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…