Tuesday, February 5, 2013
Should You Use A Direct Sales Company Or A Matrix Pay Structure?
By Howe Russell
One of the main problems with learning how to make money online is the sheer volume of misinformation surrounding every new opportunity. From Empower Network to Avon, every company claims to be the one you are looking for as an affiliate business. Today we will help you to decide one of the most important aspects of becoming your own boss.
Today we will be looking at the major differences between affiliate programs offering a direct sales package and those offering a matrix based plan.
The main attraction to affiliate marketing is the quickness of the whole process. Rather than presenting a business plan, getting a loan and then trying to find a property to use as your HQ you simply sign up to an already established brand and promote their products. This simplicity is it's main attraction.
You'll generally see two different types of pay structure within these companies. One offers a direct sales structure and another provides you with a matrix style format. What does each one do? Which one is better suited to you? []
First, let's look at how the direct sales package generally works. This involves the affiliate promoting products and services of their chosen affiliate business via a unique link. Each time a customer buys something via that link, the affiliate earns a commission. In most cases this type of plan offers the individual a fairly high rate of pay. Something in the region of 90% to 100% is common.
Let's put this into context so that you can see it in monetary terms. If a company agreed to pay you a 90% commission rate and you referred a customer who spent $10 on a product, you would then earn a $9 commission from that particular sale. This makes it easy to generate a large income in a short space of time.
However, there is one side of a direct sales structure which is not advantageous. Usually they pay you a higher rate per sale because you only earn from your efforts. You won't earn for helping your referrals to earn. This leans to a lot of poor sponsors being attracted to this type of program because they don't need to help anybody else to succeed for themselves.
Matrix plans also have drawbacks and advantages so it's important to weigh up both options before you jump into anything that could turn into a long-term income. A matrix compensation plan provides much lower rewards per sale, usually in the 10% region, meaning a $10 sale would increase your income by $1.
The reason it's lower is that they have more than just you to pay with that commission. These structures usually go five levels deep, meaning you do not just earn a commission each time you refer a member to your business, you also earn a commission each time any of your members do the same thing. Suddenly that lower commission level doesn't seem so bad after all. This structure encourages sponsors to help their team develop their own skills because, ultimately, if those affiliates succeed in their business it would also financially benefit the affiliate who referred them.
Of course, promoting the idea of helping your team can also have a negative aspect. It tends to lead to in-fighting and competition between teams promoting the same affiliate program. It is not uncommon to see teams trying to outsell each other by making bigger and bolder claims, until they reach the stage where they are practically promising to do all of the work for new members if they choose them over other teams. This is impossible, of course, and tends to only attract freeloaders.
Both type of plans have their benefits and drawbacks. Before you jump into any opportunities you should take some time to decide whether you believe you would be able to make money online via a direct sales package such as the one on display in Empower Network or you would feel more at home with a matrix style setup such as Global Domains International. Now that you know how both work, making that decision will be far easier for you.
Today we will be looking at the major differences between affiliate programs offering a direct sales package and those offering a matrix based plan.
The main attraction to affiliate marketing is the quickness of the whole process. Rather than presenting a business plan, getting a loan and then trying to find a property to use as your HQ you simply sign up to an already established brand and promote their products. This simplicity is it's main attraction.
You'll generally see two different types of pay structure within these companies. One offers a direct sales structure and another provides you with a matrix style format. What does each one do? Which one is better suited to you? []
First, let's look at how the direct sales package generally works. This involves the affiliate promoting products and services of their chosen affiliate business via a unique link. Each time a customer buys something via that link, the affiliate earns a commission. In most cases this type of plan offers the individual a fairly high rate of pay. Something in the region of 90% to 100% is common.
Let's put this into context so that you can see it in monetary terms. If a company agreed to pay you a 90% commission rate and you referred a customer who spent $10 on a product, you would then earn a $9 commission from that particular sale. This makes it easy to generate a large income in a short space of time.
However, there is one side of a direct sales structure which is not advantageous. Usually they pay you a higher rate per sale because you only earn from your efforts. You won't earn for helping your referrals to earn. This leans to a lot of poor sponsors being attracted to this type of program because they don't need to help anybody else to succeed for themselves.
Matrix plans also have drawbacks and advantages so it's important to weigh up both options before you jump into anything that could turn into a long-term income. A matrix compensation plan provides much lower rewards per sale, usually in the 10% region, meaning a $10 sale would increase your income by $1.
The reason it's lower is that they have more than just you to pay with that commission. These structures usually go five levels deep, meaning you do not just earn a commission each time you refer a member to your business, you also earn a commission each time any of your members do the same thing. Suddenly that lower commission level doesn't seem so bad after all. This structure encourages sponsors to help their team develop their own skills because, ultimately, if those affiliates succeed in their business it would also financially benefit the affiliate who referred them.
Of course, promoting the idea of helping your team can also have a negative aspect. It tends to lead to in-fighting and competition between teams promoting the same affiliate program. It is not uncommon to see teams trying to outsell each other by making bigger and bolder claims, until they reach the stage where they are practically promising to do all of the work for new members if they choose them over other teams. This is impossible, of course, and tends to only attract freeloaders.
Both type of plans have their benefits and drawbacks. Before you jump into any opportunities you should take some time to decide whether you believe you would be able to make money online via a direct sales package such as the one on display in Empower Network or you would feel more at home with a matrix style setup such as Global Domains International. Now that you know how both work, making that decision will be far easier for you.
About the Author:
Author biography: Global leadingaffiliate Russ Howe created a great income online in home businesses including empower network. His free guide on how to make money online will help you to grow your business.
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