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What’s not to like about a commission-based compensation plan?

I recently had an email conversation with someone about business…specifically home-based business…specifically about network marketing business. This person remarked that the product I represent looks wonderful but was taken aback by the binary nature of the compensation plan…saying that it looked like it takes “too much work.”

Well, I wonder what kind of business doesn’t take some work?  Because part of  marketing I do for my business is done online, I get my share of people sending me their marketing pitches for businesses that “require no work at all” in order to earn “millions.”  Frankly if I see these phrases, or ones very like them, I delete them asap. I’m actually not interested in anything that smacks of “get rich quick” with no work at all.  My parents didn’t raise me to be lazy.

Having said that, I am, however, a proponent of a business that builds residual [or passive] income.  This is income you continue to receive once the work is already done.  One simple example is a book royalty – you work hard to write and publish a novel, then you sit back and enjoy the residuals that come as the book is sold, reprinted and sold again.  Residual income.

There are network marketing [direct selling] businesses whose compensation plans are built in such a way that residual income is a very real possibility.  One type has a binary system.  This simply means that you build a team of distributors by sponsoring new people into the company- who in turn do the same thing.  You work your business in three ways by:

  • being your own customer first and foremost
  • retailing your product
  • sponsoring new distributors

In a binary system the organizational chart of your business has You with a Right Leg of distributors whom you have sponsored and a Left Leg of distributors whom you have sponsored.  They are doing the same three things you do…and one of the ways in which you earn income is by earning commissions and bonuses based on the overall sales volume of your Right and Left Legs.  This is not hard.  Yes it is “work,” but it is enjoyable work.  You work by talking with people about your product and the possibility of an income opportunity for them.  They may decide to become a retail customer and simply enjoy the benefits of your product….just like they do products they purchase from the grocery store.  They may decide that a home-based income opportunity is something they’ve been looking for and your opportunity appeals to them and you subsequently help them to enroll [sponsor].

If you do this consistently and often enough your business will grow.  Your “downline” will grow to a point that it takes on a life of its own and you will earn income whether you are actively working or not.  The caveat is that to receive continued commissions and bonuses you comply with whatever conditions your company establishes, but in some cases simply by purchasing the product for your own use on a monthly basis will satisfy that.  Why will you then receive residual income? Because all the people in your downline [those distributors in your Right and Left legs] are busy building their businesses…and you continue to receive commissions and bonuses based on overall sales volume.

To me, this all makes perfect sense.  I chose the income opportunity I did because I truly love the product. I don’t want a business whose product or service is something either I don’t use myself or really can’t feel proud of.  I chose the company because of its values and culture…it really is a company I want to be associated with.  I don’t mind the “work” involved because I don’t see it as “work.”  I like talking about my product.  I’m pleased with the way the work I do is compensated.  It does make sense to me.

You see, money itself is not enough for me to have a business I do at home.  I am the kind of person who has to believe in the product and the company behind it.  So, what’s not to like about a commission-based compensation plan?

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One Response

  1. Many people want a magic business where they do no work, spend no money, spend no time, do not learn anything but magically money comes to them. It takes time to set up residual income. If you are too short sighted to know that, then business is not for you.

    Dr. Letitia Wright
    The Wright Place TV Show

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