In today’s post I would like to discuss the breakaway compensation plan, sometimes referred to as the stair step breakaway compensation plan.
The breakaway compensation plain is one of the most common compensation plans in the network marketing industry. It’s used by some of the largest and oldest network marketing companies such as Nu Skin, Amway and Herbalife.
It’s very similar to a uni-level compensation plan, in that you can personally sponsor as many people as you want to on your “front line” or first level. The major difference between this compensation plan and a uni-level compensation plan is that when the people you personally sponsor reach a certain level in the business, they “break away” from your organization and their personal/group volume is no longer counted as part of your group volume.
In other types of compensation plans, your group volume never breaks away, regardless of what level the people on your team achieve.
Additionally, attrition is typically higher in this type of compensation plan compared to matrix and binary compensation plans. Since distributors are forced to build their own team and group, rather than have someone else do it for them, many will give up and quit.
Of course, there are pros and cons to having others help you build your own downline (binary and matrix plans). Personally, I would not join a binary or matrix plan because I think they encourage laziness. I don’t want to recruit or work with people who expect me to build their downline for them.
Furthermore, when you build a large team with a breakaway compensation plan and help a lot of people achieve success, you can earn huge residuals from those folks. In most cases, the more people you help, the more levels deep you can get paid on. Every company structures their compensation plan a little bit different, so it will vary by company. In some cases, you can get paid 10, 20, 100, even infinite levels deep in your organization.
The breakaway compensation plan is really designed for the heavy hitters. They are designed for someone who wants to work hard and build a huge organization. It’s much harder for the “part-timers” or “less serious people” to succeed in the breakaway compensation plans and make any kind of significant money.
Another problem with the breakaway compensation plan is that you typically have to meet a HIGH personal monthly sales volume to qualify to get paid on your breakaway groups. Some companies make you maintain $5000, $10000 or even more in your personal group volume, just to qualify for your breakaway bonus.
So if you have an organization doing $30k monthly volume, and Ted, your biggest leg, counts for $25k of that, you could lose almost all your income and volume once Ted breaks away. That’s why you need to sponsor a lot of people and have your volume split amongst 10, 20 or even 30 or more legs.
In addition, you have to keep recruiting to replace the people that broke away from your personal group. So your ability to build a “walk away” income and stop recruiting and stop selling is very difficult to do!
Another problem with the breakaway compensation plan is that many companies using this compensation plan front load their distributors (huge start up costs and initial purchase requirements). This creates a “false” volume in your organization. I personally like low start up costs and having a balanced volume in your organization based upon real product demand.
At the end of the day, you can make money with ANY compensation plan if you do the work and build a large team. I am not for or against a breakaway compensation plan. I think the most important decision in picking a company is the quality and price of the products, the reputation of the company, and the reputation of the company’s leadership. Ultimately, you can succeed or fail with any company.
What are your thoughts? Leave a comment below and let us know what you think about the breakaway compensation plan. I look forward to hearing from you.
Chuck HolmesWebmaster, OnlineMLMCommunity.com
Phone: (352) 503-4816
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