MLM Commissions Explanations Made Easy

Multi-level marketing (MLM) commissions are based on fairly standard models, but they can be quite confusing for someone who hasn’t been working in the field for very long. There are differences from company to company, but some basic structures usually remain the same. Those are:

Some standard type of commission

The ability to move up in rank

Rules you must meet to get commissions

Some means of structuring downlines

There have been many different types of commission plans over the years. Six types have come to be recognized as standard types of commission plans. Standard plans must be implemented by companies over more than two years, and the strengths and weaknesses and payout properties must be fairly well known in the industry.

Why are there so many different types of plans, many diametrically different from the rest? This is usually due to the evolution of plans from two different types of concepts. Those two are:

Putting focus on paying the salesperson and then adding the commissions to pay the leaders in sales at a later time.

Putting focus on paying the MLM commissions first, and then calculating salesperson commissions at a later time.

These two different methods can lead to very different amounts paid to salespersons and those in their upline and downline. Let’s take a look at the history of MLM commissions.

The feature of paying the sales commissions first started with the very first commission plans themselves. Companies preferred this strategy because they were initially just adding MLM commissions to a sales plan that was already in place. In addition, they were limited technologically at that time. They didn’t use computers like we do now, and it would have been nearly impossible for them to make contact with every distributor. So, companies had what they termed “direct” distributors, and these were the people who had the warehouses and sent product to their downline distributors and their consumers. Since the so-called “direct” distributors paid commissions to their own downline distributors, the company wasn’t involved.

In the late seventies, companies were able to take advantage of new technologies that would allow them to deal with all of their distributors, and they took that burden off the direct distributors. This was the ground level beginning of the MLM industry. In the years to follow, this industry would mushroom into a profitable business opportunity for more people than they could have imagined, back in the seventies.

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Written by Internet MLM Training - http://internetmlmunderground.com

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