We worked extremely hard at our business, and could never understand why we were not successful. Then we read Success in Ten Steps and listened to the Mentoring For Free training calls, particularly Compensation Plans, Business Models Drive The Behavior, and Five Pillars.
Then it all became clear. Not only was the comp plan designed to pay only a few at the top, but it did not encourage us to build teams for long term success. The people who made good short term money were the “Sponsor Monsters” who spent their time recruiting, collecting the one time sponsoring bonuses, and then moving on.
The products – long distance and internet packages – were a perfect example of poor timing. Hardly a dime left in them for the distributors, as prices were dropping and competition was increasing.
But the biggest problem was the pay plan. If we had known then what we know now, we would never have joined Excel. We now ask the simple 10k question …
How many distributors are required in your business to generate a walk away residual income of $10000 per month?
‘Residual’ means true recurring income, not counting the sponsorship bonuses.
We decided to do the math for Excel to see why we struggled so much.
Excel paid commissions of just 2% on personal customers. Very few people reached the next level of 5% paid on $1000 of usage. We did it a few times but could not maintain it because of the fierce competition from Bell Canada who would go after our customers as soon as we signed them up. Even if we had maintained that level, we would have earned just $50 per month on our forty or so personal customers!
Excel paid commissions down 7 levels as shown below. To reach the seventh level, we had to maintain 20 personal customers, something very very few reps were able to do.
Hardly anyone had a seven level deep business, but let’s be generous and say that the average payout below us was 7.25% divided by 7 levels, or about 1% of all the usage in our business.
On average, a phone bill at that time was about $20, meaning you would earn 1% of that, or 20 cents per customer!
We had 20 customers for a monthly usage of 20 x 25 = $500, and earned a commission of 2% of 500 = $10 per month on our own customers. When calculating the answer to the 10K question, we can ignore this puny amount. It’s also embarrassing to think about it now!
To generate $10000 per month at 20 cents per customer, we would need $10000 divided by 20 cents = 50000 customers in our business.
Our experience taught us that most reps had great difficulty gathering customers and never gathered more than three or four. Many only had themselves and a neighbor as customers. A surprising number never even signed up their own phones!
Let’s be really generous and say five customers each. To have 50000 customers in our business, we would have needed 50000 divided by 5 customers each = 10000 reps! At three customers each, we would have needed 50000 divided by 3 = about 17000 reps!
No wonder we never made it! And no wonder no one wanted to join us in this foolish dream.
We invite you to apply the same formula to analyze your own company in order to decide if your income goal is actually attainable, and whether you want to continue with them. An old proverb tells us …
No matter how far you have traveled down the wrong road, turn back.
It’s heartbreaking to think about how a company can abuse its people in such a way, when the distributors work so hard to build their financial future while building the company.
How naive of us to have thought that Excel and all MLM companies have our best interests at heart!
We couldn’t see through the hype and motivation, and couldn’t slow down long enough to do some simple math. No one could have made us question our choice of company at that time, as there was no other company as good as Excel! It would be our vehicle to financial freedom!
The reality was that following that empty dream cost us time and money and energy and friends.
Luckily for us, and thanks to Mentoring For Free, we are now able to analyze opportunities and avoid the ones that doom us to failure.
We can also now, with confidence, help others avoid failure and frustration.
We’re happy now to have found a five pillar company that pays us fairly. The answer to the 10K question now is fewer than 400 reps – not the 10 or 20 thousand we would have needed with our previous company. Most of our colleagues find themselves in companies that require 2000 to 5000 distributors to generate the same income, and are working far too hard and having less success and less fun than they should!
We can now build it once, build it big, and build it to pay our children’s children.
If you’d like some help to learn how to protect yourself and your family, just let us know and we’ll be glad to help you any way we can.
For a complete manual of tips on how to choose a good company, get this free report.
To calculate the 10k answer for YOUR company, click here for The 10k Calculator.
Bob and Anna Bassett