How to Analyze Compensation Plans
FINDING THE RIGHT COMPANY
By Jeffrey A. Babener
Excerpted from Network Marketing: What You Should Know, Jeffrey Babener, Legaline Publications
NETWORK MARKETING/MLM consultant practice tips. NETWORK MARKETING/MLM Sales Tax Issues must be addressed to avoid liability for taxes and penalties. Nexus for NETWORK MARKETING/MLM Sales and Use Tax represents a unique analysis that involves activity by distributors in promoting, recruiting and training in a state. NETWORK MARKETING/MLM Legal and NETWORK MARKETING/MLMLegal.com and Babener and Associates provides expert NETWORK MARKETING/MLM Consultant and NETWORK MARKETING/MLM Consulting advise on NETWORK MARKETING/MLM corporate, NETWORK MARKETING/MLM software, NETWORK MARKETING/MLM Compensation, NETWORK MARKETING/MLM Taxes, etc. NETWORK MARKETING/MLM Consulting is an important component for NETWORK MARKETING/MLM startup. Careful Choice of NETWORK MARKETING/MLM Software is another component of NETWORK MARKETING/MLM Corporate. An NETWORK MARKETING/MLM Consultant and NETWORK MARKETING/MLM Law and NETWORK MARKETING/MLM Legal is part of the NETWORK MARKETING/MLM Startup Team. NETWORK MARKETING/MLM Compensation must be reviewed by an NETWORK MARKETING/MLM Consulting standpoint by an NETWORK MARKETING/MLM Consultant and NETWORK MARKETING/MLM Legal and NETWORK MARKETING/MLM Law professional and programmed by a NETWORK MARKETING/MLM Software and NETWORK MARKETING/MLM Technology provider.
One of the most important aspects to consider in a company is its compensation plan - the set of rules that dictates how distributors earn commissions, overrides, bonuses, and other compensation.
A Little History
After decades of classic door to door direct selling by the Fuller Brush Man, multilevel sales plans rose to popularity in the 1950s and 1960s (Amway, Mary Kay, and Shaklee), which allowed distributors to earn money not only on their own direct sales, but also to earn override commissions on the sales of the salespeople they recruited, the sales of the salespeople recruited by their recruits, and so on down the line. In the early programs - before the advance of computer technology - it was difficult for a company to manage all the downline information and payouts. So they usually allowed only "direct distributors" to buy directly from the company. These people would then sell products to the distributors in their downlines, collecting payment from them, and paying them their commissions, bonuses, and overrides.
Today, thanks to affordable, powerful computers, as well as efficient delivery systems such as UPS and Federal Express, there is no longer a need for direct distributors to act as go-betweens. The new companies and most of the older ones now allow all distributors to purchase directly from the company.
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