| The stairstep breakaway pay plan is the oldest | | | | moves up the volume rebate scale (bonus scale) |
| MLM compensation plan. Having stood the test of | | | | in steps, or "stairsteps". He may get a rebate of |
| time, it is the most commonly used compensation | | | | 3% for the first 100 points of volume he and his |
| plan. The oldest and largest MLM companies, | | | | group produces, 6% if he produces 200 points, |
| Amway, Herbalife, Mary Kay, Neways, Nu Skin still | | | | 9% for 300 points and so on and so forth. |
| use this type of pay plan. It is also the most | | | | When a distributor reaches the top of the volume |
| complex form of compensation plan and the most | | | | rebate scale, his group volume would be signficant |
| difficult to explain to new prospects. | | | | enough that he'd be better off dealing directly |
| Before the days of computerised databases and | | | | with the company, and therefore he qualified to |
| online ordering, distributors did not deal directly | | | | become a direct distributor. He now had the |
| with their MLM company. They actually bought | | | | responsibility of sourcing the products for his |
| products at wholesale price from their sponsoring | | | | frontline distributors in return for higher |
| upline, who bought from his sponsoring upline and | | | | commissions. |
| so forth until the first "direct" distributor who dealt | | | | But the new direct distributor would "breakaway" |
| directly with the company. | | | | from his upline direct and form something of a |
| In fact, some companies still use "direct" to | | | | separate business entity. However, the |
| distinguish their top producing distributors from | | | | breakaway direct's volume would no longer count |
| others, with designations such as Gold Direct, | | | | toward the volume for his sponsor and therefore, |
| Platinum Direct, Emerald Direct, Diamond Direct | | | | the sponsor lost a considerable portion of her |
| etc. | | | | volume and therefore, income. This is the primary |
| Back in the old days, throughout the 1950s, '60s, | | | | pitfall of the stairstep breakaway compensation |
| '70s, '80s and even '90s, it was the direct | | | | plan. |
| distributor's job to train and motivate their | | | | The sponsor would get an override commission |
| downline organisation. It was their job to calculate | | | | on the total volume of the breakaway leg, but |
| and pay commissions to their frontline distributors, | | | | this is only a small percentage compared to the |
| who calculated and paid commissions to their | | | | commissions she would have received prior to her |
| frontline distributors and so forth. | | | | new direct breaking away. |
| Direct distributors would order huge amounts of | | | | So under these circumstances, there would be no |
| product from their company and warehouse it in | | | | incentive for your sponsor to support you in |
| their garage, and this is where their local downline | | | | building your organisation once you reach a certain |
| distributors would get their products from. | | | | level. When you reach the same rebate level as |
| Thankfully, distributors no longer have to do any | | | | your sponsor, you break away and their income |
| of their own book keeping, and this level of | | | | drops. |
| inventory loading is a thing of the past. | | | | The stairstep breakaway plan rewards the few |
| Technology has made ordering products much, | | | | who can consistently sponsor new distributors and |
| much easier. Today, all distributors in all legal | | | | build multiple breakaway legs. But unfortunately, |
| network marketing companies deal directly with | | | | industry statistics show that the vast majority of |
| their companies. However, the stairstep | | | | distributors will not be able to sponsor enough |
| breakaway plan still works the same way. | | | | people to get the most out of this pay plan. |
| In a stairstep breakaway pay plan, a distributor | | | | |