114x Filetype PPTX File size 0.15 MB Source: www.123seminarsonly.com
SET-UP • Mainly consist of Independent, unsalaried salespeople, associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents. • are awarded a commission based upon the volume of product sold through their own sales efforts as well as that of their downline organization. LEGALITY • Many pyramid schemes try to present themselves as legitimate MLM businesses. Note:-. Good plans where the money you make is based primarily - on people outside the plan who intend to use the products - rather than on the number of distributors you recruit and your sales to them. CRITICISM OF MLM • In 1979, Amway was found guilty of price fixing (by requiring "independent" distributors to sell at the low price) and making exaggerated income claims • The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as "pyramiding”. • Walter J. Carl stated in a 2004 Western Journal of Communication article that "MLM organizations have been described by some as cults (Butterfield, 1985), pyramid schemes (Fitzpatrick & Reynolds, 1997), or organizations rife with misleading, deceptive, and unethical behavior (Carter, 1999), such as the questionable use of evangelical discourse to promote the business (Hopfl & Maddrell, 1996), and the exploitation of personal relationships for financial gain (Fitzpatrick & Reynolds, 1997)". • the loss rate for recruiting MLM’s is approximately 99.9% COMPENSATION PLANS • Unilevel plans:-Every distributor the person sponsors is considered to be on that sponsor's frontline and there are no width limitations, meaning there is no limit to the amount of people one can sponsor in the frontline. . This is due to the fact that commissions are normally paid out on a limited depth, which typically means sponsor can earn commissions on sales between 5 and 7 levels deep. • Stairstep Breakaway plansThis type of plan is characterized as having representatives who are responsible for both personal and group sales volumes. . Once predefined personal and/or group volumes are achieved, a representative moves up a commission level. This continues until the representative's sales volume reaches the top commission level and "breaks away" from their upline. The original upline usually continues to be compensated through override commissions and other incentives. • Matrix plans This type of plan is similar to a Uni-Level plan, except there is also a limited number of representatives who can be placed on the first level. When all positions in a representative's downline matrix are filled (maximum width and depth is reached for all participants in a matrix), a new matrix may be started. representatives in a matrix earn unlimited commissions on limited levels of volume with minimal sales quotas Contd… • Binary plans: A binary plan is a multilevel marketing compensation plan which allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributor's front-line. • Hybrid plan are compensation plans that are constructed using elements of more than one type of compensation plan. PYRAMID SCHEME • A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service being delivered. Pyramid schemes are a form of fraud.
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