We help people understand that MLM compensation should be fair. If your commissions for a sale are less than you would have made in a traditional store, or door to door, you are being robbed. Here’s a conversation with Lucy, who was trying to understand why she was making so little money with her company. Her compensation plan paid out an average of 5% over seven levels, including personal sales!
Us: Would you agree, Lucy, that network marketing is just another way to bring goods and services to a customer?
Lucy: I would!
Us: So if you sold something online or in a store or door to door, you’d expect to be paid just about the same?
Lucy: I would!
Us: Suppose you came to work as a saleswoman on straight commission at our high end ladies’ clothing store. In the morning, you ask how much you will be paid. We tell you not to worry and to just get out there and sell. We’ll pay you at the end of the day …
Lucy: Hmm … that doesn’t sound so good …
Us: But it’s what we do all the time in network marketing, isn’t it?
Lucy: You’re right. I have no idea how I get paid!
Us: So you work all day and sell a $500 suit. At the end of the day, you’re headed home, we meet at the door, we congratulate you on doing a good job, and you hold out your hand for your pay. How much would we have to give you to get you to come back tomorrow?
Lucy: I’d want about $150.
Us: Well, that makes perfect sense, as every commissioned salesperson we’ve talked to expects to be paid 30% to 50%.
Lucy: Good! I know what I’m doing!
Us: So you’d come back for 30%. If we said you could bring in some friends to sell too, and you could earn 5% on their sales, would you come back for 20%?
Lucy: Sure! That sounds like a good deal. Hey, that’s MLM!
Us: Right. Getting paid for the sales of others is called ‘leverage.’ It’s what we’re all trying to achieve.
Us: So how would you feel if we handed you 5% which is what you’re getting paid by your company? Would you come back tomorrow if we paid you $25 for that $500 sale?
Lucy: I couldn’t. There’d be no store to come back to.
Lucy: If you gave me $25, you and I are going to have a problem …
Us: Oh, oh!
Bob and Anna Bassett