10 Steps Towards Launch! Part 3 - Compensation Plan

The following is part 3 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!

The third of ten business segments to help new MLM companies get started is COMPENSATION PLAN.  This crucial segment for a new MLM company centers on creating a reward system for the important behaviors that drive sales, recruiting, and growth.


  • Creating a Great Compensation Plan that Rewards the Right Behaviors
  • Knowing the Right Behaviors to Incentivize
  • Determining the Distributor’s Dollar-per-hour Earning Opportunity
  • Using the Right MLM Definitions
  • Creating a Successful MLM Founder’s Organization
  • Computing the Commission Payout Percentage
  • Fine-tuning Your Selling Approach & System
  • Determining the Type of Company that is Best for You and Your MLM Distributors
  • Writing the Programming Specifications for Accurate MLM Commission Programming
  • Obtaining Legal Review of Your MLM Compensation Plan


Here are examples of descriptions that you might write for your MLM Launch Best Practice:


  1. Dollar-per-hour – We have determined the “dollar-per-hour” proposition for our recruiting and sales plan, and the results are documented for reference and tracking. Our plan will generate sufficient earnings at each rank to make it worth their time and keep them working.
  2. Commission Payout Percentage – We know exactly how much we can afford to pay in commissions as a percent of revenue to maximize field performance and support sufficient profit to expand our business.  We have analyzed the margins and our results are documented for reference.


A thoughtful pass through these best practices will help you to create your MLM planning checklist for this vital business segment of your new MLM business.  For more information, contact Terrel Transtrum terrel@launchsmart.com.


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