If you’re a new MLM distributor, learning how your company’s compensation plan works is one of the first things you should do.

There are a number of different MLM compensation plans, and it is important to understand how they work to maximize the income you can generate. However, there are many other factors that will also determine the level of income that you will generate. The effectiveness of your marketing strategy and mentoring provided by your sponsor are also very important for generating a large income. In order to have the best MLM business you can, you should understand all of these factors before signing up as a new distributor.

There are some basic similarities among all MLM compensation plans. As a distributor, you receive commissions on the products that you sell directly to customers. You will also receive commissions when you enrol another distributor and this distributor sells products directly to customers. The distributors you enrol may enrol other distributors. You will receive commissions on the sales of these distributors as well. The advantage of this system is that you are rewarded for building a team of distributors. You generate income from the multiple levels of your organization. The larger you can grow your organization, the more income you can make.

The differences in MLM compensation plans derive from different ways of organizing the distributors you enrol. There are four basic types of compensation plans.

Uni-level Compensation Plan

The simplest is the uni-level plan. In this plan, any new distributors you enrol are placed directly under you. Your front line can be as wide as you like.
When these distributors enrol new distributors, they are placed on your second level. You receive different commissions from distributors placed on different levels.

Matrix MLM compensation
Matrix MLM compensation plans limits the width of your front line and the depth of your organization. This plan encourages teamwork and allows you to focus on supporting your downline.

Binary compensation plan
The binary compensation plan limits the width of your organization to two distributors. New distributors are added into two branches of your organization.

Breakaway Compensation Plans
The Breakaway plan allows distributors who generate enough volume, to break away from their sponsor and begin to develop their own organization.

There are also a wide variety of bonuses in each plan. Each company develops its own unique compensation plan so it is important to get all the facts about the plan before joining.

While understanding MLM compensation plans is important for the development of your business, there are many other factors that will determine whether or not your business will successfully generate income. By far, the most important factor is your ability to find new distributors to enrol in your organization.

The compensation plan will not help you if you cannot find anyone to join your business. You need to have a solid plan to market your business and generate leads and new distributors. If you do not have a plan, your business will struggle.

There are many marketing systems available to consider. You need to research them and find one that will work for you before starting your MLM business.

One important factor to consider before joining any MLM business is your sponsor. The person who sponsors you should help you get started and teach you various MLM strategies to generate new leads. This will reduce your learning curve and increase your chances of success.

Your sponsor should work directly with you to train and coach you in building the best MLM business you can. Without this mentoring, your business will most likely struggle. You can still learn the business and have success on your own, but having the right mentor can prevent you wasting time and making costly mistakes.

Do MLM Compensation Plans Really Matter?

If you want to build the best MLM business you can, you must understand, the business and MLM compensation plans are only another tool for success. Sure, some have more advantages than others, but, you need to make sure that you have a good marketing strategy and an excellent mentor who will really support you. Having great products and great MLM compensation plans will be useless if you have no way to market them to your prospects.

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