How Network Marketing Compensation Plan Works

When I first started out with my network marketing career, I had no idea what my Company Compensation plan was talking about, I thought all I need to do was to sign people in and make money. I was wrong, this course me to lose money because of poor understanding.

It is Important that anyone venturing in to network marketing business to understand how the company of choice’s compensation or marketing plan works. Network Marketing Compensation plan varies from one company to the other.

If you learn how it works, the business will definitely work for you and not against you.. Many People find the plan confusing. Good understanding of Network marketing Compensation plan, will save you time and help you plan your career part accordingly.

If I did understand my company plan in the beginning, I would have plan my strategy beforehand and save me from losing money and down line placement. However, I had to learn fast.

A Plan is an intended course of action or a set of guidelines to deal with a situation, even a kid has a strategy to get over a fence. A plan is a strategy, they are developed consciously and purposefully, all business have them in advance of the action to capture market..

As the word goes, Those Who Fail to Plan, Plan to Fail.

Anyone can understand network marketing compensation plan, you don’t have to be mathematician, and it’s just a simple calculation.
To be successful in network marketing, it is important that you understand the terminology, thus planning your direction.

Network marketing compensation plans are put this way:

Builder
A builder is a distributor who is actively looking for downlines. A builder is not the same as a customer who only consumes the products or recommends them to friends.

Upline                        
You are in their organization. An upline usually earns commission from your group volume. You may have several uplines possibly up to 10-20 levels in depth. Normally, an upline is responsible for your success. An upline may not necessarily be an upline leader/mentor.

Upline Leader/Mentor
This is an upline that you actively seek counseling from on how to build your business. They are here to guide you and are here to mentor you and make sure you succeed in the business.

Sponsor
You are directly under him or her. Normally they are the one who introduced you to the company.

Downline
They are in your organization. Depending on the nature of the plan, your commission from their group usually is smaller the deeper they are in the organization. Sometimes, your downline’s downline could be many levels deep in your organization so you might not even know him personally.

Sideline/Crossline
These people are not in your organization and neither are you in theirs. Basically there are no monetary relationship between your group and the sideline’s group. However, depending on the culture promoted in the company, they are either perceived as the worst competitors, or valuable allies. Take note also, that somewhere along the line, they are also in your upline’s group, so helping your sideline means helping your upline and his group.

Front Line
These are downlines that are personally sponsored by you or are directly under you. You must be directly responsible for their success because you are the one who introduced them to this business. Furthermore, the development of your frontline will determine the success and failure of an entire downline group.

Leg
A leg is a downline group in your network starting from the person you personally sponsored. He and all the downlines under him are considered one of your legs. A distributor usually develops many legs simultaneously.

Width
The number of people you can personally sponsor. Matrixes and Binaries usually limit the maximum width. Normally a strong downline is one that builds and develops a very large width.

Depth
Depth refers to the level of your downline’s downline. A person who has build depth usually has a secure organization.

Override
An override means you are paid a certain percentage over your downline’s group. Normally an override is calculated on your frontline only.

Profit Sharing Pool
Profit sharing is a bonus that is paid out to achievers who have reached certain conditions in the marketing plan. A pool is a collection of sales volume from distributors all over the company regardless of whether the sales volume comes from your sideline.

Maintenance
A mandatory (sometimes optional depending on certain criteria) sales volume a distributor must achieve. Often maintenance is done to override your downline, become eligible for profit sharing, or maintain a certain rank or even the distributorship. Normally this is enforced because the company needs to make money as well.

Total Payout
This means that a percentage of a product sold by the company that is set aside for distributors and retail sales only. The company only keeps the remainder.


You have heard the phrase “Knowledge is power. Yet, knowledge without action leads to failure.  And, so does following the wrong coaching!

Look out for the next post, will be going more in detail, clearing out some common misunderstandings,

Do comment and Share. Thanks.

See you at the Top

Lucy Bieri