In a traditional retail distribution organisation, there are many levels involved
in getting the product from the manufacturer to the consumer.
Network Marketing organisations evolved to cut out the distribution agents, with their
profit overheads, and replace them with a "network" of independent home-based businesses
distributing products directly to consumers.
Many Network Marketing companies employ regional and area managers to recruit and manage the home-based distributors. These types of organisation are referred to as Direct Sales companies.
In a Multi-Level Marketing organisation (an MLM), the recruiting and management of the associates is done by the associates themselves - forming what is referred to as a downline. All associates, including the equivalents of area and regional managers, are independent business owners - they are not employed by anyone.
Well, pictorially yes it is - but so is the structure of virtually any business entity with its Chief Executive Officer at the top and layers of managers beneath ... etc. But that is not to say it is a Pyramid Sales Scheme.
In an MLM, associates introduce others to the business and hence build a downline. In turn, the associate makes money based on the turnover of his entire downline. The more sales the downline makes, the more income is generated for the associate.
With a Pyramid Scheme, an associate's income is based on the size of organisation created. With an MLM, that income is based on the volume of business done by the downline not its size.
Well, look back at our discussion on income first. That 25% component is the basic retail profit made by an associate on personal sales. The 35% segment is the interesting bit. It is mostly shared between the associate doing the selling and his upline, with part going into general business incentives for high achievers.
The more business that is done by associates you have in your downline, the more bonus they will generate. Your percentage share of that bonus grows as your downline business volume grows - success is rewarded. There is a lot more to it than just that but it is easier to explain personally, so contact us for more information.
So - on the face of it you feel that the 25% paid by Watkins is a poor deal? Perhaps it is if you only plan to sell a small amount of product. In that case, Direct Sales may well be better for you. However, if you are looking to build your business, remember that there is a lot more than the 25% available for you. Look carefully at our discussion on income.
A typical Manager in Watkins, for example, will earn an additional 14% on average through bonus income - making 39% ... does that sound better? More than that, the Manager will also earn that 14% bonus on the sales made by entry-level associates in his downline.
Hard working associates can progress to to the Executive level and earn closer to 50% on their retail sales in profit and bonus payments.
The Watkins Compensation Plan is a lot more complex than just a few simple example figures - we will be happy to discuss it further with you in person and to answer all your questions. Independent observers have concluded that it is one of the most generous plans around - but you need to judge that for yourself.
