If you’ve ever wanted to change your network marketing or MLM compensation plan, you’ll quickly realize that doing so is a cautious exercise that involves part art and part science. Change it too often or too drastically and you could run the risk of losing your whole company. Refusing to change when change is needed can also put you at risk.
There are a million ways for your business to die in the network marketing space but those of us have been around long enough have (more than once) seen the billowing mushroom cloud of a once-revered company… those that made critical mistakes with their compensation plan and couldn’t stop the disastrous chain reaction countdown before becoming a bright fireball in the MLM rearview mirror.
Here are just a few “no-brainer” principles to consider when you get tempted to toy with your commissions and how they are paid.
- Do make sure that you fully evaluate the pros and cons of each proposed change. Some questions to ask might be:
- What are the reasons for the suggested change?
- Who is this change geared towards? (i.e. the new enrollee, the leader at the top, or corporate?)
- How will this affect payout both short-term and long-term? Is it sustainable?
- How will this impact potential future bonus changes?
- How will this affect your payout limits or cap?
- How complex is it? Compensation plans are inherently complex but if it’s too left field, it won’t fly.
- Who will be the biggest advocates of this change and why?
- Who will be the biggest detractors and why?
- Can we get buyoff from the key field leaders?
- Do have your MLM software provider or IT staff run various scenarios. Your software provider should be able to provide you with a robust set of data to help you analyze before-and-after type scenarios. Spend the time to make an informed decision by looking at all the data before you rush to judgment.
- Do fully explain the changes to your distributors before (or right as) the changes are going into effect. Keeping things clear will avoid confusion and mitigate loss of momentum.
- Do make sure you fully test the changes before rolling it out to avoid any embarrassing mistakes.
- Don’t rush into changes just because a so-called “expert” or leader suggests the changes are the hottest thing since plutonium. Give yourself time to fully scope and evaluate or you just may start a chain reaction of destruction that you are powerless to stop.
- Don’t make promises to the field about the changes until you know for sure the exact changes that are going to be made. When appropriate, however, you can consult with your top field leaders or advisory board for suggestions and opinions after the relevant data has been gathered. Reserve the right to have the final decision come from corporate.
- Don’t make constant changes to the plan or you will begin to lose the confidence of your leaders, which will result in a lack of momentum and potential sandbagging (holding enrollments until changes are finalized and the system is stable).
- Don’t promise the field any dates until you consult with your software provider or IT staff making the change.
While most of the above principles seem like common sense, you’d be amazed at how many times they are violated. Sometimes those violations prove catastrophic and other times companies just get plain lucky. It’s exciting to introduce a “new and improved” plan to your distributors and I’ve seen many companies pull it off effectively. It takes a bit of finesse, a little luck, and a whole lot of planning and preparation to make it go smoothly.
Keep in mind that it’s generally okay to have a few small bumps along the road… and good communication really helps turn those bumps into nothing more than minor annoyances. Just take care not to detonate that plutonium or your company may soon be a smoking crater along the littered highway of long-forgotten MLM dreams.