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MLM COMMISSION PLAN QUALIFICATIONS AND RANK ADVANCEMENTS
Article by: Mark Rawlins | Founder & CEO, InfoTrax
May 19, 2010
http://mlm.com/mlm-commission-plan-quali...k-rawlins/
Rules define the requirements a distributor must meet in an MLM company in order to be paid commissions on downline activity. They also specify the criteria for earning awards or benefits from the company. For example, how much must a distributor sell each month to remain qualified at the current rank? And, does the company require a distributor to take certain training classes before moving up in rank?
A network marketing company’s commission plan will almost certainly have to include the following two categories of rules: 1) commission qualification rules, and 2) rank advancement rules.A company has to attribute qualifications and rank advancement to the act of work.
Distributors want to be able to depend on a clearly defined set of rules that tell them what they have to do to be paid each month, and what they have to do to advance in rank. Basically, a company builds its qualification rules to set the distributors on the path the company wants them to follow, and then puts in a system of commissions that reward them for following that path.
There are two kinds of qualification rules: those that qualify distributors for rank advancement, and those that qualify distributors to receive commissions each month. This is where the issue of having ranks and lots of commission types creates a challenge for a company. The more ranks a company has, the more rules are required to advance from rank to rank and to qualify to earn each of the commissions associated with each rank. This means the commission plan description becomes more complex. The more complex the commission plan becomes: 1) the harder it is to explain, and the more time you need to explain it, 2) the more confused people are, and 3) the more distributor service people the company has to employ. You see the problem.
Companies can help alleviate this situation by having a consistent method of advancing from rank to rank. The advancement rules should set up a logical, consistent manner for: 1) commission payout for each rank, 2) achieving a rank in the first place, and 3) maintaining qualifications. In general, a company should make the rules as simple as is feasible to achieve the desired results.
In most companies, the distributors advance in rank by building their organizations and increasing their downline sales volume. A company always needs to keep the top rank in mind as it defines the rules for the other ranks.
Another thing to remember is that once distributors reach the highest rank, it’s tempting for them to quit building their organization and “retire.” When a company defines the top rank, it needs to make sure that when people do achieve that rank, their earnings are in line with the respect the company wants the rank to command. For example, if a 4-Star Diamond Rank is the top rank, and some distributors at that rank that are earning only $2,000 a month, it won’t command much respect. This is especially problematic if some 4-Star Diamonds are earning $2,000 a month and others, $100,000 a month.
Once a company decides what qualifications to use, it’s important to build consistency as a distributor moves from rank to rank. A distributor shouldn’t have to build one way to become a sales leader and then change methods to get to the next rank. A company shouldn’t, for example, encourage distributors to build their downline deep, and then switch to having them build their downline wide in order to advance to the top rank. Once a company decides which qualifiers to use, the next question it must consider is if distributors must reach the qualification to achieve a rank within a month, several months, or if they have forever to achieve it.
Caution: Make sure your commission plan isn’t rewarding non-producers. Examine what happens with your plan if distributors fail to produce. Do they continue receiving compensation at the level of their performance? If not, you’re rewarding nonperformance at the expense of performers. What one man receives without working, another man works for without receiving.
In conclusion, if you want to understand a commission plan, you must understand its qualifications and rank advancement rules. If you do not understand these, you cannot understand the plan.
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Source: Understanding Multi-Level Commissions and Their Role in a Successful Company, Mark Rawlins.
Amway China FY2016 revenue:
USD 2.57 billion (RMB 17.7 billion)
Number of agents = 166,000
Average sales per agent = USD 15,482 per agent
Average commission earned per agent ( assuming 30% max allowable by the Chines DS law ) = 30% x USD 15,482 = USD 4,645 per agent
Compare to DMJ/CGL 's at least SGD 500,000 income per year (Top 10 Earners 2016)
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Struggling in China, Amway bets on technology for turnaround
Matthew Miller
MARCH 22, 2017
http://www.reuters.com/article/us-china-...SKBN16T0Z5
BEIJING (Reuters) - Global direct-selling company Amway Inc is looking to rebuild its business in China with the help of improvements such as an online ordering platform for its agents and experience centers, as sales in the country have fallen over the past three years.
Two decades after entering China, the country remains the biggest global market for the Michigan-based firm, representing about 30 percent of its $8.8 billion in total sales last year. But China revenue has contracted from nearly $4 billion in 2013, to reach 17.7 billion yuan ($2.57 billion) in 2016.
"We're struggling a bit here now," Doug DeVos, Amway's president, told Reuters in an interview late Tuesday in Beijing.
DeVos said the China business was suffering from "a direct selling cycle" and faced growing competition, with more than 90 direct selling companies now operating in the country.
China's direct sales market has doubled in size over the last five years, with the retail sales value, excluding sales tax, reaching 135.8 billion yuan in 2016, according to market researcher Euromonitor.
Amway's active sales force has contracted by about half over the past three years to 160,000 agents, while its permanent workforce has declined slightly to 8,000. It operates 250 stores nationwide, fewer than earlier.
To revive its business, Amway is turning to the Internet to make improvements for its sales force in China, DeVos said. The company is allowing agents to use an online platform to order and re-order products, while converting stores into so-called "experience centers" designed as both showrooms and clubhouses.
About 50 percent of all China sales are now made online, compared with around 10 percent five years ago, said Amway Greater China president Gan Chee Eng.
Last month, Amway said its total revenue in 2016 was down 7 percent from a year ago. Asia-Pacific, which also includes Japan and South Korea, remains the company's most important region, representing about two-thirds of total sales. The privately-held company does not disclose its profitability.
China is expected to remain the company's biggest market for some time, DeVos said.
"China is going to have new markets (internally) for some time," said DeVos. "We're going to work through the current situation, because we have some history with it, and we're going to find our way back."
Reporting By Matthew Miller; Editing by Himani Sarkar
There is one major difference though between Nu Skin and BWI – i.e. the ways in which the retail outlets are being run.
Nu Skin operates most (if not all) of their outlets themselves, I believe.
Whereas, “All DR’s Secret service outlets/workshops in China are operationally independent and do not have any contractual agreement with Best World and any of its subsidiaries.” – according to reply from the IR.
This looks like a more “shophiscated” and clever set up designed to insulate BWI from any possible potential liability - the mentality of “No contract – No liability”
But would it work? Does no contractual relationship means no relationship?
"An agency relationship is created by the consent of both the agent and the principal ; no one can unwittingly become an agent for another. Although a principal-agent relationship can be created by a contract between the parties, a contract is not necessary if it is clear that the parties intend to act as principal and agent.
The intent of the parties can be expressed by their words or implied by their conduct."
Their conducts at the convention serve to prove that they {Principal (BWI/BWL) and agents (DMJ/CGL)} have been engaging in multi-level commision based business activities in China.
6 of the TOP 10 Earners are from Taiwan.
Who are the other 4 ?
Where are they from ?
Where are the TOP 10 Earners video and photo now?
(03-08-2017, 11:05 AM)Boon Wrote: [ -> ]6 of the TOP 10 Earners are from Taiwan.
Who are the other 4 ?
Where are they from ?
Where are the TOP 10 Earners video and photo now?
@ millionfaith
Multi-level-commission is legal in Taiwan.
The 2016 minimum income for EACH of the 6 Taiwanese top earner is TWD 10,000,000 (~ SGD 500,000).
Questions:
1) What are these income consist of ? Commission from own sales + passive income (commission from sales of downlines) + ?????????
2) How do IBO's ensure that they are accurately compensated by the Company?
3) How do IBO's ensure that their rights and entitlement to passive income are protected?