Compensation Plans: Design and Review

A great compensation plan makes you more attractive to the distributors who will drive your growth.

Your compensation plan is a critical component of your new MLM or party plan company. For many startup entrepreneurs, it’s one of their earliest concerns. And for existing companies, a review of the compensation plan can be a turning point in moving the company to the next level. The role and requirements of the compensation plan are widely misunderstood, so we’ll take a moment here to dispel some myths and shed some light on the reality of compensation plans.

The Myths and Realities of Compensation Plans

Myth Reality
1. The purpose of the compensation plan is to compensate distributors. The purpose of the compensation plan is to motivate behaviors that will grow your company.
2. The compensation plan is simply a financial tool. The compensation plan is also a marketing tool: a great plan makes you more attractive to the distributors who will drive your growth and is a roadmap to success.
3. There’s ONE plan out there that is proven best for all companies. There is no one-size-fits-all compensation plan. Your plan needs to be precisely customized for your product, market space and intended distributor behaviors.
4. The Best Plan Is a Simple Plan. To motivate the right behaviors and to match competition from other companies, your plan may well need a number of moving parts that compensate for varied sales and recruiting activities.
5. A complex plan will put off new distributors.  A simplified presentation of multiple profit centers allows new distributors to choose where they want to participate and to what extent to feel excited about your company.
6. I can buy an off-the-shelf plan for now and change it later. The plan you launch with will have enormous impact on your early success. Some refinements will be possible later, but a major change can destroy your business.
7. Compensation plans haven’t changed much since the industry began. Compensation plans are changing all the time, and to be competitive you need to be fully informed on the latest innovations.

The Sheffield Edge

The team at The Sheffield Group has developed a level of skill in compensation plan design that simply cannot be matched by any other consulting firm.

We will analyze your business and provide the best plan suited to drive growth for your product, market and distributor base.

If you are at an early stage in your planning, it is critical that you educate yourself on the opportunities, hazards and demands of compensation plan design. We invite you to contact us at no cost to discuss your future company.


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