Multi-level marketing has witnessed many scrutinies and regulations, mainly because of the complexities in their compensation plans. Some fight and evolve successfully while many others fail to make their point and exit halfway. The MLM industry has witnessed this year over year making it important for brands to maintain fairness and equitability in MLM compensation plans.  

An MLM compensation plan is the linchpin over which MLM businesses grow and expand. Any hairline flaw can cause high damages to the revenue and reputation of the brand. All this can be prevented by maintaining a transparent and structured compensation plan. 

How? Let’s analyze. 

MLM companies choose their products, their profitability goals, and then finalize on which compensation plan to choose. While there are quite a number of options available, choosing the right one is the most trying part. MLM consultants often help brands overcome this challenge but in the course of the business, the compensation plan might require small tweaks to align with the changing business requirements.  

In the distributor's point of view, the compensation plan must reward them fairly for their efforts. While most of the distributors analyze a company’s compensation plan before joining, many others are ignorant of its importance. Brands must focus on maintaining complete transparency in their compensation plan, and train distributors on its functioning to help them in their decision making process. This not only is a demonstration of commitment, but also helps in building brand loyalty and trust. Real-time recognition of distributor efforts accelerates distributor productivity and improves retention rates. 

A fair MLM compensation plan can also help businesses save themselves from legal scrutiny. MLM plan that adheres to industry regulations and the operating country’s policies empowers businesses to expand seamlessly without complications. It enhances brand image among customers thus improving the brand credibility. Companies must focus on establishing Income Disclosure Statement (IDS) so that new entrants are well-informed about their earning opportunities and wrong earning claims can be kept at bay.  

 >> Companies must constantly monitor the performance of their compensation plans using compensation management tools or MLM software that provides compensation plan analytics features. 

 >> Scalable technology solutions will also help maintain the health of the compensation plan as it accommodates growing user base, workloads and traffic. 

 >> Automating the whole compensation process can also hint on flaws, rightly notifying businesses to amend their compensation plan. 

 >> Train distributors on every minute detail of the compensation plan, their earnings, and the changes in the compensation metrics, if at all it happens. Communicate the changes clearly. 

 >> Analyze distributor performances and whether they are paid fairly and on time. 

 >> Choose customizable compensation plan that can accommodate zillion changes that may arise along the way. 

 As important as it is to drive new distributors to expand the network, evaluating the efficiency of the compensation plan also demands attention. Neglecting this can cause businesses heavy damage to their identity and revenue.