There are many different kinds of reward plans in network marketing. Some work better than others, as you can imagine. Some are complex, others are relatively simple. Many start out simple, then end up with lots of enhancements to make up for deficiencies not anticipated by their creators.
Regardless of the type of reward plan you're considering, there’s one important point to note: people succeed and fail in every kind of reward plan.
In this section, we’re not going to analyse or compare all the different types of reward plans. Apart from lack of space, new variations keep appearing regularly — so any comparative analysis could easily be out of date before it was posted.
Instead, we’ve outlined some guidelines you should bear in mind when doing your own analysis. These are important attributes that will ensure fair reward for effort at every stage of your progress.
What should I look for in a reward plan?
For a start, discount all the miracle claims of instant, overnight riches for no effort. Be wary, too, of promoters who claim that they’ll build your downline for you. Why would they if they didn’t expect to make more money than you from their efforts? Why do they need you at all? Use common sense. If it sounds too good to be true, it probably is.
Look for these features in any reward plans you’re asked to consider. You’ll discover that they’re often interrelated and may overlap:
- Reward in proportion to effort
- Sustainable levels of rewards
- Exponential growth factor
- Clear differentiation between reward and recognition
There should be a balance between your rewards for personal selling and sales made by your downline network.
There should be a balance between the horizontal and vertical aspects of your personal group. In other words, rewards generated by sales from your personally-sponsored distributors (horizontal growth, or width) and those further downline should be balanced to encourage you to work with both. You should continue to sponsor personally into your front line, as well as working deeper downline. There should be no penalty or disincentive for either.
Of course, some plans — such as binary plans — simply don’t allow you to build wide by their very nature. You have to build depth.
The plan should not reward “heavy hitters” (super recruiters with mega networks) at the expense of those distributors just starting out in business or still growing. Too often, in plans that pay large overrides on many levels, the product price has to be set very high to be able to pay those higher rewards. This can result in loss of leverage, because retail prices become too high for anyone to sell. So distributors end up having to recruit their customers to buy at wholesale
Reward in proportion to effort
There should be very clear connection between reward and effort, especially in the early stages of a business. Not only must justice be done, it must be seen to be done.
As you grow in your business, your rewards will be connected more for finding people, training, supporting and encouraging them to grow and develop as part of your downline network. But the connection will still exist between reward and effort.
Sustainable levels of rewards
Companies must be able to cover costs like research and development, plant and equipment, support services and resources (including reliable, fast data processing), logistical support, adequate stocks of products and packaging and much more.
There’s no point in a company paying out such a high percentage of the product price that it threatens the very existence of the company. If the company collapses, nobody earns anything, and the entire industry suffers, not just those left with products and literature, kits, etc. they can’t use any more.