This is Part 2 in a series of five articles[1,2,3,4,5].

Note: It has become increasingly clear to me that it’s just as important for network marketing distributors to understand MLM compensation concepts as the MLM companies, themselves. Why? Because distributors invest their all into building a downline. The bottom line is if distributors understand MLM commissions, they can make better choices about the companies in which to invest their lives!

A Breakaway Compensation Plan includes very defined sales force classifications: 1) distributor and 2) sales leader, and commissions are paid very differently on each of them. A new distributor is basically considered as a pre-sales leader. When he/she advances to a designated level, he/she breaks away from his/her sponsor and forms his/her own group as a sales leader. The plan then pays this distributor, called a breakaway, a new, different type of commission. It is usually referred to as a sales leader override. His/her group volume is no longer included in his/her sponsor’s group volume. Instead, the sponsor receives breakaway volume–a smaller percentage. And, the sponsor must go out and replace this person in his/her organization.

For example, last month, you had ten people in your personal group helping you qualify. This month two of them broke away, so now you don’t receive group commission on those two and you have to replace them. If you are a breakaway/sales leader, you’re always going to make more money on your group volume–on the distributors in your downline–than you are on your breakaways/sales leaders. On your group volume, you may earn as much as 15-25%, and on your breakaway volume, you may earn as little as 3-6%. Distributors make more money on their group than they do on their sales leaders because of the commission differential.

The Breakaway Compensation Plan typically uses at least two commission types:

Read full article from Mark Rawlins at MLM.com here.

This entry was posted on Thursday, May 20th, 2010 at 3:42 pm and is filed under Article Series, Articles, mlm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.