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Each person can sign up only 2 others which directly report to them. If you bring on additional people, you sign them up below others in your organization. So, you have two "downline" groups. You are paid on sales of lower-selling group for month. The difference between your higher-selling and lower-selling group may roll over to following month. Obviously there is a big advantage to you if it does, so this is something to ask about.
This is probably most popular plan for part-time network marketers, since you only initially need to locate two others interested in your opportunity and since those above you in hierarchy have an incentive to place people in your organization for you, to help you get started and to increase their sales volume.
In this plan, you can have as many others as you want sign up directly under you. Then, there is a set number of levels in your downline, usually ranging from three to nine, and varying bonus percentages on each level. To explain a bit more, if you have "John" sign up directly under you, and he gets "Suzie" to sign up under him, "Suzie" is level 2 to you. You will receive a percentage of all sales up to number of levels allowed, though percentage will decrease as person is more layers removed from you.
A matrix plan limits number of distributors you can sponsor on your first level, usually to less than five. The most common form of matrix is called 2x12, meaning two wide and twelve levels deep. Another way of looking at this is that or you can have on your first level, a maximum of two distributors, second level - 4; third - 8; fourth -16; fifth - 32; sixth - 64; seventh - 128. Aside from 2 x 12, other common matrices are 4 x 7, 5 x 7, and 3 x 9. Matrix plans generally tend to pay down more levels than other types of plans, at least on paper. Since width is limited, and organizations tend to go deeper in matrix plans, so do levels bonuses are paid on. It is also much easier to predict how much you will earn on each level, since you will know exactly how many people will fill each one. Generally, matrix plans are simple and easy to explain and understand.
Well, I heard of this compensation method in many of things I read but couldn't find any detail on it. The articles I read referred to it as a "scam" - so beware if this compensation method is used by a company you're evaluating.
HYBRID OR COMBINATION:
The options here are almost unlimited. Companies can combine basis compensation plans in any way they want!
Residual Income: ------ Income can only be considered truly residual if you can go on vacation for an extended period of time and still get paid. If you are looking for residual income, watch out for "personal sales volume" requirements. This means that you personally must sell a minimum amount of product each month in order to be paid. Obviously, that doesn't meet vacation test.
Upfront Costs: ------ All network marketing opportunities will have some sort of upfront starter kit that you need to purchase. They start around $200 - $300, and can go quite a bit higher than that. For your money you will get some initial sales materials and products.
Ongoing Costs: ------ You will generally be expected to purchase company's products on an ongoing basis for yourself - you can't sell something you don't believe in!
In addition, if you will be marketing person-to-person, you will need to purchase marketing materials, and if you will be marketing via internet you will likely have ongoing costs for a company web site, an 800# for prospects to call, and for advertising your opportunity.
This is definitely a "your own business" situation, so you will have some ongoing business costs as described. Also keep in mind that these costs may be tax deductible, so keep good track of your expenditures.
Marketing ------ The "traditional" model of network marketing involves making a list of 100 people, sending them all letters, following up with calls and cornering them into face to face appointments where you sell them on business opportunity. This is fine for "natural" sales people - but there aren't many of those out there.
However there are many successful people doing network marketing in a true marketing sense - meaning giving a little information to a lot of people and waiting for interested parties to contact them - using mass media like classified ads and internet. If you're interested in this approach - I would suggest you find a company who is already doing it, since they will have a lot of tools (ad examples, web sites, etc) that you can use right away, rather than having to develop your own.
Also, if you plan to market using internet, make sure it is allowed! Some companies restrict use of internet to promote their products.
Training and Mentoring ------ Many companies don't offer much training or mentoring, so many people joining these organizations are not successful. I would suggest you look for a program with a strong mentoring component and a strong training program.
Also, keep in mind that many organizations have weekly training meetings. This sounds good - but can be a problem if you have children to take care of in evenings. You may want to look for an organization which offers their training via conference call instead.
(c) Carol Woods
Carol Woods is a small business consultant and the editor of Work at Home Income, a weekly publication of Income Building Blocks. IBB offers free ideas, information and inspiration for moms who work at home - or want to! For lots of free ideas to help you find a work at home job or start a home based business, visit us at http://www.income-building-blocks.com and sign up for Work at Home Income!