I had a conversation with someone the other day about the Life Force International compensation plan and how to review comp plans in general. This person, let’s call him Bob, had analyzed the comp plan using the Law of Large Numbers and made the following comment in their remarks:
“The LLN can easily be illustrated using the rolls of a die…” in order to create “averages” and what someone could expect to earn in Life Force or any other company.
Here’s the flaw in using averages, and specifically the LLN theorem as he explained it:
No One Should Ever Gamble With Their Business.
Simply throwing numbers out based on a “static” equation doesn’t make the data completely accurate. As in any “lab” environment, additional factors can be put into play to change the outcome. So the solution may be accurate according to the formula, yes, but as you’ll quickly see, the numbers can be manipulated for an alternate outcome.
Bob argued that in “most” comp plans it was more profitable to build wide than deep. But to clarify his conclusion, this isn’t entirely true. First of all the Life Force comp plan isn’t like every other comp plan. Furthermore, you must factor in “where” you build wide and deep. Cut and Paste math do not account for strategic human interaction to manipulate the equation, by which you are able to control the environment for a particularly desired outcome.
Here is some more of what Bob had to say…
“Seems like you are getting a lot of advice, and that’s good but it isn’t really answering the question you asked… It is a health opportunity, so I would guess that it will pay you around $1 per person in your downline residual. That means you get 1000 people in your organization they pay you $1000. Most health opportunities are front end loaded with fast start up bonuses that pay you quickly but when it comes to residual “do the work once get paid forever” money they usually put a lot of qualifications and require a large organization. The reason that they are set up that way is because often the product has a low profit margin which limits what the company will make for profit, which in turn limits the residual incomes of its distributors…”
This was advice given in a forum to a lady asking about comp plans. It just so happens however that Life Force International IS a wellness company and they pay 55% on the first three levels alone and 65% total within the remaining compensation features… far more than $1 per member in residual income. Bob stated it takes 1000 people to make $1000 month. The Life Force plan would provide a $1300.00 income with only 84 people. And with 1110 people in an organization it would be $14,050.00 per month RESIDUAL.*
If you look at the Life Force comp plan the first 3 levels with the addition of the Infinity Bonus, are structured as follows:
Level 1: 5%
Level 2: 40%
Level 3: 10%
Level 4+ to infinity: 2-14% (infinity bonus)
It is obviously developed to promote depth and helping those below you to develop an income, particularly those you enroll personally. Notice the contrast in compensation from level 1 and level 2, 5% and 40% respectively. A member will profit most by helping those in their team to build their business first. (Ziglar 101: “Help others get what they want, and you will have everything you want.”)
As an example, let’s look at two scenarios using our comp plan as the example figures and the diference between the two strategies:
Scenario A:
You enroll 5 people and help them enroll 5 people each and help them enroll 5 people each.
5 x 5 x 5 = 155 people
Level 1 – 5 people w/ 100BV (500BV) x 5% = $25
Level 2 – 25 people w/ 100BV (2500BV) x 40% = $1000
Level 3 – 125 people w/ 100BV (12500BV) x 10% = $1250
TOTAL RESIDUAL: $2275.00
Scenario B:
You enroll 10 people and help them enroll 10 people each.
10 x 10 = 110 people
Level 1 – 10 people w/ 100BV (1000BV) x 5% = $400
Level 2 – 100 people w/ 100BV (10,000BV) x 40% = $4000
TOTAL RESIDUAL: $4400.00
With a simple adjustment we generated an increase of over $2100 in residual income and decreased the number of people to accomplish that income by 45. That is a huge factor and would greatly impact someone’s efforts if done one way or the other; by which you would greatly impact their success as well by recommending one over the other.
My hope is to help people understand how to review comp plans, which I hope you are learning to do through our discussions here. But having a true understanding of how to evaluate a given pay plan obviously brings about varying scenarios such is illustrated in the differences between Bob’s evaluation and mine. It’s not always about surface level math and averages.
Choosing a company to align with should be calculated, strategic and well thought out. Utilizing proper methods of evaluating that opportunity IN CONJUNCTION with strategy and the best use of the available resources is of utmost importance.
~Richard
