It must be something in the air.
I’m hearing more and more marketers promote their program by saying “I only promote programs that pay 200%, 300%, or 500% commission!”
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I saw one marketer selling a $10 a month MLM product that paid a $100 commission bonus when 5 sales were made in one week. He called that a 200% commission!
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I heard a bunch of other folks telling how when you collected $40 for a $20 per month membership program and you were paid $80 commissions. They called that a 200% commission!
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I even saw another marketer selling a $6.95 per month digital product that paid a $50 bonus. He called that a 700% commission! The newbies drool and go “WOW!”
More experienced marketers who should know better just keep repeating the same stuff…
But let’s take a deep breath for a minute…
What’s going on here?
Is it a scam or just numerical ignorance?
Maybe a little of both but technically it might not a full blown scam. In fact at least 2 of the above three programs represented (maybe all three, the jury’s still out on one for me) are decent to good programs… they just have lousy promoters putting out too much spin.
So if it’s not a complete scam (it depends on the program and product after all), at best, it preys on the ignorance and gullibility of our prospects and ask them to believe something that’s not completely true. And the problem is that such exaggerations can always come back to bite someone in a delicate place!
Let me ask you.
Can ANY program really pay you more than 100% of what they take in?
NO! NEVER! NOT EVER!
So what are these promoters talking about?
Notice this…
-Each program is either a digital product bundle or membership with a recurring fee.
-Digital and membership products with recurring fees that don’t have “hard costs” like the gold in a coin or the vitamins in a nutritional supplement have more freedom to advance commissions based on the expected life of a customer.
-Each product is a monthly subscription package designed to be in force for months or, hopefully, years.
If the $10 per month package is in effect all year it takes in $120 per account.
If they are paying out a $100 bonus for the sale of 5 accounts ($600 expected annual revenue), it’s because they are DARN sure that REAL accounts will stay on the books long enough for them to get their money back.
What Per Cent is $100 from $600?
It isn’t 200%!
It’s really 17%.
And I know this particular package has other bonus levels. You can be darn sure the math’s about the same. Companies don’t say in business that operate at a loss and paying 200% commissions is what… A loss! DOH!
What about the membership plan where reps collect $40 and get paid $80? Surely that’s a 200% commission.
No.
Read the fine print (as much as you can find anyway…)
The product costs $20 per month or $240 per year.
In reality though if the customer cancels short of 18 months, the rep owes back part of that $80!
Over 18 months, the $80 paid is about 22%!
You see it’s an ADVANCED COMMISSION based (like the first one) on the reality that most folks stay with the plan. That assumption in this case came from selling the plan privately to a specific industry and HOPING the numbers are the same for the general public. If memberships lapse, I could never quite get the story about what would happen then.
That last product is another digital service with a monthly fee. Their affiliate manager said they expect a customer to stay with them, on average, 5 years and buy other service upgrades too.
Over 5 years, $6.95 = $417. A $50 finders fee seemed reasonable to them. Of course if the service lapses in 30 days, no fee.
Even if customers hang on a year, $50 is only 60% of the total revenue.
So what do you think of those 200% 300% or even 700% commissions now?
Our fist impression is that it’s hard to compete with a 200% commission program. Indeed it would be if such a thing were possible.
On the other hand ADVANCED COMMISSIONS are ok as long we we recognize the TRUTH about what’s going on and let our prospects understand the truth.
We want to create business owners and business builders, not mere drones who believe whatever lie we tell them today.
After a while, you see, the misrepresentations come back to haunt us and the people we considered “drones” to be duped become the rightly dissatisfied customers who realize what’s going on and cause our businesses to implode!
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