Stair Step Breakaway Compensation Plan

The stair step breakaway compensation plan is one of the oldest compensation plans in network marketing. It works just like the unilevel plan in that everyone you personally sponsor goes into your frontline of distributors and your frontline can have infinite width. The difference is that you advance through a series of ranks until you reach a point where your organization “breaks away” from your sponsor’s organization”.

I think the best way to explain it is with an example. Let’s say that Mary is your sponsor and you have personally sponsored 3 people: Bob, Jane, and Tim. We’ll also say that this compensation plan pays out 5% per rank up to rank 4 which is the breakaway rank. You are at rank 3 and each of your people are rank 1.

In the stair step portion of the plan you make your full commission, 15% in this example, on your personal sales, and your commission less your downline’s commission on their sales, or 10% ( 15% – 5% ) in this case. When Jane sponsors some people and gets enough volume to move up a rank she will be at rank 2 with 10% commission, which reduces what you get from her activity down to 5%. If she did that again then you would be reduced to 0% and not get paid at all on her activity.

With this plan you have some strong incentive to stay active and do what you need to do to advance through the ranks if you want to keep making money on the active people you sponsor. The stair step breakaway compensation plan rewards people who stay active in their business. If you are going to be just an “average” network marketer who only sponsors 2 or 3 people then this is not the plan for you. You would be better off with a binary plan or matrix plan and hope you have a sponsor who will build your team for you.

Now let’s say that you have done all that’s required to advance to rank 4, the breakaway rank. The structure below you is still the stair step and you now get 20% because you’ve increased rank. Let’s say that Mary is rank 5. As we said before, in our example the commissions increase by 5% up to rank 4 where they max out at 20%. So, Mary also gets 20% commission and if the plan still operated as a stair step at the level then Mary wouldn’t ever make any more commission on your activity. In our plan, Mary makes a 6% bonus on her breakaway teams ( at least that’s what the company I am with pays ). Back when you were making 15% Mary made 5% on your activity. Now that you have “broken away” she makes 6%, a 1% pay increase. That may not seem like much but realize that to have reached this level in the real world you have more people than just Bob, Jane, and Tim on your team and Mary has more than just you on her team.

I hope you see how this plan works. As I already said, it rewards activity. The people who don’t like the stair step breakaway plan usually complain about 3 things. The biggest complaint is the breakaway. They say that they’ve put all this hard work into building a team only to have it break away. It isn’t really gone because you still do make money at the breakaway team and, depending on how the company sets the percentages, the breakaway can actually mean a pay increase.

The second complaint is with the stair step. They complain that as your team moves up in rank, your commission on their activity decreases. That’s true. As they move up the ranks and gain experience they do get a larger portion of the pie. You would expect the same thing if you were a sales person in a traditional sales force too. We’ve already pointed out a couple times that this plan rewards activity. Also realize that when Bob finally moves up in our example, even though your part of the pie drops from 15% to 10%, you will be getting 10% of a larger pie.

The final complaint I usually hear applies to both this plan and the unilevel plan, and that has to do with the potentially infinite width. They say that it is too many people to work with at one time and they are all in competition with each other because they are cross-line. As your team moves up in rank they are going to need less and less of your time. You will put the majority of your training and hand-holding time with the handful of people who are still at the lower ranks. As for the competition issue, that all comes down to the culture that you and the company create. Like I said before, the company I am with uses this plan and has created a culture of cooperation. I can get help from a cross-line person, and upline person, or a downline person. It’s all the same.

When looking at a company with the stair step breakaway compensation plan, the percentages are important. Make sure that there is an incentive, even a 1% increase, for helping someone to reach breakaway. Beyond that, it’s the usual things you look for in any network marketing company. A reliable company with a proven track record and a quality product that you can get excited about.

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