Introduction
Selecting a network marketing company / mlm opportunity with an appropriate compensation plan is critical to your success. There are many compensation plans in the network marketing industry and there are a few things to consider when evaluating them.

Assumptions & Facts
First, we can start off with an assumption that nearly all network marketing participants, professionals and new representatives alike seem to agree on. That is that regardless of the opportunity it takes about the same amount of effort and work to find and enroll new business participants.

Further, research shows that the majority of folks enrolling in a network marketing business never reach down in the multi level compensation plans to take advantage of percentage payouts beyond the second level. Therefore a large second level payout (40% or more) would be very beneficial to the average representative. Highly unlikely you may be thinking, but read on and see that there are companies offering these types of plans.

Also, even though some plans tout high payouts these are normally hypothetical or possible payouts and not the reality of what is actually being paid out. This is especially true where breakage is concerned. Breakage refers to the fact that distributors may either be unqualified or ineligible to receive some or all types of commission each month. When these unpaid commissions are retained by the company, they are called Breakage. Breakage also happens when an order is placed by a distributor who is close to the top of the genealogy such as a distributor sponsored directly by the company or an orphan. In these cases, some or all of the commissions that would normally be paid to an upline are retained by the company because there are few, if any, distributors in the purchasers upline.

These being the facts we should evaluate a compensation plan to make sure that the average individual (usually a part timer) can really earn an income and be profitable in a reasonable period of time based on a realistic view of what the average individual can achieve in MLM. By focusing on these requirements you will give yourself and your team the very best chance for success. By choosing opportunities with compensation plans of this type you will ensure a higher retention rate than almost any other plan (e.g. BINARY, Aussie 2-Up, Breakaway, Stairstep Breakaway, Matrix, Forced Matrix, etc...).

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Hypothesis & Evaluation
With this in mind we should take a hypothetical situation of an average individual enrolling only an average number of new business participants (e.g. Four) and helping each of them to enroll four. This would mean a total of 20 business participants, call it our 20 Club, in the entire organization. Four (4) on the first level and Sixteen (16) on the second level.

Now we must assume that everyone does some ordering or volume because a true and viable (Not to mention legal) network marketing company compensation plan pays on the sale of products or services (Not on Enrolling New Members). So we will assume for our evaluation that each person in the organization orders a minimal amount of products from their network marketing company (e.g. $100 each) each month of a consumable product. Consumable is very important as these are products or services that will be ordered over and over each month by customers and distributors alike. This $100 scenario creates a volume of $2,000 in our entire 20 Club organization (Our MLM team).

Next we need to ask the question; what will the average individual earn from this $2000 volume each and every month in ongoing residual commissions? Remember, we do not want to concern ourselves with enroller or quick start bonuses because they are not a measuring stick of what one will earn residually on the volume of products moving through the organization each month. The focus here is what will the average individual earn on an ongoing basis for the time, money, and effort they have put to this point? After all they are responsible for creating the organization that generates this volume every month. We can then apply the organizational volume in our assumption to the commissions on levels that various organizations would pay for this structure and evaluate the return for the average representative based on the time and effort they have put in.

Scenarios

• Scenario 1: Consider the typical 5% compensation plan many levels deep or in some cases called unlimited levels (Although that term is a misnomer and frequently misleading). In this scenario the average distributor who built the 4x16 20 Club organization referenced above may earn a whopping $100 each month for all their hard work. This is probably not enough to cover thier own distributor requirements (required product orders for personal use or sales which are usually a requirement to earn commissions in most organizations) let alone their marketing and other expenses. Thus the distributor is left with a business that still loses them money each month and they eventually quit or drop out.
• Scenario 2: At the same time consider a plan that paid only two or three levels but paying a whopping 40%-45% on the second level. In this scenario with just One (1) first level participant and Three (3) second level participants a representative would earn at least Twenty Five percent (25%) more than the Twenty (20) participants evaluated in the first scenario above. That's at least $135 on only 4 person organization with $400 in volume compared to $100 in earnings on the Twenty (20) person $2000 volume organization mentioned in Scenario 1. What's more, on the same 4 x 16 20 Club organization we mention in the first scenario and given the same exact $2000 in volume this plan would pay a representative over $700 per month. That's an enormous 700% more than scenario 1. As you can see its really no comparison. This second scenario is one in which a representative can quickly get into a profitable situation and easily earn a substantial and sustainable monthly residual income. So lets examine just one more position you migh achieve in this plan. Lets just imagine for a moment that you enrolled only two people that each used $50 of a product or service for themselves every month and sold $50 of the same product or service each month as well, for a total volume of $100 each person. Then lets further imagine you help each of these two folks do exactly the same thing with 4 other folks (e.g. Use $50 and sell $50). You would then have the 2 x 8 organization pictured here. In our Scenario 2 you would earn only $10 on the two first level people you enroll, but a whopping $360 on the 8 second level participants. So the total volume in your organization would be $1000 and you would earn $370. Thats a reasonable monthly income and home business on personally enrolling only 2 people into your business and using your leadership skills to aid them in succeeding as well. That is also a real 37% payout. What if this company even set aside a bonus pool (Say again a whopper of 15%) for those who achieved a a certain amount of first level participants each doing $100 in volume. This would be unheard of right? WRONG! It exists. People wind up in profit very fast, they dont quit or drop out, they actually really make money, and they do it with a real and viable top quality product that you can't get anywhere else and that is backed by plenty of research in an exploding industry. Now that makes for a very real and viable business opportunity!

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Reasons for Failure
When evaluating compensation structures in network marketing another important issue that we need to carefully consider is the fact that the number one reason for attrition, dropout, and failure in network marketing companies is that the average representative has a very difficult time in achieving a profitable situation. They seem to always be spending more each month than they are making. Consequently, they eventually quit or drop out. Knowing this we can conclude that if the plan we are evaluating yields more than $250 per month fairly quickly, or in that neighborhood, then this would be a plan that would significantly reduce the attrition rate in an organization. That is because on a relatively small number of representatives, sales volume, and personal use, then in fairly short order the average representative can be in a profitable business.

We offer the $250 per month number because in our assumptions above the average representative will need to spend at least $100 on their products (mentioned above but can be for personal use or resale in most mlm companies) and the representative will likely need to acquire a few sales aides, product samples, and do a bit of advertising (newspaper, business cards, flyers, brochures, etc...).

Therefore, if one can achieve more than $250 in residual monthly income on this hypothetical 20 Club organization that is doing $2,000 in monthly volume it can be said that this is a plan that is very advantageous to the average individual representative and very beneficial to retention and growth within the organization. Certainly in scenario 2 above this is very achievable. Just think of the retention that Scenario Two (2) above can create in an organization.

It is generally universially accepted and agreed upon by those in MLM that retention of average performing distributors is a major concern. This is because in most MLM plans the average representative can not get into a profitable situation on an ongoing basis very quickly or easily.

Reducing Failure Factors
In an opportunity offering a compensation plan like the one in scenario 2 above, rarely would folks leave or drop out of the business. They simply would not stop ordering, using, and selling products or otherwise fail to qualify for their own commissions when they are already profitable. It would be silly to quit or drop out from a business that makes a profit each and every month. It would also be non-sensical not to continue to build it and share it with others, especially when it can be done so quickly and easily.

In fact we submit that nearly anyone with a pulse could succeed in an opportunity that compensates like scenario 2 above. It is almost unfathomable to consider quitting or dropping out because a representative can see the light at the end of the tunnell and they understand that true financial freedom is within their grasp, possibly for the first and maybe only time in their lives. They know for a fact that they can reach $1000 per month in residual income in a matter of a few months if they put in a little effort. Retention and success in this type of MLM compensation plan is unprecedented. Sure there are more people making money and fewer representatives earning super incomes. But the majority of folks who are average performing individuals have a significantly higher success rate in these types of businesses. True opportunists and business builders who really understand the power of this type of compensation plan can literally make a fortune.

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Analysis & Summary
We have analyzed hundreds of compensation plans (binary, unilevel, matrix, forced matrix, breakaway, stairstep breakaway, and others) and companies, yet found only a handful meet the criteria that would enable an average MLM participant to get into a profitable situation quickly, possibly even in their first few days as a representative. Some of these are remarkable and highly recommended.

We have discovered that there are only a few companies in the MLM industry that offer this type of opportunity. Probably because it is not as profitable for the company, but it surely bodes well for the representative. These are companies where the average participant can build a substantial and sustainable business and monthly residual income rather quickly.

In fact we participate in an opportunity like this right now and although this opportunity currently has only one tenth (1/10) the representatives and does only one tenth (1/10) the volume as another opportunity we participate in, we earn as much or more from this opportunity nearly every month. Yes, more than the opportunity that has ten times the participants and volume.

It is strongly recommended that if you think you may be interested in a business opportunity and if it involves any type of network or multi level marketing that you review these types of opportunities seriously as they can greatly enhance the success ratios for you and those on your team. The opportunity recommended here has been fantastic for us and likely could be for you as well.

Please review the recommended opportunity and MLM Comp Plan Calculator on this web site for more detailed information or visit the Opportunity Site to review an opportunity that meets and in fact exceeds these criteria.