youlesucceed on Free webinar tomorrow: social media for MLM…
John Counsel on Free webinar tomorrow: social media for MLM…
Jose on What are Afformations? How are they different from affirmations?
tommyb on “Where have you BEEN?”- John Counsel on “Where have you BEEN?”
- youlesucceed on “Where have you BEEN?”
- John Counsel on Where did that 97% failure rate come from?
- youlesucceed on Are YOU actively encouraging and supporting spammers?
Deana Wilmink-Martina on Recorded interview with George Fourie of thatMLMbeat.com- tommyb on Need more targeted, educated, qualified prospects? And more income?
- John Counsel on Need more targeted, educated, qualified prospects? And more income?
- tommyb on Need more targeted, educated, qualified prospects? And more income?
- youlesucceed on Need more targeted, educated, qualified prospects? And more income?
- John Counsel on Need more targeted, educated, qualified prospects? And more income?
- youlesucceed on Need more targeted, educated, qualified prospects? And more income?
Compensation Plan? Business Plan? Marketing Plan? Which is it?
November 24th, 2009 | 
Author: 
Like most sellers, network marketers are opportunists. They have to be to survive. It’s the nature of their profession. There’s nothing wrong with opportunism: like anything in life, it’s not WHAT we do, but WHY and HOW we do it, that makes it legal or illegal, ethical or unethical, desirable or undesirable.
And just as sellers promptly hijacked the new language of marketing in the 1950s, 1960s and 1970s (because it sounded great and gave them a perceived edge), ignoring its very precise meanings and applying their own (causing massive confusion in the process), network marketers and Internet marketers enthusiastically adopt conventional business terminology without a clue about its real meanings and — you guessed it — create massive confusion in the process.
This came up while I was reading a new ebook on network marketing which is a classic example of this hijacking of specific business terminology and perpetuating ignorance and confusion amongst network marketers. (Even the term “network marketer” is a perfect example of this opportunism — in this case, substituting the word “marketing” for “selling” because it’s more plausible and less threatening. )
The book refers to compensation plans as marketing plans. Others refer to compensation plans as business plans. So let’s stop the uncertainty right now and set the record straight, once and for all.
Business Plans
A business plan is the overall set of definitions, descriptions, sub-plans, strategies, resources, milestones and measurement procedures used by successful businesses to visualize the business and bring it to reality. Here’s a simple model of a business vehicle showing the components of the business plan…
- It defines why the business exists (the mission statement).
- It describes how conditions will be when that mission is being accomplished (vision statement).
- It describes what the business will make, provide, supply, add value to or otherwise exchange with consumers in order to make profit (the basis for business and basis for growth).
- It identifies the key competitive edge that will help it to survive and thrive in a competitive environment.
- It includes sub-plans for marketing, finance, internal relationships and external relationships.
Notice where marketing comes into the picture? It’s one of the four sub-plans of a business plan. In a really enlightened business plan, marketing is actually one of the components of a customer fulfilment plan — a much more productive and intelligent concept than marketing alone.
Marketing Plans
A marketing plan defines and describes the components of the marketing mix that identify unmet needs (needs define markets) and satisfy them. These components may vary slightly according to the industry or business model in question, but typically looks like this:
Public relations also comes under Market Communications, but is much more than just marketing: it’s about protecting your right to do business in that market place under the Law of Common Consent (“Any organization continues to exist only with the common consent of the society within which it operates.”)
The marketing in “network marketing” (a misnomer because the only area of real difference from conventional marketing is found in Distribution) is done by the company’s internal marketing department. These are staffed by professionals, usually with degrees from business schools. They’re back room strategists and analysts, not sellers out in the field. Very few consumers ever come into contact with marketers. What they do have contact with is sellers who misuse marketing language to try to give them an edge.
Compensation Plans
A compensation plan defines and describes the terms and conditions under which a network marketing company will compensate its independent network of contract commission sellers. (That’s what you are: part of an outsourced sales department.)
So a compensation plan is part of the sales nut that holds the marketing wheel on the business vehicle.
Presenting a marketing plan as a business plan, or a compensation plan as a marketing plan or a business plan, is like the proverbial sausage that wanted to be the butcher. Or, in this case, the nut that thought it was the entire vehicle.
It shows ignorance and blatant opportunism — perhaps even deliberate deception.
Hardly attractive qualities in a would-be sponsor, true?
Minimize YOUR risk of being seen as ignorant, foolish or deceptive. Learn the different terms and use them properly.
Learn more at…
Author Profile Consults to managements of direct selling companies, small business and home business owners. Writes regular columns and feature articles for various business media, online and offline. Author of several best-selling business books. Presents seminars and workshops, webinars and other training programs. Creator of Fourth Generation Thinking, Selling, Business Systems. Read more from this author
Posted in Bad Practices, Compensation Plans, Dubious Practices, MLM and the law | 
Tags: business plan, compensation plan, marketing plan
4 Responses to “Compensation Plan? Business Plan? Marketing Plan? Which is it?”
Click to see the 49 other
winners in 2009!
Insights, ideas,
free goodies!
Click to visit!
Excellent – set out the confusion and misleading usage of terms very clearly – no room for misunderstanding, even if some are uncomfortable with the result.
Hi Eric
I understand how it happens. For most, it’s simple ignorance — they’ve never run a conventional business or worked at senior management level, so they’ve never been told what the terminology means.
They hear it, it sounds impressive, so they use it — without knowing what the terms actually mean.
It’s like IMers and their “Joint Ventures”.
They’re rarely true joint ventures. They’re nothing more than strategic promotional alliances that take the deal up a notch or two from simple affiliate status to super affiliate status or “JV partner” status.
Most would be horrified if they realized that calling these deals “Joint Ventures” can leave them exposed to prosecution, litigation, fines, costs, damages and penalties… even jail time under some circumstances.
Ignorance in business is NEVER bliss!
John
Hi John
Yes when there is so much sloppy information out there its obviously too easy to fall into the trap. Which is why your insights are so valuable to keep us (me) on track.
Interested in your comments on JVs, never really gotten involved, or seriously looked at such. I guess instinctively felt they were misnomers. As far as possible I keep away from the internet offers, got my fingers burnt early on with cycling HYI etc. More cautious now, which is why I prefer to keep with the established NM companies, no guarantee but safer.
Your comments on NW and selling are interesting and one to dwell on. Whilst clearly NM is more selling than marketing in its purest sense, still I feel that it’s moved into a gray area. There seems to be an acceptable term to describe a distribution model, which has distanced itself from Direct Selling. Intellectual distribution and drop shipping are the current terms and whilst still involve selling – perhaps this is selling with a small “s” in the sense that all business involves “selling” but not all involves the exchange of product for money, but could be “selling” ideas, influence personal branding etc.
Time for a new more helpful and less misleading name.
Hi Eric,
It doesn’t really matter what names are invented for it, the actions of the majority will taint that new name just as surely as MLM and Network Marketing became so rapidly tainted.
We screw it up, then look for less offensive names to try to deflect the ensuing odium.
The current victim is “direct selling”. It’s quite misleading. Yes, network marketing is a FORM of direct selling, but only one of many forms. It’s a bit like all those so-called “Democratic Republics of…” that were anything but democratic, although they may have met met the vague criteria for a republic.
Instead of looking frantically for new names that will become promptly corrupted, why don’t we try changing the BEHAVIOUR and ATTITUDES that create that adverse public perception in the first place?