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7 Secrets of MLM Pay Plans

MLM pay plans have quite a range. You can make money will all of them, but each has its own strengths and weaknesses. You may not realize what behavior each of these pay systems push you towards.

Also, a pay plan can really make or break a company in some cases. I’ll explain why below. When you sign up in a company, now you’ll know what you are getting into with these secrets.

Typical MLM Pay Plans

Here’s a brief look at the standard MLM pay plans to keep us both on the same ground. I’ll keep it short and move quickly on to the secrets hidden in these pay plans.

Breakaway: Sometimes called stair step. This is the type that many older companies have used for decades. You build a group, it breaks away when the group reaches a certain monthly production. When one of your groups breaks away, you get a percentage override on the group production.

Binary: In this MLM pay plan you have two legs, and you have to build them together or you won’t get paid as much.

Australian: Also called a 1-up, 2-up or whatever #-up. In an Aussie, you give your sponsor some number of your recruits as part of your training. Basically it means that your first recruits go t your sponsor, as well as anyone those recruits bring in. Beyond that, no levels.

Also, the Aussie pay plan is not always considered an MLM pay plan since it lacks levels. I’ll explain more below. Offers certain benefits at times.

Forced Matrix: This plan limits how many you can recruit on any level. You can only have, say 5 on your first level. After that, you can sign people up, but must put them elsewhere in your organization.

Unilevel: You can recruit unlimited numbers, and you earn a set percentage on each level as long as you qualify. No groups, no breakaway, no 2-up. Many people like this MLM pay plan the best.

Hybrid: Of course, accountants like to have fun, too. Some companies mix up the plans and hybridize them, making their plan a little different.

Bonuses: I’ll throw bonuses into its own category to emphasize it a bit. You can car bonuses, home bonuses, recruiting bonuses, and program bonuses. Tons of bonuses.

What Does It All Mean?

Let’s be shrewd for a minute here. We’re adults, we sign contracts and so on. When you sign up for a specific type of MLM pay plan, you commit to 2 things right away.

First, you will accept payment according to the pay plan. Second, you will hold the company responsible to pay per the plan. That’s a contact.

This means that the company can shape what you, the rep, does with your time by only paying for what they want.

For example, remember a few years back when Coke and Pepsi had rewards programs? You could win cool stuff for drinking Coke and Pepsi and saving your proof of purchase or whatever. As a joke, the company offered a Harrier Jet for 7 million points. So a college kid, John Leonard, raised $700K to buy the points, and then asked for the jet. He didn’t get it, but Pepsi did get a lot of attention in the press.

The point: MLM management use pay programs, like rewards programs, to shape your behavior and mine. Now, with that in mind, let’s look at what these programs can do, and what secrets network marketing businesses can use.

The Secrets

1. Bonuses

Okay, you may know that by offering a bonus, your company will get you do more of a certain activity. Maybe you’ll present the new product more, for example. But that may not be it.

The secret here is what the company wants to do. For example, the company may know that this product is tanking, and so they want to see if you, the reps, can save it. Or maybe a competitor is releasing a similar product and your company wants to try to bury it. Or maybe the company has a short term decrease in costs. Any of these can influence your MLM pay plan.

Makes you wonder why Monavie offers free sign up in March, right? Anything free is like a bonus as well.

Last, if your company offers long term bonuses, like a car payment or house payment bonus, understand that they offer this so that you will try to achieve that level of business. When you fall just short, you can know that they have just pocketed extra profit that they would have given you if you had just turned in another 100 in PV.

How many people do you think fall short every month? This works well for them and you. You strive to do better and reach more, and eventually many will earn this nice bonus. The company pockets all the missed car and house payment money on your way up in the months you don’t make it. Win-win. Or the company wins now, you win later.

I like bonuses, you should just understand how they work.

2. Does a Unilevel help you?

Think about this: you get 10 people first line. 110 people second line. 789 third line, and you are earning on all their volume. You see some produce tons, others not so much. Who do you work with?

The producers, of course. What if that producer is 7 levels down from you?

The secret of unilevel MLM pay plans is that it focuses those upline on the high producers. Unfortunately, as a producer, you may get 15 calls on the 31st day of the month to see if they can make the payment on their ski chalet in Vail. And in the Alps. This may add to your stress, or it may give you more resources.

I think it tends to stifle leadership, but it would also allow higher ups to see serious attrition and its affects easily. Unilevels can be good plans.

3. Why did so many companies build MLM with breakaway plans?

Breakaways tend to act like small businesses more than other plans. You have your team, a few leaders in your organization trying to breakaway for themselves, and so it works like a little company. You’ll find this in Amway, Shaklee, Nikken, and Mary Kay – all older MLM companies.

What secret does this hold? You can be held back. If your upline runs a group and has a low month or a few low months, but you lead your little group to do great, and qualify to breakaway, you may be held back if your upline doesn’t submit your order until the first of the next month. Unfortunately, it’s sort of a hold-back.

I swear I am not making this up. A breakaway may allow a leader to keep a group only while new leaders don’t ascend. This doesn’t happen much, and most companies have policies in place to protect the new leaders and allow them to break away and fly on their own as soon as they are ready.

A breakaway should encourage you instead to build a new leg, and add people and volume to your organization. Some of these companies have great people and great products. You can find great mentors in some of these companies. I like breakaway MLM pay plans.

4. Binaries are really fair, right?

When binaries came out, they were all the rage.

The problem is the secret: if you don’t build evenly, you don’t get as much money, the company keeps it or at least holds it. This MLM pay plan was probably meant to be a way to encourage you to build, but it ends up looking more like trying to get a formula right.

As long as your organization is out of balance, you can’t earn your maximum, and the company earns more. I don’t like the binary.

5. Spillover is awesome!

The spillover in possible in some organizations, especially forced matrices, is magic, right?

Yeah, spillover is cool. But here’s the secret: If you rely on spillover, you won’t make any money. Too many people sign up thinking that their up line will build it for them. Then, the next guy thinks the same thing.

Do you see the problem here? Forced matrix companies can’t work if everyone thinks he’ll get rich with no work. Skip these. Also, this MLM pay plan looks like a gambling ring to regulators in some cases. Another reason to avoid them.

6. Aussie Style and 2-up plans don’t look like MLM. Are they?

I would say no, the Aussie 2-up is not an MLM pay plan, since you don’t have multiple levels. Others disagree, since every recruit has to give you 2 to move into profitability, that’s a level. But since they work the same in other ways, I have included them here.

It is on paper, but in reality, they are all first line recruits to me, and once you finish your 2-up, you break away and I receive no more compensation from you.

But I would say it is network marketing, since you still market to your network and sign up people you know. Weird, right?

The secret here is more of an organizational insight. I have seen a few Aussies. Some people say the problem with an Aussie is that new recruits won’t sign up their best people until after they finish their 2-up.

Not so. You and I both know that we can predict how a new recruit will do in a company. So if you work an Aussie, and you sign people up, you’ll start making some money.

Here’s the real secret: The Australian 2-up only works for big ticket items. By selling a big ticket item, you can sell to one person and earn a large amount of money. Now you don’t have to call them every month, you don’t have to worry too much about their volume, either.

Look at the math. If you only make money on the people you sell to and sign up, you either have to sell very fast, or you have to sell something expensive.

Just to keep the law on your side, I should say that recruiting people into an Aussie 2-up is very inexpensive and a different form from selling someone the actual product. In other words, you sell them the product, and you recruit them to sell it to others if they want to.

I have seen Aussies selling products at prices of $600, $1000, $3000, and one with products up to $18,000. Can you see that with a sizable commission of 50-90% you can make money on this kind of an MLM pay plan?

7. The Second Secret of Aussies

By getting you hooked on large commissions for selling their product, the company puts you in the position of constantly recruiting and selling.

Of course, every company wants you to recruit and sell – but most also want you to lead your group. In an Aussie, it looks like you can skip that duty, but look again. Your company has created almost too much emphasis on selling and recruiting personally. If you teach your recruits the best way to sell and recruit, you will have an exponential return.

Essentially, by focusing on the people you bring in, you change your focus from selling and recruiting personally to teaching how to sell and recruit in order to improve your results.

Aussies have some great strengths, like less concern about attrition. This MLM pay plan or network marketing business works well with the right leadership and products.

Watch and Learn

More than I planned on saying. You can learn a lot if you look. MLM pay plans work to make sure that the company’s priorities are kept straight, and to guide you to what the company wants you to focus on. Some work well, like the breakaway, the Aussie and the Unilevel. Some don’t work so well, like the Forced Matrix.

Take some time when you sign up to look at your plan and see where it falls. See if it emphasizes what you want to do. You can choose. If you like the product, but not the plan, just be a customer and look for another network marketing business to start.

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