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Compensation Plans : Pitfalls of Plans with Regional Ambassador Rene Liaw

Compensation Plans : Pitfalls of Plans with Regional Ambassador Rene Liaw. PITFALLS of COMPENSATION PLANS in MLM Many compensation plans in the world Many pitfalls in compensation plans Some compensation plans have more then one pitfall and some even have almost all of them

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Compensation Plans : Pitfalls of Plans with Regional Ambassador Rene Liaw

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  1. Compensation Plans:Pitfalls of Plans with Regional Ambassador Rene Liaw

  2. PITFALLS of COMPENSATION PLANS in MLM • Many compensation plans in the world • Many pitfalls in compensation plans • Some compensation plans have more then one pitfall and some even have almost all of them • “GAME-OVER” clauses • When you see a “GAME-OVER” clause, it means you’ve hit a brick wall, it means you’ve reached the end of the track, it means the skies not the limit, and it means it’s time to throw in the towel • When you see a “GAME-OVER” clause, know that there is something else better out there. It’s GWT!!!

  3. PITFALL #1 • PAYOUT ALLOCATION - Commissions versus Bonuses? • Commissions are not Bonuses. Very different. • Commissions are your main revenue streams • Why? Commissions are paid weekly, forever. • Bonuses are small part of income • Why? Bonuses are one-time. Once you get them once, you have to do something to get it again (re-qualify, do more work, something) • Payout Allocations in Bonuses make the company rich • Payout Allocations in Commissions make the distributor rich • 80% of the Payout Allocation should be in Commissions. So if a payout is 50% then double check if 80% of the 50% is in commission not bonuses. • Example: ABC Company has 20 ways to earn commissions and 19 of them are bonuses and 1 is in commissions (1% payout). “GAME-OVER” • In GWT, our focus in payout is in commissions (10% to INFINITE)

  4. PITFALL #2 • PAYOUT Levels • How many levels does your pay plan pay? • If it doesn’t pay to infinity, then “GAME-OVER”. • Historically, most of the bulk of distributors in one’s downline is past 8 levels. So if you had 1000 distributors, most of those 1000 distributors are after your first 8 levels. • The longer you are in business, the deeper your organization gets so does it make sense to only get paid to a certain amount of levels? • If you have to do ‘something’ to unlock all levels, then “GAME-OVER”. Why not join a plan that pays you down to infinity without having to do anything. • Example: ABC Company pays you ¼% on your first level, ¼% on the second, ½% on the third, 1% on the fourth, 2% on the fifth, 3% on the sixth, and 8% on the last level. So at BEST you’re making 8% on the last level so if you happen to have 6 people on this level, you get 8% on them. GWT pays 10% on ALL LEVELS!

  5. PITFALL #2 PAYOUT Levels continued Example: ABC Company only pays you down to 8 levels but then only once you reach a certain rank can you get paid 1% on level 9 down to the rest. “GAME-OVER”. In GWT, you get paid 10% on EVERYONE down to INFINITE! Other compensation plan types Matrix - pays to certain levels (2 x 10, 3 x 7) “GAME-OVER” Unilevel – pays to certain levels (5) “GAME-OVER” Stairstep Breakaway – teams breakaway from you so doesn’t pay to infinity “GAME-OVER” Binary – no levels but many different types of restrictions “GAME-OVER” Hybrids – combine different compensation plans that still have a pay to certain levels “GAME-OVER”

  6. PITFALL #3 • PAYOUT and RANKS • Does your compensation plan have ranks? • What is the purpose of ranks? • Ranks only have one purpose and only one purpose. • It’s NOT to motivate you (common myth) • Ranks simply restrict the flow of money from the company to you. It’s restricting how much you make. • Companies have ranks in place because they can’t afford to pay everyone the same payout. If they did, most companies would go bankrupt. • Why does someone who accomplished the ‘Super Nato Commander Rank’ make more then you do? You’re both working hard so why does one get more? • If a company says they pay out 50% but then you have to accomplish the ‘Super Nato Commander Rank’ or ‘Super Special Triple Diamond 5 Star Janitor Rank’ to unlock the 50%, then it’s not 50%.

  7. PITFALL #3 • PAYOUT and RANKS continued • If you have to reach these ranks in order to unlock bonuses, then what do those bonuses really have to do with you? • In other words, most companies have bonuses that have nothing to do with 99% of the people in the company. • Ranks are a pain in the butt. • Have to achieve the rank firstly, and it’s not easy. • Then you have to maintain the rank • Can you lose your rank? If you lose your rank, then do you lose your bonuses? • Can your team lose their ranks? If your team loses their ranks, then do you lose your rank too?

  8. PITFALL #3 PAYOUT and RANKS continued Example: Compensation Plan has A, B, C, D and E ranks. E C C C C D E D C D C C D D E E D B B B YOU B B A

  9. PITFALL #3 PAYOUT and RANKS continued Note: You are a D and want to be a C E C C C C C D C C D D D E E E D E E E B B B YOU B B A • What’s your goal now? You want to help E become a D • Compensation Plan Contradiction • You don’t want to help your other two D’s! • What happens if one of your other D’s is growing to fast and • Becomes a C?

  10. PITFALL #3 PAYOUT and RANKS continued Note: You are still a D rank D E C C C C C D D C C D C E E D E D D E B B B YOU B B A • What happens now? • You just lost a whole lot of bonuses and if your plan was bonus focused, then • you just got “Game-Over!” • Now you are trying to slow down C and make C become a D. Another • contradiction.

  11. PITFALL #3 PAYOUT and RANKS continued Note: You are a C rank D C C C C C D C C D D D E E E D E E E B B B YOU B B A • What happens if one of your D loses his rank and becomes a E? • Then you just lost your rank, became a D rank now, lost a bunch of your • bonuses and commissions, and got “Game-Over” • Not only does it de-motivate you, it also de-motivates your team • member who just lose their rank. They will most likely quit.

  12. PITFALL #4 • PAYOUT GIMMICKS and CAR PROGRAMS • Have been thousands of lawsuits from distributors suing the company for the car program • Whose name is on the lease? Yours or the company? • What happens if you don’t maintain the qualifications for the car? • You end up paying for it, and it can make your bankrupt! • Be careful with companies that give you a car too quickly! • It means that you’ll most likely be paying for it. • Besides, would you rather get a car lease that you pay at least $1,000 a month to drive when you just got started or would you rather take $1,000 cash? • Example: There have been many BMW’s on leasebuster because the people who qualified for them at first could not maintain their qualifications for the free payment and are trying to get rid of them. “GAME-OVER” • In GWT, once you get the car, it’s YOURS without any qualification • or monthly re-qualifications.

  13. PITFALL #5 PAYOUT FLUSHING or BLOCKING OF COMISSIONABLE VOLUME Does your compensation plan flush volume? GWT simply does not flush! Does it flush volume after you reach a certain payout? GWT never flushes volume after a certain payout! Does your compensation plan flush volume after a certain period? GWT NEVER flushes volume! Does your compensation plan have a block on the volume that can accumulate? GWT has no block on volume! Is there a maximum to how much volume can carry-over? GWT has infinite carry-over! Is there a maximum in how much commission you can make from your business center and how much is it? - Example, some compensation plans only allow you to make $1,000/week per Business Center. In GWT, it’s $10,000/week. So to make the same income you have to build 9 additional legs!!! “Game-Over!”

  14. PITFALL #6 • PAYOUT HOW MANY LEGS TO BUILD? • If your compensation plan requires you to build more then 2 legs, then “GAME-OVER” • -Building 5 legs is easier then building 10 legs. Building 3 legs is easier then building 5 legs. Building 2 legs is easier then building 3 legs. • Longevity and retention is in depth. The deeper you build your organization, the stronger it is. • WHY? If someone joined for a while and has NO one on their team, what will happen? They may usually quit. • If you had 10 people join you, and you had to build 10 legs then you would want to put 1 person on each leg. If you only had to build 2 legs, then you could 5 people together on one leg, and 5 on the other leg. Isn’t it nice to have someone join below you?

  15. PITFALL #7 PAYOUT ON ALL LEGS? Does your compensation plan pay you on volume for all your legs? Example: There are some compensation plans that only pay you on the “Pay” leg, or the “Weaker” leg. If they do, then “GAME-OVER!” - If a company only pays you on your weakest leg, then you’ll never touch any of the volume on the bigger leg. So what’s the point in having a bigger leg?

  16. PITFALL #7 PAYOUT ON ALL LEGS? continued Example: ABC Company pays you 10% on weaker leg VERSUS GWT pays you 10% on both legs ABC GWT YOU YOU 1667 volume 1667 volume 10% payout of weaker leg (1667) is $166 10% payout of on both legs (1667 and 3333) total of 5000 is $500!!! 100,000 volume 100,000 volume

  17. PITFALL #8 • PAYOUT ON LEGS IS VARIABLE? • Does your compensation plan require that you balance your legs? • Does it have to be 50/50? • Does it have to be 1/3 and 2/3? • Does it have to 2/3 and 1/3? • GWT is ALL OF THE ABOVE and ALL Combinations • Could be Left 2500 and Right 2500 • Could be Left 2000 and Right 3000 • Could be Left 3000 and Right 2000 • Could be Left 1667 and Right 3333 • Could be Left 3333 and Right 1667

  18. PITFALL #8 PAYOUT ON LEGS IS VARIABLE? continued Example: ABC Company pays you 10% based on 50/50 VERSUS GWT pays you 10% on VARIABLE ABC GWT YOU YOU 1667 volume 1667 volume 10% of 1667 Left and 1667 Right (total 3333) is $333 10% payout of on both legs (1667 and 3333) total of 5000 is $500!!! 100,000 volume 100,000 volume

  19. PITFALL #9 PAYOUT RE-QUALIFICATION Do you need to maintain certain qualifications or re-qualify to keep your commission payout? If you have to do some sort of re-qualification, then “GAME-OVER”

  20. PITFALL #10 PAYOUT RETENTION What’s your companies retention ratio for monthly re-orders? DSA Average for best distributor monthly activity ratio (monthly orders) is 6%. GWT is 40+% DSA Average for best distributor retention ratio is 10% GWT is 50+% Rene’s Opinion: People join MLM/Network Marketing to make money. Otherwise, for the products there’s THOUSANDS in the market and not in MLM. If you join the Health and Wellness industry, there are 30 million people competing against you. “GAME-OVER”.

  21. PITFALL #10 • PAYOUT RETENTION continued • Are you here to make the money once, or make it for life? • If every 3 months, a new company comes out with the “BEST PRODUCTS” then what do you do? • Do you keep fighting with these new companies and constantly in a product battle to figure out which ones the best? And every distributor in each company can say bad things about other companies. • Do you watch your team leave you and join these other companies? • Do you try to leave first and bring your team with you and keep switching every few months or a few years? • How often do you see a leader switching companies? Why? Teams are leaving them. • Do you have to become half a doctor? Do people need to “try” your products • to decide to keep buying?

  22. PITFALL #10 PAYOUT RETENTION continued Does your company sell a NEED versus a WANT? WANT is STRONGER then NEED People don’t need to smoke, they want to smoke People don’t need to drink, they want to drink People don’t need to shop, they want to shop People don’t need to buy brand names, they want to buy brand names In GWT, people want our products, it’s instant appeal and instant gratification so no need to ‘test’ out the products. Products don’t expire, they don’t go bad, they don’t go obsolete, rather they gain value over time, they can be passed on generations after generations and they make you look good!

  23. PITFALL #10 PAYOUT RETENTION continued Does your company sell vitamins? “GAME-OVER” Does your company sell juices? “GAME-OVER” Does your company sell weight-loss? “GAME-OVER” Does your company sell health or wellness? “GAME-OVER” Does your company sell telecommunications? “GAME-OVER” Does your company sell technologies? “GAME-OVER” Does your company sell something that someone else can copy/imitate/duplicate and switch from your company to another? “GAME-OVER” In GWT, we are a BRAND. People love buying brands. No one just shops at Coach, or just GUCCI. People love buying all kinds of brands because they want it. Plus, at GWT we HAVE Plangsten, FERI MOSH 19K and 21K and our BRAND ITSELF FERI, FERI MOSH, and POSH by FERI!!!

  24. PITFALL #11 PAYOUT E/D RATIO (EARNING PER DISTRIBUTOR) What is the average earning per distributor in your company? Industry = $1.00/distributor (Health and Wellness companies) To make $10,000 a month you need 10,000 people = Up to $0.30/distributor (High-tech and telecommunication companies) GWT pays up to $8.93 5000 points to pay you $500. Diamond members give you 90 points per month so 56 Diamond’s pay you $500/month residual. $500/56 = $8.93 (800% MORE then the average!!!) Example: Would you rather have 100 people in your team pay you $100/month or have 100 people in your team pay you $893/month? “GAME-OVER”!

  25. PITFALL #11 PAYOUT IN RETAIL SALES Does the people in your company actually have REAL retail sales? Most companies promote retail sales commissions and how much you can make but in many cases, NO ONE sells retail because the products simply cost too much at the retail cost. Example: ABC Company promotes that they sell all kinds of products online and their entire presentation is talking about online sales but the reality is that NO ONE is selling retail. They’re just getting people to buy vitamins every month. “GAME-OVER”. If you wanted to buy a keyboard because you needed one and you were driving by BESTBUY, would you NOT buy it and decide to buy it through a friend of yours who sells it online or would you stop by, go inside, and BUY IT!? GWT has INSANE Retail Profits through Look Book Catalogue division, @Home Branding Party division, Online division and Trade Shows.

  26. PITFALL #12 PAYOUT IN MATCHING BONUSES Does your company pay a matching bonus and how much? Some companies don’t even pay a matching bonus. Some companies pay a high %, but be careful. A big percentage on a small number is still a small number. Example: ABC Company pays you 100% matching bonus on your personal sponsored member, John’s cheque. John made $20 so you made a $20 matching bonus. In GWT, you get paid 10% matching bonus whenever they make $500 which is $50 (more then twice the amount) Note: If your company is heavily focused on bonuses and not commissions, then this is certainly “GAME-OVER”

  27. PITFALL #12 PAYOUT TO BUY LEADERS Does your company pay leaders to join the company? Why would a company do that? Example: You and I, go to Malaysia and find a new mushroom extract and create a NEW LATEST and GREATEST and BEST PRODUCT. But how do we build the organization now? Do we start talking to people to join us and be at the top? We could, but it’s very slow. What’s the faster way? Get leaders to join us! But will a leader whose making lots of money leave their company just to join you? No, because they’re making a lot of money. So how do we get these leaders? We pay them to join. But… is that REAL? NO! And these are the leaders on stage saying how much they made and that you can make it too… but it’s NOT REAL! In GWT, no leader is bought. Every earner MADE IT!!!

  28. PITFALL #12 PAYOUT TO BUY LEADERS continued Are you impressed by fake stories? Rene’s Opinion: People always tell me that they know someone in ABC company who makes $1 billion dollars a year and that’s why they are in the business. Firstly, these stories are 99% of the time not real. Secondly, if someone is making that kind of money, it usually means the timing is wrong because it takes so many people to get there so most people have heard of your company. Example: People talking about ABC company but out of 10 people, 9 heard of it. “GAME-OVER” Thirdly, never look at what someone else is making and assume you can make it too. Look at other facts and stats that we covered today! GWT only has 12,000 people, and we’re a BRAND, and THE BEST OPPORTUNITY ON THE PLANET!!!

  29. Its Time To Live Again THERE IS NO COMPENSATION PLAN THAT PAYS MORE THERE IS NO PRODUCT MORE UNIQUE in Direct Sales THERE IS NO PRODUCT MORE UNIQUE in the world THERE IS NOTHING MORE YOU CAN ASK FOR THE ONLY THING YOU NEED IS… ACTION!!!

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