MLM Compensation Plan design will be a key to starting and running the successful MLM company. Growth comes from rewarding the right behaviors, and momentum results when consistent rewards and recognition are delivered. Budgeted MLM incentive dollars must target behaviors that produce expected outcomes. When the MLM compensation plan is designed to reward the most important and productive behaviors, it supports the company’s recognition and incentive system to form the magic of growth.
Here we cover the following MLM compensation planning elements:
- MLM Compensation Plan Design
- Plan Payout Analysis
MLM Compensation Plan Design
Any MLM compensation plan that does not motivate distributors will stall the best of companies. The compensation plan is considered by many to be the primary factor in motivation. Many ask , “what’s the best MLM compensation plan out there?” The answer: the best MLM compensation plan is the one that powerfully reinforces the behaviors you must elicit from your field sales reps in order to be successful.
MLM Compensation plan design team leader Dan Jensen has proven that “The Five Golden Behaviors” drive every successful compensation system. The Five Golden Behaviors are Selling, Recruiting, Building Managers, Building Leaders and Retention. Striking the correct balance of incentives that drive these behaviors should drive your compensation plan design efforts.
Below is a useful checklist for guiding you through the five golden behaviors, MLM compensation plan design strategies, awards and incentives, and general party plan elements.
MLM Compensation Plan Design Checklist & Key Considerations
- Do we understand the MLM compensation plan fundamentals and The Five Golden Behaviors?
- Will we design our own plan or work with a compensation plan design team?
- Will we analyze product margins, compensation margins and projected sales?
- Are we exploring target markets (leaders, builders / managers, consumers)?
- Have we developed the MLM compensation plan concept based on target market intelligence?
- Do we know how much we can afford to pay in percentage payouts?
- Have we determined our budget for promotions?
- Who will draft the MLM compensation plan and programming specifications?
- Are we strong on the marketing elements?
- Do our programming specifications and details provide enough for the MLM software team?
- Have we obtained a legal review and approval of our MLM compensation plan?
- Are we comfortable with the final edits and copy writing to describe the plan?
- If we are creating a Party Plan selling and compensation system, have we done the following:
- Define the in-home experience
- Design the hostess rewards program
- Develop the consultant home party compensation & incentives
- Do we have the following in place for our Awards, Recognition and Incentives (ARI)
- ARI strategies
- Key field behaviors and productivity outputs
- Awards calendar for all recognition
- Pre-launch recruiting awards and special incentives
- Promotions and contests
- First-year promotions and contests calendar
- Budgets for all ARI, promotions and contests
MLM compensation plan design is an art and science combined, and the most successful companies exercise patience and restraint with attention to the fundamentals of human behavior. Success begins with knowing and rewarding the right behaviors that lead to long-term growth and stability.