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Comp Plan for 10 Steps

 

If part time people are not rapidly making money then they tend to fail. That's been the story of the industry, the big companies especially. It really takes a Herculean effort to break into solid net profit and then go into really huge residual income. That's been the history of it. Our compensation program has been about solving that problem, which is basically attrition. In most companies like Oasis,if you bring 100 people in, a year later only 5 or 10 of them are left. Those are the kinds of issues you run into with most unilevel comp plans in the industry of network marketing. The part time person has a challenge getting into the net profit easily, and maintaining it residually. A lot of the companies now have some sort of fast start bonus, but they don't have a way to hold the part time person on the residual side. Then 6 months into it they're gone because they've put all this effort into it and they are not making money.

The Residual Bonus, Fast Start Bonus, and New Member Bonus follow on the next 2 pages. This is limited, easy to understand info intended to give the New Member enough (but not too much) information. The Life Force Compensation Plan on the website gives all the details.

 

Residual Bonus – info for the New Member

So the basic thing we like to show is 4 who get 4 (the Napkin Presentation) and just how the comp plan works. Typically in the average network marketing company the average payout is between 5 & 7 % per level, so if you just build a hypothetical group of 4 people who get 4 people and you pay out 5%, and each person is doing $100.

On the first level you would have 4 people x $100 = $400, then x's 5% = $20

Second level you have 16 people x's $100 again = $1600, then x's 5% = $80

It creates a commission stream of $100 per month $100

This is about a 4-6 month part time effort in the average company and these are averages. Sometimes it happens faster, sometimes slower. Another fact is that it costs about $300 a month when you add everything up and divide by 12 to do this kind of business from your home. What happens is you get someone who tries it for 4-6 months and they are getting behind financially. They've got a $300 credit card bill and a $100 commission check – it's a negative cash flow. A lot of times if you've got a partner situation, like a husband & wife. One of them is in it 122% the other one is in it about 10%. They're looking at this saying “this isn't working.” What happens in a partner situation is the workload gets transferred to the one who is only in it about 10%. The dishes, cooking the meals etc. and they are saying “I've got to put the kids to bed & do all the dishes because you are on the phone doing this thing you're doing, and you are losing $200 a month? 6 months into it? HELLO!” The spouse becomes this huge factor in driving them out of the business. That's been the dynamic of the industry. What we have done at Life Force is not only create a number of front end bonuses, like the Fast Start Bonus and the New Member Bonus to give people income for their very first orders that take place, but we also have a really big residual compensation, which is the 15% and the 40% on level one and two. The real genius is the 40% on the second level because here's what it does if you just do the math with the same group that you earned your fast start bonuses with.

On the first level you would have 4 people x $100 = $400, then x's15% = $60

Second level you have 16 people x's $100 again = $1600, then x's 40% = $640

It creates a commission stream of $700 per month $700

 

The way Life Force does it is that they have compressed the pay plan. Instead of initially creating a plan where it's 12 levels deep at 5%, they are compressing and paying 3 levels at 15, 40, and 10%. They have also created a big back end where they provide serious income. However, it's the front end for the brand new person that can now receive $700 a month. They are at $400 a month net profit. Now the skeptical spouse is looking at it going “Yea. You got it to here, maybe you can get it to $1000, $2000. The spouse is now a cheerleader instead of a detraction. This simple little shift in compensation makes a huge difference in the retention of people. We have found that if the brand new person can make money quickly and easily, they stick around even if it's that their products are paid for and it's an extra $100 bucks a month. The best part is that you're not having to call them and convince them to stick around. That's one of the great compensation dynamics of Life Force.

 

Fast Start Bonus – info for the New Member

 

New Member Bonus – info for the New Member

The amount of money paid out varies, and is based upon how much company BV is generated. One-half (.5) percent of company BV is paid into the New Member Bonus on a monthly basis. The New Member Bonus Pool is then divided up in shares among all new members qualified to receive it.



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01.01.05 - Recommended Wellness Program updated.
02.24.05 - Another news item here.