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| What does Mega Millions lottery have in common with overly complicated MLM compensation plans? (Photo credit: Wikipedia) |
However, there are THREE aspects to any decision making: cost, risk, reward.
Income, is obviously the reward.
Cost would be "what do I have to do / pay to earn the income?"
Risk would be "what are the chances I would get little to nothing for whatever I did / paid?"
Ideally, all three factors would be crystal clear. However, in practice, most MLM plans are only clear on the reward, but not the cost or risk. Indeed, some MLM comp plans are INFAMOUS for being so obtuse it takes several single-spaced pages to explain it in detail, and even its own members have a hard time explaining things. Most simply gloss over it. There's personal volume, there's bonus volume, there's shares, commission, levels, tables, matrices, and more.
It's gotten so complicated that often the comp plan has been distilled down to "what you can get", but NOT "how you get it". For example, "you share 6 levels down" and "car bonus" are simple comparison points. A comp plan with 6 levels down ought to be better than one that only offers 5 levels down, right? And one with a car bonus ought to be better than one without, right? WRONG! Because you don't know HOW TO GET IT OR THE CHANCE OF GETTING IT!
In other words, an overly complicated comp plan leads people to highlight the reward, and minimize cost and risk, leading to a completely distorted picture.
People LOVE high rewards, even when they understand that the odds are infinitisimally small, such as lottery. Chance of winning the jackpot in Mega Million is 1 in 175 million. But it only cost 1 dollar to play. People buy it in droves, so much so that states use it as a source of education funding, and has a monopoly on the lottery: it is ILLEGAL to run a private lottery in the US. People like the huge reward. However, people know lottery to be just that... NOT WORK. You can't make a living by playing the lottery.
So why would people pick MLM comp plans promise the sun and the moon (with stars thrown in for free), but doesn't tell you HOW to get it, or the "how" is so complicated, you have NO IDEA what is the cost (not merely monetary, but time and social capital as well) or the risk? Isn't that like playing the lottery? At least you can calculate the odds of winning a jackpot (indeed, it's published on their website). You don't even KNOW the odds/risk of winning in MLM!
Why would companies create such MLM comp plans that are so complicated as to be incomprehensible? Do they WANT people to NOT understand the plan? People distrust overly complicated things. If a company's plan is overly complicated, people may assume that it's there to obfuscate something to the company's advantage, to keep the affiliates in the dark and confused.
As an affiliate, you will have a hard time explaining overly complicated comp plans. You will sound confused and it will NOT be good for sales. Furthermore, if you don't understand it yourself, you won't sound very convincing. Furthermore, affiliates, attempting to explain the system even themselves may not understand fully, may explain things wrong, whether by accident (genuine misunderstanding) or by intention (deliberate obfuscation or omission), and thus cause the company and other affliates problems down the road.
Overcomplicated comp plans are hard to understand, hard to use, and hard to sell. Overall, it's just NOT GOOD for you to get involved in an overly complicated comp plan.
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