Down the Rabbit Hole

Down the Rabbit Hole

Welcome to Show Me The Plan – Part 2! Although these posts are the second part of a 2 part series, the content here is designed to be stand-alone and each set of posts are written with lessons applicable for every aspect in network marketing.

Let me just give you a few facts to ponder about:

Average network marketing companies today spend roughly a few hundred to a thousand dollars on Compensation or Marketing Plan Training in just hall/training room rental, speaker salaries and question and answer sessions! And to think that most people assume that plans are all about numbers only. Continue reading

Infinity Bonuses & Blocking

Infinity Bonuses & Blocking

A company may pay an achiever up to infinity levels of commission once he has built a solid organization.

Normally this reward system is useful for people who step up to the challenge to be leaders and are willing to work depth in his organization. Infinity bonuses also reward those leaders who help their downlines no matter how deep below they are within the organization.

Observe the diagram below:

As you can see, the star ambassador is like a leader who is servicing his entire downline group and there fore, he deserves to be paid 3% from everyone in the group.

When a downline reaches a level that is similar or higher than the upline (in this example, let us call him a STAR AMBASSADOR), the upline usually only receives infinity level overrides up to the downline that is also a Star Ambassador. This feature is known as BLOCKING.

Observe the next diagram:

Note: There are more bonuses to be awarded to the upline for nurturing a strong downline. Normally in the form of bonuses or eligibility for higher ranking.

Downline Building Strategies

Identify the strongest ones in your downline group and train them to become leaders so you will be able to leverage on them. In other words, that downline will keep on building the group long after you have stopped being directly involved with them. Although you may not draw infinity bonuses from their group, the company usually will give you a leadership bonus on the downline leader’s group. Usually the leadership bonus is smaller than the override or retail bonus, but it is like getting a smaller slice of a much, much larger pie.

Product Synergy

Infinity bonuses can be really powerful and generate massive residual income if done right. If you were to train all your downlines in your group to be loyal product users, and you were to get 3% from all the volume, you will earn something like this:

3% * 1000 downlines (each buying $500 every month) = $15,000 monthly!!!

Starting a New Company

If I were to start a new company and give out infinity bonuses, you have to be very precise on the blocking system especially when you are using a binary plan (because of overpaying).

This is a topic that is very plan specific which I will not discuss here but will be explained in a later book.

The rule of thumb to remember is this:  Reward leadership and do not cater to free loaders!

Summary and Closing

There you go! You have just run through the basics of Show me the Plan: Part 1!

A quick recap of what you have just learnt:

  • Why marketing plan training is very important

  • By mastering it, save you time and money on training and lost sales

  • Learning all the important terminology

  • Discovered the truth regarding marketing plan misconceptions

  • Strategize how to build your downline with the information

  • Know the importance of Point Value to Cash Calculation, Payout

  • Transparency, Buy Back Policy, Breakaway, Infinity Bonuses and Blocking

ALL this is just the icing on a delicious cake. In the upcoming posts, you will learn

  • Manipulating marketing plan mechanics to climb the ladder of success faster

  • Mastering the pitfalls of demotion

  • Maximizing your profits with stocks that can be used to sponsor new downlines

  • How to use maintenance to your advantage regardless of which company you are a part of

  • Lots more diagrams and illustrations on exciting new topics!

Stay with us now to find out how you can take one more step towards network marketing success!

SEE YOU AT THE TOP!

Breakaway

Breakaway

Breakaway is a feature found in most Unilevel or Stairstep plans where a downline reaches a target faster than his upline.

Here is an example:

In this company, you need to recruit three downlines in order to advance from having a 9% commission to 12% commission. The SPONSOR has to recruit 3 downlines then only he goes to 12% but his downline achieves this criterion before him.

This is a very common scenario on network marketing because you can’t possibly ask a downline to slow down (it is HIS business after all) and different people put in different amount of effort.

Depending on the company plan, a breakaway in this case means that the upline will no longer be eligible to receive commissions from the downline group forever. The commission that is due to the UPLINE will go to HIS UPLINE (the one even higher up) who has achieved the rank higher than all those under him. In some cases, the downline will even bypass his sponsor and his entire group will join his new upline

(see diagram)

Downline Building Strategies

It is very important to understand that the upline and the downline are all part of a team and as a team you have to work together. At the same time as helping the downline, the upline must work his own share as well. In some cases, depending on the relationship within the team, the downline may opt to ‘wait’ for his upline so all can achieve the goal together without leaving anyone behind.

Proper team planning and relationship building is very important to prevent factors like sabotage (the upline deliberately ‘slowing down’ the downline to prevent breakaway).

Product Synergy

In spite of the disadvantages of breakaway, it is very important for the upline to put in a lot of hard work. For example, if an upline sees his downline growing very fast, he will work harder to generate more product sales so he will be eligible for bonuses and also ‘catch up’ with his downline.

Starting a New Company

Breakaway has his advantages and disadvantages. The advantage is that it rewards distributors for hard work. Whoever recruits more or moves more products gets more rewards. This is very important for the company as you don’t want to pay out unnecessary commission to free-loaders. The disadvantage as the company, you must strike a balance between to fairly reward all parties. This is tricky and requires planning.

Next post is:  Infinity Bonuses & Blocking plus a summary of all the posts so far.

Until then, later…

PAYOUT TRANSPARENCY

Payout Transparency

A company’s marketing plan must be as transparent as possible and written in a simple way that can be understood by veteran and newbies alike. Payout transparency refers to the portion of money that is paid back to the distributors listed in detail.

Here is an example:  

The company keeps 35% of the   

product. That means 65% is

paid out to the distributors

In this case, the company actually

declares the payout in the official marketing plan. If the percentages are not written out clearly, then you will not know where the money goes to.

Downline Building Strategies

A transparent payout is useful to motivate your downline especially new prospects who are evaluating the company. By teaching your downline to understand what all these percentages mean, you can effectively close more sales.

Product Synergy

This is very important for the product because too high a mark-up of the product means it will be very hard for retail customers (people who are not members of the company) to afford the product. In Multi-level Marketing, you have to pay to many level of distributors so if a product can sell without being people joining the company, then there is strong demand for the product.

Starting a New Company

Calculate the payout before hand and most of all; decide the total mark-up. Be careful especially in Binary Plans (which will be covered in the next book) because you don’t want to overpay your distributors or else your company will go into bankruptcy.

Buy Back Policy

A buy back policy is a clause in the company’s terms and conditions where it protects its distributors in case they quit their business and want their money back. Normally this applies more to offline companies.

A very strong company usually has money back guarantees for their products even after the product has been used halfway or if the product is totally used up. This kind of satisfaction guarantee normally compels the company to absorb the risk because there will always be lots of quitters in network marketing or people who want to rip the company off trying the product for free.

In most countries, they offer either a 10 day cooling off period, or a 6 months to one year period where they will refund 90% to 100% of the products (whether used or unused depending on the company) due to the laws of the country or by the Federal Trade Commission.

Downline Building Strategies

A buy back policy forces the upline to be at his best because the moment a downline exercises a buy back policy, he might lose future potential income or even has his commission recalled or deducted. This is quite normal as in network marketing, the upline must go all out for the downline and make sure they succeed. A good way to prevent buy backs is to train the downline to be good product users so that even if they quit in the business, they will always remain loyal customers.

Product Synergy

In network marketing (or direct selling), testimonial of a product is critical as it is the driving force of the industry. Citing a money back guarantee gives prospect the confidence to try the product.

Starting a New Company

If you decide to include a money back guarantee in your new company, you must be very careful as you are absorbing the costs for any type of refunds. It is no point to keep a customers money anyway no matter how much you try to stop them from getting back as complaints to the consumer associations or even BAD word-of-mouth can destroy your reputation. In the end of the day, you must make sure your product is superb or else people will accuse your company for being a Ponzi or Pyramid Scheme.

Hope you are taking notes and paying attention!  Next post:  Breakaway

Until then.. see ya later…

Recognizing Basic Plan Mechanics and Point Value to Cash Calculation

Recognizing Basic Plan Mechanics

Now that we are very clear how important it is to learn about marketing plans, let us seek to understand more about its basic mechanics. This will be covered over a course of a many posts.  We hope you are learning something at this point and time!

Over the next few pages, I will outline the basic plan mechanics and outline its benefits based on the following topics:

  1. What downline building strategies are the best?

  2. How well does it synergizes with the product?

  3. If I start a company with this feature, what are the strengths and weaknesses?

 

Point Value to Cash Calculation

Point value, or PV in most network marketing usually relates to a monetary value that translates into how much money you will get after purchasing a product from the company. An illustration would look like this:

SCENARIO 1

Let’s say, a product costs $100 and each dollar spent on the product gives you 1 PV:

I get paid on 100 PV for purchasing $100 worth of products and if I am eligible for 10% override, I earn $10

Hence the dollar to PV ratio is $1:1 PV – a dollar to dollar equal comparison

SCENARIO 2

Sometimes, the same price of a product will only give you 0.5 PV for each $1 spent.

I get paid on 50PV for purchasing $100 in this scenario. If I am eligible for 10% override, I earn only $5

Hence the dollar to PV ratio now is $2:1 PV – you don’t get as much as 1:1 because you have to spend more to earn more points

SCENARIO 3

Certain companies might give away promotions for products and offer $1:1.1 PV so if you buy $100, you get paid on $110 value. At 10%, I earn $11 – more commission from the company on the product for less spent buying it,

Downline Building Strategies

If I need to generate large volume for my group this month, I would ask my downlines to focus more on selling or moving products that give a higher point value. That way, everyone spends less but earns more.

Product Synergy

Products on promotions usually give a higher PV ratio. Other products that are outsourced (acquired from outside companies) usually give either a smaller PV or the same PV but a smaller business volume because they have to pay to the outsourced company as well. These products pay the distributor less but give more variety on the business catalogue.

Starting a New Company

Giving a high dollar to PV ratio usually encourages the distributors since they get paid more for the same effort. If I were to focus on moving high ticket items (like water filters, air treatment systems or expensive cookware) I would offer a higher PV incentive to distributors to move these items and go for the big bucks.

Payout Transparency and the Buy Back Policy are the next posts coming up, so stay tuned all…

Until then talk at ya later…