 |
|||||||||||||||||
|
Phil's Past Episodes Episode 10: Getting paid through the misfortunes of others - Breakage. If you're going to play their game, you have to play by their rules - and their rules are always subject to change. The concept behind most MLM's is a simple one. Find a product, get massive amounts of people to sell the product, and get more people to sell more of the product. There. Done. Easy. Right? Friends, if it were only that easy. The cold hard truth is that the majority of MLMs do not want you to succeed. They don't want to make you rich - you won't find that anywhere in their business plan. They want to make themselves rich. That's what it's all about. In the not-so-distant past, I found myself in a room with a business owner. He was going over his plan for people to sell a product. He consulted his magic genie and came up with the price for the product, and then said that the independent agents would get .25 for selling one. A quarter? Yes, a quarter. His rationale? He didn't want the agents making money and getting rich... if they did that, they'd leave! I personally haven't seen anyone lining up to get his twent five cents per sale. While we look at the shallowness of that plan and laugh, we also have to consider that it's being done every day by large MLM companies. They just package it a little more creatively. It's called Breakage. Breakage is defined as the commissions left unpaid each month compared to the theoretical maximum of the plan.What that means, is that you could make 40% of every sale, but only if your sales exceed a certain amount. Otherwise, you'll make 20%. The company retains that extra 20% as breakage. Typically, the company uses that money to roll into other peoples accounts who have met the minimum requirements. Yes, that's right, your hard work is going to pad other peoples pockets. Breakage allows a company to pay more commissions than it can actually afford to pay. This happens because the goals are set so that not many people will achieve them. You'll try. You'll come close. You'll just miss the mark. And they're counting on that. They take your extra 20%, and pay it to the guy next to you who did make his quota this month for some strange reason. If companies find that too many people are hitting their numbers, they simply change the plan. Happens every day. Breakage also allows a company to reward specific non-product-related behaviours. Recruitment bonuses, retention bonuses, leadership rewards... these kinds of plans simply would't exist without the failures of others. You don't think the company pays for these things out of their pockets, do you? No, they're counting on you to miss your target goal this month. I was working late one night, and got a notification from one of our major servers that the database had gone offline. I logged into the box, and found the project lead was already logged in. I walked into his office, and he was already on the phone with the MLM company, explaining to them that he was working to bring the database back online.... or so I thought. In reality, the owner of the MLM had called him. He didn't call to report the outage. He called to take the database offline. The problem was too many people were hitting their goals. He needed to do something to slow the proccess down. If no more sales can get in the queue tonight, then they wouldn't be counted towards this rounds goals. I don't know what shocked me more... the fact that the guy called to have it done, or that the project lead actually followed through with it. When you see the testimonial of the guy sitting by his luxury car out by his pool at his vacation home in Hawaii, keep several things in mind. First, those aren't his toys. He's just sitting on a set. Our minds lead us to believe all that stuff is his. But it's not. Also, he doesn't look that good in person. Make up artists do a wonderful job. And, most importantly - remember that for him to be the success that he is required no less than 100 other people to fail. I was talking to an associate of mine and he was explaining a pay-per-click program he was in. He was excited, because he was going to make $500 this month just for putting up a link on his website. I decided to look into the pay-per-click program a little further. As it turns out, the program is designed on a huge breakage. It cost him $200 up front, and $10 a month to be a part of, and you have to have a huge amount of unique clicks per day. If you don't hit your daily goals, there is no way you can get the $500 a month. At best, you'll make $10 - $25 per month. Further reading of the plan outlines that they safeguard against you clicking the links yourself day in and day out by tracking your IP Address, and not counting multiple clicks from the same IP Range. My score? A complete failure of a system that won't make anyone rich except the con guys who started it. Know the break points for your particular program. Know if recruiting and retention is a part of the comission plan. Know exactly what you have to do, and when you have to do it by. Then do whatever it takes to make those numbers a reality. Check the plan at least two times a week. Almost all MLM Comission Structrues are subject to change. For MLMEruption.com, this is Phil Foster - The Trusted Voice Of MLM |
||||||||||||||||
|
All
information on this site is ©2006 - All comments and opinions
expressed on this website are solely the comments and opinions of
MLM Eruption. based on best effort to gather facts and issues.
Use at your own risk. |
|||||||||||||||||
