MLM Training: Understanding MLM Stair-Step compensation plans, is important, if you desire to be a student of the Network Marketing profession.
Senior Vice President 74%
National Marketing Director 63%
Division Leader 47%
Sales Leader 35%
Associate 25% * Purely for illustration purposes only, not actual
The Stair-Step compensation plan is one of the purest types of compensation plans and accepted by the FTC as a viable compensation models. It is one of the easiest plans for new distributors to understand. Every step is a promotion usually based on achieving a certain volume and each promotion or rank gives you a larger cut.
In stair-step plans, to ensure a distributor’s group commits to a certain volume every month, it gives a particular rank a guaranteed income. Demotion in this case means that you must either maintain a certain volume every month (quarter or fiscal year) in order to maintain your rank. For example, Paige achieves a sales volume of $200,000 in her entire sales organization (for a specific time-frame) and that promotes her from Associate to Senior Vice President. Now on her personal sales she will earn 74% of the price (wholesale or Retail price), and will earn the different between each lower rank from the sales of her team.
In Stair-Step compensation plans used by service companies like Primerica, there is no personal MV required (although group volume can come from personal production.) Everything’s based on meeting specific monthly or quarterly team volume benchmarks.
Stair-step plans are one of the oldest and longest plans around. The advantage of climbing the stairs gives major incentives for distributors to work harder and fight for the target. The larger your group the more you override even up to infinity levels as long as your downline is of a lower rank than you.
There is also a fair system involved. Let’s say if your downline works harder than you and produces larger volume, they can actually have a rank higher than you and that is when breakaway in certain plans come into play.
There can be disadvantages however. Once a downline reaches a certain rank (lets say you need 3 directly sponsored leaders doing $5K to qualify as a champion), one of them becomes a leader while you focus on making the remaining 2 groups to become leaders, the first leader might be neglected in the process.
Another potential situation you must watch, is if the downline is too deep in the organization (lets say your downline’s downline all the way down 10 generations), some distributors may neglect helping them because the monetary incentive is too small.
Troy’s Truth: The Law of Averages show, if you work with downline members even out of your payline (10 generations deep), eventually some of them will move up into your pay level and could very well reach your frontline.
Never Give Up,