MLM Comp Plans - The Stair Step Love Affair

In my last post "MLM Comp Plans - Uni-level Breakage" I revealed where breakage is in a Uni-Level comp plan. Now we’ll venture into the tawdry romance between MLM companies and the Stair Step Break Away compensation plan.

The early years of the twentieth century gave rise to many innovations; among them was the marketing concept of multi-level marketing. This brave new adventure gave birth to the granddaddy of all network marketing industry comp plans called the Stair Step Breakaway.

Here's how the stair step breakaway works.

A Stair Step Break Away comp plan has two types of distributors: managers and non-managers. Whatever the title, when a distributor achieves a certain performance level, he becomes a manager and “breaks away” from his original manager. Now the original manager receives a percentage override from the sales of the entire breakaway organization in place of her original managerial overrides.

How do companies love the stair step? Let us count the ways.


1. Retail vs. Wholesale
Up to 4 times what you'd pay at a place like Wal-Mart.

2. Qualification Hoops to Get Paid
A dog and pony show generally requiring 2 forms of volume (ex.: personal and group volume).

3. Astronomical Bonus Qualification Requirements
Titanic burdens that would bring even Hercules to his knees.

4. The "Break Away"
Almost like starting over from scratch, the override of a new manager's group volume can be up to 60% less than that of the personal volume override from a non-manager distributor.

MLM company owners love the Stair Step Break Away comp plan because the many forms of breakage makes it a very lucrative plan for them. The effect of the "break away", unrealistic qualification expectations, and ridiculous retail rates spells failure for all but the elite recruiting machines. Oh, and lest we forget, super recruiters never see duplication in their teams.

Are you a robo-recruiter? If so, then never mind.

However ...

If you’re one of the 97% of the world that can’t recruit at will, then I suggest bypassing the Stair Step comp plans in favor of something that rewards you for all your hard work instead of swatting you in the nose, throwing you out into the cold, and then tossing you a bone.

Bill Tessore