Field Compensation

Compensation Plans for Network Marketing and Party Plan

By Terrel Transtrum, Co-founder LaunchSmart™

Growth and momentum are driven by the right behaviors done consistently by motivated builders. Incentive dollars should always be targeted to the behaviors that produce the desired results. When an MLM compensation plan or party plan system is designed to reward the most valuable and productive behaviors while leveraging relationships, it combines with a company’s recognition and incentive system to form the momentum and magic of growth.

In this section the LaunchSmart™ Launch Guide will cover the following MLM compensation plan design elements:

  • MLM Compensation Plan Design
  • Network Marketing Compensation Plan Design
  • Party Plan Compensation Design
  • Plan Payout Analysis

MLM Compensation Plan Design

Network Marketing and Party Plan

An MLM compensation plan that fails to motivate distributors can quickly stall the best company. Many factors contribute to the success or failure of direct selling companies, and the MLM compensation plan is one of the biggest. Many ask us, “what’s the best compensation plan out there?” The answer: the best MLM compensation plan out there is the one that exactly reinforces the behaviors you must elicit from your field sales reps in order to be successful.

Party Plan and Network Marketing Compensation plan design team leader Dan Jensen has proven that “The Five Golden Behaviors” drive every successful compensation system. These behaviors are Retailing, Recruiting, Building Managers, Building Leaders and Retention. Striking the proper balance for the incentives that drive these behaviors should drive your compensation plan design efforts.

This section will give you the checklist for guiding you through the five golden behaviors, MLM compensation plan design strategies, awards and incentives, and general party plan elements.

Compensation Plan Design Checklist & Key Considerations

  • Do we understand the MLM compensation plan design fundamentals and 5 Key Behaviors?
  • Will we design our own plan or work with a design team?
  • Analyze product margins, compensation margins and projected sales
  • Analyze target market (leaders, builders / managers, consumers)
  • Develop compensation plan concept based on target market
  • Determine percentage payouts
  • Determine promotions budget
  • Draft the MLM compensation plan
    • Marketing elements
    • Programming specifications and details
  • Legal review and approval of compensation plan
  • Final edits and copy writing
  • If Party Plan
    • Define in-home experience
    • Design hostess rewards program
    • Develop consultant compensation & incentives
  • Awards, Recognition and Incentives (ARI)
    • Develop ARI strategies
    • Identify key field behaviors and productivity outputs
    • Define awards calendar for all recognition
    • Determine pre-launch recruiting awards and special incentives
    • Define promotions and contests
    • Create first-year promotions and contests calendar
    • Determine budgets for all ARI, promotions and contests

LaunchSmart™ MLM Compensation Plan Design Services & Tools

Our party plan and network marketing / MLM compensation plan design team is guided by the most sought-after compensation plan design specialist in the direct selling industry. Having worked with hundreds of successful companies over the last 25 years, the breadth of experience provides immense value to direct selling companies needing better compensation plan strategies, and to new companies needing guidance in cutting-edge plan design

(The content of this article is extracted from ServiceQuest® RetentionSmarts™ Modules. For more information on RetentionSmarts™ training and mentoring systems, contact a member of the LaunchSmart team.)

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