You should look for third party information, facts, and resources that deal with precisely what it is going to require from you to be successful in this industry. This is the first step, and should happen before you make a decision about about signing up for any company or make an investment in any business opportunity.
So… you have decided to invest your time, energy, dreams, and finances into a new business venture. Is a Stairstep Breakaway plan right for you and your goals then?
It goes almost without saying then that when you understand the specifics of the pay plan you will be considering, then you are better equipped to choose the right opportunity and business pay plan for your specific needs.
It is clearly evident that MLM Compensation Plans should be subjected to the same evaluation process that any MLM opportunity, its leadership, products, and marketing system go through before you make a decision about signing up.
The pay plan is clearly an important facet, but it is only one part of any network marketing opportunity. Due diligence mandates you examine the whole package, including but not limited to: Company Pay Plan, Products Sold, Automated Business Tools, Market Size, Leadership, Start-Up Costs, Mentorship, and your personal level of Skill and Preparedness.
Are Stairstep MLM Compensation Plans proven and sound?
Variations of the ”Stair Step” have been used for over fifty years. This plan started it all and is still being used today. The Stairstep breakaway plan remains the most tried-and-true type of plan out there, and with the success of mega-superstar companies like Amway, they are most likely to survive in the decades to come.
Stairsteps are the best known and demonstrated of the five basic compensation plans. The plan was declared legal after a great legal battle was fought for it and as a result it has been copied more and more in the industry through the years. Like most surviving plans in the industry it has undergone advancement and evolution throughout its career to become one of the most tried and true plans out there to date
Though long in the tooth, there are advantages to this compensation structure, and there are also a number of disadvantages. Its’ longevity does not necessarily make it the one size fits all solution for every marketer out there.
Are Stairstep MLM Compensation Plans a Pyramid Scheme?
A Pyramid Scheme is a recruiting game for money and they are illegal enterprises. Some MLM Pay Structures may look like a pyramid when they are filled up, but that does not merit pyramid status. Stairstep Breakaways are not Pyramid Schemes.
People joining pyramids are only joining for the opportunity to make a lucrative payout off of recruiting. That’s strictly illegal.
A clue in spotting pyramid schemes is there is no legitimate product or service for sale. Another give a way is there is no payout unless you successfully recruit a number of people into the pyramid. Generally there is no selling or marketing of any products or services necessary to receive payment.
MLM plans are a very different animal indeed.
Stairstep plan basics include:
In a Stair Step Breakaway Plan, distributors climb the ladder of success (or steps) and when they reach a certain level of accomplishment, they are allowed to break away from their main upline and run their organization independently. The original upline sponsor receives a percentage override on the sales of the entire breakaway, but it will be significantly reduced.
As distributors break away from their upline it allows them to earn progressively greater commissions. ” Each distributor is allowed to sponsor one level of “frontline” distributors and limited depth (levels) depending upon the amount the company can afford to pay out. There is no limit to the width (number of frontline distributors) you can sponsor and receive commissions on.
Advantages of Stairstep MLM pay Plans:
With Stairstep plans you can build as wide as you want for your front line of distributors. You could build your team with each of theses distributors or find one special marketer in the group, and focus your attention on building a large organization together.
This plan is now well known and it is widely accepted by regulation agencies. There is no doubt as to the legitimacy of this pay plan.
Stair Step Breakaway Plans work well for experienced distributors that have good selling, recruiting, and management skills.
This plan is better suited to full timers but becomes an option for more part-time and novice distributors with recent advancements in the industry. Internet marketing skills in particular, can dramatically level the playing field and make it just as friendly for dedicated part-time distributors.
Disadvantages of Stairstep MLM Compensation Plans:
The Stair Step Breakaway Plan is hard for many to understand, and is even harder to try and teach and explain.. This makes selling the pay plan portion of your business difficult from the start at a time when you need new sales the most.
Personal volume requirements can be very high. This can be difficult for many new distributors to absorb as they try to move their business into profit. Attrition rates can be high as a result.
A tried and true 50-year-old plan isn’t a sexy sell. It may be difficult to seem appealing to new distributors looking for the next bigger better deal.
The Stairstep Breakaway plan is considered by many to be a pretty unfair plan that puts strong incentives toward full time big gun network marketers at the expense of part time and novice recruiters. It can be a very brutal plan to make money with for the part-timer.
It’s a Breakaway Plan! Your strong legs reach the necessary step requirements and they “Breakaway. You loose their volume after working so hard to help build and develop them. This can be a significant portion of volume or in the worst cases it can be the complete volume of that leg. Ouch!
Breakaways offer little incentive for teamwork.
Breakaways have a bad reputation for encouraging distributors to buy a large amount of product (inventory loading) every month.This often creates a stockpile of products distributors are unable to use or retail.
What do you need to know about Breakaways to make them work?
For those looking at this compensation plan for the first time, one thing to consider is this; do you have, or are you willing to attain the time and skills necessary to become successful with this type of commission structure?
All the more with this type of plan you should seek out third party information, tools, strategies, systems, and mentorship to be sure you are positioning yourself for success in the industry.
Aspects of Stairstep MLM pay plans you may not be aware of:
The Breakaway… To break away from your upline is good for you. You will earn better commissions as a result. However, it can have a serious negative impact for your upline. They can still earn commissions from you, and from your volume, but it no longer flows through your to your upline at the same rate. The new reduced commission your upline receives is called an “over ride commission
Your upline loses some of their best customers. Each breakaway is called a generation and although distributors are entitled to earn an override commission on all of their breakaway generations, this override commission is only a small slice of what it was.
This aspect of the breakaway plan seems fine for the distributor at first but then as they help to build their teams some of their best distributors and downline members begin qualifying for breakaway status and leave their organizations. So at first you may be thinking “okay that’s fine I’ll still get some override commission right?” However, you’ll need to maintain a certain level (often quite large) of “open volume” (this is sales volume outside of the volume the break away business is creating.) just to qualify for the override commissions.
What’s really frustrating is when the “Rock Star” distributor you helped groom and develop, the one who’s helped explode your business, now breaks off from you. They’re still rocking and building a very large business but now you can’t maintain a large enough amount of open or new business to keep up. So what can happen is you become unqualified for the override commission. The breakaway volume from the rockstars team is now gone… Ouch!! This can lead to distributors stockpiling product in order to qualify for their override commissions. It’s a bad situation.
Some of the top MLM companies have recognized this and adjusted their compensation to help this problem, but the distributor still feels they are leaving money on the table because, in reality, they are!
Stair Step Breakaways in the past helped to give the industry a bad name. Some companies set their group sales volume targets so high that new distributors were encouraged to purchase large amounts of product beyond an amount an average distributor could consume or sell.
How do Stairstep MLM Compensation Plans pay you?
There are always at least two parts to a Stair Step Plan
The ”front half” or “front end” is the sales plan. Compensation rises at each different level (step), with the highest compensation at the top step. The goal is to reach the top of the stair step by meeting the different qualifications necessary.
Some qualifications are fulfilled by personal (retailing) sales; others by group sales, others are personal sponsoring requirements, and group sponsoring requirements, while some require all of the above to progress up the ladder of success.
Each of the steps has different names and requirements and their titles demonstrate a person has reached a certain level of qualification and achievement.
The second half, the back half (back end), or break-a-way, is the managing half of the Stair Step Breakaway Plan.
Here is where one gets paid based on their management and training abilities, plus their sales volume consistency. In this second half of the plan, distributors continue to be paid on the front end of the plan as before, but they are also being paid a percentage commission on the sales volume of legs in their organization who have reached the same top bonus level and have broke-a-way, taking their organization with them.
This commission payment only occurs of course if you meet the open volume requirements described earlier in this article.
The back half of the plan is where a person who works for it can achieve stability and financial independence with a residual income. When a break a way occurs, a percentage is earned on the break a ways group volume. As we have mentioned that percentage is less than before the leg broke away, but can still be a significant pay off. If there are enough of these break off legs in your organization and/or they are of sufficient volume generating size, then these organizations take on a life of their own and provide you with a consistent source of stable and residual income for years to come.
Remember that there are many variations on this basic generalization. Stair Step Breakaway Plans are easily modifiable and there be a number of aspects of the plan that may require your consideration. Compression plays a big part in Stair Step programs and there are several different definitions for compression. Qualifications vary, as do percentages of commissions paid out at differing levels. Other bonuses and incentives may be included in the basic plan that will have varying effects on determining weather it is a suitable plan for you or not.
Is a Stairstep plan going to work for you?
2-5% of the distributors in any network marketing opportunity will say that network marketing is the greatest opportunity they were ever introduced to! They are experiencing the freedom and lifestyles every network marketer aspires to achieve.
Of the 95% of others, reviews will always be a mixed bag of responses that range from ‘I made a little money,” “it just wasn’t for me,” to “it’s an outright scam and a pyramid scheme”. This is true of the Network Marketing Industry as a whole not only of breakaway plans.
The mitigating factors between success and failure are the tools and training you receive, and in the person you are willing to become to succeed. Are you or are you not willing to become trained and mentored to succeed in this industry? Are you ready to apply the knowledge and skills you learn on a daily basis? If not then MLM may be a huge disappointment for you.
Are you really ready to take your life and income to the next level? These are questions you should have answers to before joining an opportunity not after.
I think that Matrix Plans are an awesome opportunity for the right person. I also understand it takes significant training, tools, and mentorship for most people to succeed in a home based business.
People need to hear the truth and have access to the training and tools necessary to succeed. What they don’t need is more smoke and mirrors and hype that get people into a business they are ill prepared to succeed in.
That’s actually the reason I wrote this series of articles and produced the video’s. I’m making an offer to those people who want to join those at the top of the industry. To those involved in MLM already and to those just looking. I want to show you the tools, training, and resources that make the 5% difference.
Sign up now to get plugged into these awesome cutting edge tools, techniques, strategies, and resources… But you’ve got to take some kind of action today for your own success!
