Which
is better — width or depth?
Or doesn't it matter?
 People often ask me which is better, building wide or deep… or doesn't it really matter?
My response
is always another question: "which is more important... breathing IN or breathing
OUT?"
You need both. But you need to get the balance right or it's
very easy to lose the plot and end up doing the wrong things for the wrong reasons — the worst of the three fatal aspects of the Law of FAILURE. (Remember — you can never succeed by obeying the Law of Failure!)
It's like sponsoring versus retailing products... which is more important?
Same answer. One without the other robs you of your real leverage and you
end up working hard rather than working smart. (Note: "working"
is the only word common to both expressions.)
Since the 1980s the trend has been to work deep instead of wide. Companies and upline
leaders have encouraged working in depth for a number of plausible reasons, including...
- It drives volume in some plans. You qualify faster for higher ranks and bonuses.
- You can identify and
mentor future leaders in your deeper downline levels.
- It allows you to break
out new teams under some types of plans, so you qualify faster for lucrative
override bonuses, and even higher ranks and rewards.
- Building wide means YOU
have to do the sponsoring. It's easier and smarter to have your downline do the
work so you can reap the rewards.
- Many compensation plans
reward depth more than width — especially stairstep breakaway, wholesale discount,
unilevel, bottom-heavy unilevel and matrix-style plans.
- Some compensation plans
limit width — especially binaries and other narrow/deep matrix plans.
Can you spot the
common factor in ALL of these arguments?
What does that common factor tell you about those compensation plans? And what does
it reveal about the companies that operate those plans?
Before I answer these questions, let's take a step sideways and peer back past all
the clutter to what this is really all about. There's a fundamental principle
at stake, which we ignore at our peril in network marketing...
- Income growth and stability come from WIDTH.
- Income security comes from DEPTH.
There's a very simple reason
for this. It's called the product price. A company can't pay out more than
a limited proportion of the wholesale price to the distributor network or it will
go broke, fast. So the more levels on which that payout has to be shared, the smaller
the shares will be for the distributors in all those levels.
By the way, bonus income is paid UP the line of sponsorship, NOT DOWN as so
many people mistakenly assume. If you sell a product to a customer, or buy it for
your own consumption, the bonus portion of that product's wholesale price is paid
up the line of sponsorship, starting from your own level. (You qualify for
bonuses based on the performance of your downline team, and you earn a share of the
bonus volume that they produce each month. But it's paid UP to you, not down from
you.)
If the bulk of a compensation plan's total payout is spread over too many levels
deep, the income earned by the people on those levels will be very small. And, as
a rule of thumb, around HALF of the total bonus income earned by that group will
be paid to the person at the head of that group.
The more legs you create (width), the higher the percentage you'll usually earn on
the first few levels of those legs, because the percentage of the wholesale price
of products moving up through those legs will usually be higher than from further
down those legs.
Your volume will also be protected against people in your downline breaking away,
or blocking your bonuses (depending on the type of plan you work with — ALL plans
block volume at some point because product prices are limited, remember?), leaving
you with less group volume with which to qualify until you build your downline and/or
group volume back up again.
There's an old saying in network marketing that's as true today as when network marketing
first began...
"One leg is a walking
stick.
Two legs are a ladder.
Three legs are a bar stool.
Four legs are a table."
It's not hard to see where
the stability comes from, is it?
So any compensation plan that limits the number of legs you can create also limits your personal income potential, no matter what plausible spin the company and upline leaders
put on it.
There are only two reasons why it would do that...
- they don't know what
they're doing, or
- they know exactly what
they're doing! (Creating breakage to deliver hidden windfall profits for the company and heavy hitters upline. Learn more...)
You should be seriously concerned
about either of those two reasons!
A Quick Test
for Cutting Through the Hype
Whenever anyone pitches you anything in network marketing, the first thing you should
consider is the emotional appeal being promoted — and that will rarely be out in
the open. You'll need to step back, get the whole thing at arm's length, set aside
your own feelings and judge it objectively.
Remember... as an entrepreneur, marketer and innovator you should
NEVER base business decisions on your own emotions. Emotional decisions are the realm
of the employees, consumers and imitators who are our target
audience. Like a drug dealer getting "high on his own supply", a seller making business decisions like a buyer — based on emotion — falls
for his or her own publicity. It's a fatal mistake from which few recover.
Scrutinise the emotional appeal of the proposition, whether it's the compensation
plan, the products, some business building technique or promotional ploy. If the
real appeal is to any one or more of the Five Fatal Failure Factors of Network
Marketing, run a mile!
- Ignorance
- Fear of Loss
- Greed
- Laziness
- Gullibility (or plain stupidity if you keep falling for it.)
Seriously, appeals to these
emotional responses are intended to take advantage of people who are ignorant, desperate,
greedy, lazy and gullible/stupid... you should be insulted that your upline or anyone
else tries to pitch you something with these appeals, because it reveals what they really think of you!
Okay... back to those plausible-sounding reasons!
Here they are again — with my answers, this time.
It drives
volume in some plans. You qualify faster for higher ranks and bonuses.
If this is the case, who's receiving the bonuses on that volume. I mean, who is really receiving those bonuses? And who's missing out?
You can
identify and mentor future leaders in your deeper downline levels.
If you're having to work
with people more than two or three levels deep, you have some serious problems to worok on closer to home. See The Lock Nut System for more information about a better
way to work... http://www.LockNutSystem.com
It allows
you to break out new teams under some types of plans, so you qualify faster for lucrative
override bonuses, and even higher ranks and rewards.
This is often achieved
through dubious techniques like "power lines", "tap-roots", "accelerated
sponsoring" and other fancy names for sponsoring everyone in a straight line
down one leg. Too often, though, it backfires, so that someone just below you qualifies
for breakout or blocking and takes all that group volume, leaving you too little
group volume to qualify. As the saying goes, "stupidity is its own reward."
Building
wide means YOU have to do the sponsoring. It's easier and smarter to have your downline
do the work so you can reap the rewards.
No, there's no sign of greed,
laziness or any of those other Five Fatal Failure Factors at work here! (Yeah...
right.) This is netWORK marketing, not NOTwork marketing. The oldest axiom in the
business is still true: "your people will do what they SEE YOU DO." Set a good example of doing the right things for the right reasons, and it's just possible that your downline team might learn from it! (Hmmm...
isn't that what the Law of Success is all about?) http://www.TheLawOfSuccess.info
Many
compensation plans reward depth more than width — especially stairstep breakaway,
wholesale discount, unilevel, bottom-heavy unilevel and matrix-style plans.
Ask yourself the question...
"who makes the real money with these types of plans?" Then ask yourself
"why did the company choose this type of plan? And if it was an honest mistake, why are they still using it?" (Can you say "breakage" and "windfall
profits at the network's expense"?)
Some
compensation plans limit width — especially binaries and other narrow/deep matrix
plans.
Why would a company do that
if it really understands network marketing and the principles that power it?
Is it because they don't know what they're doing? Or is it because the know EXACTLY what
they're doing? (Can you say "HUGE breakage" and "MASSIVE windfall
profits at the network's expense"? Especially from the part-timers!)
I think you get the picture.
It's not a pleasant thought, and you probably don't want to hear it, but the band
members that kept playing as the Titanic sank all went down with the ship.
Noble sentiment, but not particularly productive or intelligent behaviour.
Look for compensation plans that create very little breakage (it's not possible to
have no breakage at all — and be very wary of any company claiming it has
none... they typically have the most!). That tends to be a fairly reliable indicator of the company's real motives and priorities.
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