distributor joins the company for the right to purchase products at wholesale and SELL them to end users at Retail, and then makes the difference as his profit margin.

In addition to the Retail Profit earned, the Distributor can also earn additional bonuses based upon building a network of other distributors.

While the commission plans vary wildly as to how these additional bonuses are earned, this explains the simple vanilla Ethical method of an MLM Company setup.
The principal is simple, take all the money a typical Proctor and Gamble, or Coca Cola type company will put into marketing, advertising, distribution, and the normal sales channel, and re-direct it into the MLM commission plan.

This ultimately pays the members to set the MLM company up with direct to end user distribution in a best case scenario, or at least with direct to Member distribution who then go on to retail themselves to the end user.

Valid Products and Services for MLM

What products and services can be sold by an MLM can vary widely, but there are a few general traits of a good MLM product.

1. High Profit Margin
2. Highly Consumable
3. Hard to Explain
4. Must be Experienced

High Profit Margin

Let us start with the High Profit Margin criteria.

The necessity of high profit margins is mostly due to competition in the MLM Sales Channel. Sadly, outright illegal scams, in addition to less than ethical MLM companies are messing up the marketplace.

As a result of scammy MLM companies with Sham products being sold for ridiculously inflated prices in order to power ever more "generous" compensation plans, legitimate MLM companies can find it hard to compete if their profit margins are too low. Their commission plans will appear anemic when compared to the company selling the sham product with massive margins.

When a Scam masquerading as an MLM company can be your competitor you can be at a serious disadvantage. MLM Members are not always the best at deciphering the difference.

Lower profit margin products can still be sold by the MLM sales channel, it will likely just take a little longer to build a loyal distributor group, and cost a little more in initial procurement of Distributors.

The ideal profit margin to have the ability to pay out 50% of the Distributor price in total to the distributor base through your commission plan is a 1 to 8 ratio. So if your product costs ready to ship $10, you want to be able to sell it WITH VALUE, not just by pricing it high, for $80 wholesale to your Distributors, and an additional 30% ON TOP of that or $104 for retail.

Before you get all crazy about how ludicrous this profit margin is, let’s take a reality break from the “real” business world.

How much do you think it costs Coca-Cola to produce a glass or bottle of Coke that you buy for $3 at the Movie Theatre? Or Even $2.00 at the gas station or 7-11? Wait EXACT SAME PRODUCT yet such wildly different pricing? Sounds like a scam to me!

Ok, I know bad example, everybody knows we pay too much for Coca Cola. Let’s look at something simpler. Water? Now bottled water costs MORE than Coke but it is still ultimately sold to me by Coca-Cola!

Do we need another example? How about perfume? Do you think the cost to the perfume manufacturer is really out of line to our 1 to 8 ratio? Thedailymail.co.uk wrote that the liquid in the bottle*** costs 3% of the selling price. Throw in a really nice bottle at say $5 cost on a $55 bottle of perfume and Voila, another item that would qualify with MLM capable margins that exists in the "real" business world.

Vitamin Supplements, Skin Care, Cosmetics, Laundry Detergent and Automotive Additives are all "real world" high margin items often with more than sufficient margins to power an MLM commission plan ethically.

Why don’t we get back to the topic at hand of why this high profit margin is desirable?
If your competitor has a 1 to 20 ratio due to a fake or close to fake product being sold for an overinflated price on the basis of how much money the joining member will make, he will appear significantly easier to make money with regardless of compensation plan.

We have noticed an interesting point with regards to commissions earned by members with large teams across several of our Legitimate and mature MLM clients. Clients with legitimate products and profit margins tend to see Members overall average payouts of 10% of the total sales generated in their organization or downline. This is average over time, not including any large 1 time advancement bonuses. So if 1000 members sold/purchased $100 each in a month, after all the dust clears, on average their total compensation would be about $100 x 1000 = $100,000 x 10% = $10,000 for the month.

Keep in mind this is based on a product with an 8x ratio. $1 cost, selling wholesale for $8 and a commission plan tweaked to pay out about 50% of wholesale sales overall to the membership. So of $8 in sales, $4 overall goes to commissions, $1 goes to product cost, and $3 is left for operations and profit.

As these are normal ratios we can assume operational costs are $3.

Here is where the illegitimate MLM’s advantage comes in. Let us assume the bad MLM has a cost of 50 cents, and sells their product for $16. This means they have $16 in revenue and if we assume our other example is fixed costs for the comparison, they need $3.00 for operations and profit, and 50 cents for product cost, so they would have up to $12.50 to pay in commissions or just over 78%. That is a 50% increase in ability to pay.

This means apples to apples a member in this company stands to make $15,000 on a $100,000 sales volume period vs. $10,000.

While the above example may not scare away members from a legitimate MLM, imagine if you only had a 4x ratio to work with. $1 Cost, $3 operations are not even possible, as you have nothing left to pay the members, therefore you will need to use BV or Sales Volume in order to even make your plan work in the first place.

What this means if that if a member sells $100 in product, and you are for ease of explanation a 5 x 7 Matrix commission plan paying 7% per level, rather than the member earning 7% of $100 or $7 in commissions in your plan, you would need to BV or Business Volume your product to about 50 points for the $100, so the member would now earn 7% of 50 points or $3.50!

With this 50% required BV, using the same logic as above, your member could expect to earn only a paltry $5000 on their $100,000 in sales volume.

As a result, the average person can deem an MLM with legitimate products to be not as lucrative as a scam. This brings up a whole new discussion on the state of the MLM Industry. We will get into that concept in another article!

Highly Consumable

Why is it better if your products are highly consumable?

This one is not a must, but rather you will have a much higher chance of success in the MLM sales channel with a product or product range that is very consumable. The ideal consumption rate would be the ability of a single person to consume $50 to $100 a month of your product or products and feel they have received fair value for their money. NOT value due to the fact they will make lots of commissions in the business, but actual VALUE based on the products alone.

The true measure of a good MLM product priced right is how many members and/or retail customers keep buying the product for more than 6 months AFTER they have given up on the dream of making money or building an MLM business. If you believe your product is that good and you have the margin, you are a huge step ahead as a candidate to distribute your company’s products by MLM.

There are some Vitamin Supplement companies out there in the MLM world that in my opinion get a little ridiculous with the expectation a family of 4 can afford to spend to take their supplements. That said, I am not sure the same company could afford going down to their local GNC and purchasing at retail the best Vitamins on offer for the entire family either.

In other words, it is fine to sell a premium product at a premium price, but at best you should be the top of the retail market in price with a similar product, or if you are going to be higher priced than the top of the market, you need a true value proposition as to why your product is so much better than what is available in the market.

High ticket items like water filtration or Esthetic Gizmos that sell for $1000 or up that are not consumable, can often do with less profit margins, but you have to be very careful as you can also contravene a lot of state laws trying to take such items to market legally and ethically by MLM. You also do not end up with the desired consumable trait with these type of items so it is harder to keep the network growing long term.

Hard To Explain

One type of product or service MLM excels selling is taking a hard to understand or complicated product or services to market cost effectively.

A perfect example is Vitamins. Before MLM the concept of a vitamin was children’s chewable or One A Day brand. Some people took them, but nobody ever questioned the quality or science behind them.

Once MLM got a hold of the vitamin industry everything changed. Suddenly the concept of Chelated vitamins, or just better science started to take hold.
The reason why complicated items do well in MLM is you end up with a very dedicated and Zealous sales force taking the time to explain the items with enthusiasm knowing that once someone starts to take the products, they will likely signup for autoship and keep taking them for a lifetime.

The dynamics of what goes on with MLM are quite exiting. In one transaction you get people to understand and trust in the concept of a vitamin that is better, coupled with the industry standard 30 day empty bottle guarantee to build trust, then the idea that it will be likely not just be a single sale, but a lifetime sale and POSSIBLY a member who builds a team leading to even more revenue for the referring distributor!
This is what allows Members to take the time to learn the complications of the product themselves, AND then take the time to explain it to a new potential customer or member. You can’t do that in a 30 second commercial.

Must Be Experienced or Demonstrated

As MLM is a person to person business, it does particularly well with products that are most easily sold after a trial or demonstration. By law in most places in North America an MLM Company must have at least a 14 day return period. Most MLM’s extend this to 30 days, and some even to 60 days AND say it is an empty bottle guarantee.
This means your MLM Member can sell the product to a potential customer with a full Money Back Guarantee, letting them actually use the entire product then decide if they want to buy more, become a member, or get their money back.
Once again the concept of the Member possibly picking up another Member or a LIFETIME customer motivates them to spend far more time with the potential customer answering questions and teaching or sharing information and testimonials about the products in order to close the sale.
Summary

So what do you do should your products or services not fit any of the above criteria? Should you still try to twist your products into an MLM Company based on how much money your members could make?

Much like you would not expect success selling a heart surgeon’s surgical instrument through your local grocery store or 7-11, sometimes the sales channel just doesn't fit your product!

Sadly, this is a major contributor to the mess in the MLM industry today. Products that do NOT fit the MLM model being forced in with the lure of a Fantastic commission plan.

If your products fit a few of these criteria, then possibly speaking to an MLM Consultant can help you decide if there is a way to make a successful, honest, ethical MLM utilizing your products.

If your products or services do not fit ANY of these criteria, it is likely best you do not pursue the MLM Sales Channel.

On the other hand, should your products fit 3 or more of these criteria, this could be just the Sales channel for you to inexpensively get the product recognition and sales volumes you deserve!

*** http://www.dailymail.co.uk/femail/article-550511/Perfumes-trial-The-truth-scent-industry.html

INS can certainly help ascertain if your product or service could be a viable Product for the MLM Sales Channel. We also have a generous Share in the risk plan on MLM commission plan design AND MLM software available to all our MLM Software clients.

Contact us today to learn more about INS MLM Software or our other MLM related services or request pricing by Clicking Here.

Internetnextstep.com Consulting Ltd.
http://www.internetnextstep.com
Your MLM Software, MLM Consulting, and MLM Commission Plan Design Experts
+1 (604)-998-2256

Send a trackback »

MLM Commission Plan Quality Enroller Roll-Up Bonus

Permalink 02/28/12 21:57, by admin, Categories: MLM Software, Commission Plans, MLM Startup Consulting , Tags: mlm commission plan, mlm software, quality enroller bonus, roll up bonus

Link: http://www.internetnextstep.com

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.

Contact us today to learn more about INS MLM Software or our other MLM related services or request pricing by Clicking Here.

Internetnextstep.com Consulting Ltd.
http://www.internetnextstep.com
Your MLM Software, MLM Consulting, and MLM Commission Plan Design Experts
+1 (604)-998-2256

Send a trackback »

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