Overview:
The Breakaway Plan, also known as the Stairstep Breakaway Plan, is one of the oldest and most popular types of MLM structures. This plan is especially common in large MLM companies and is known for its complexity and potential for high earnings. It focuses on encouraging representatives to build large teams, with rewards given based on sales volume rather than recruitment alone.
In a Breakaway Plan, as distributors (sales representatives) grow their teams and reach certain sales targets, they eventually “break away” from their upline and form their own separate group. At this point, they earn commissions not only from their personal sales but also from the sales of their breakaway teams.
Key Features of the Breakaway Plan:
- Rank Advancement: Distributors move up the ranks based on their performance, usually measured by sales volume.
- Breakaway Groups: Once a distributor achieves a certain rank or sales threshold, they break away from their upline to become an independent leader.
- Leadership Bonuses: Upline members earn bonuses from their breakaway groups, even after they separate.
- Focus on Sales: This plan emphasizes retail sales and team performance, rather than recruitment alone.
- Residual Income: Uplines earn a percentage of their breakaway group’s sales, leading to long-term residual income.
How the Breakaway Plan Works:
- Joining the Network:
- A new distributor (let’s call her Alice) joins under an existing distributor (Bob).
- Alice starts by selling products and recruiting others to join her team.
- Building a Team:
- As Alice recruits and trains new distributors (Charlie and David), she earns commissions on their sales.
- Alice’s team grows, and she accumulates volume points from both her personal sales and her team’s sales.
- Reaching a Sales Target:
- Once Alice’s team achieves a specific sales volume (e.g., $10,000 in total group sales), she is promoted to a higher rank.
- At a certain level, Alice’s team “breaks away” from Bob’s team and becomes an independent group.
- Earning Leadership Bonuses:
- Even though Alice’s team is now independent, Bob continues to earn a leadership bonus on Alice’s team’s sales.
- Alice, in turn, can develop her own team members into leaders who eventually break away from her team, creating additional downline groups.
Example of a Breakaway MLM Plan with Tree Structure
Let’s illustrate how this plan works using a tree structure:
Bob (Upline Leader) | Alice (Distributor) / \ Charlie David (Recruits)
After Breakaway:
- Alice achieves the required sales volume and breaks away from Bob.
- Alice now becomes an independent leader with her own downline team.
New Tree Structure:
Bob (Upline Leader) | +-- Alice (Independent Leader) | Charlie and David (Alice's Team)
Detailed Example with Ranks and Commissions:
Let’s say a company has the following structure:
Rank | Sales Volume (Monthly) | Commission Rate | Bonus |
---|---|---|---|
Distributor | $1,000 | 5% | – |
Supervisor | $5,000 | 8% | – |
Manager | $10,000 | 10% | Leadership Bonus |
Director (Breakaway) | $20,000 | 12% | Leadership Bonus |
- Alice joins as a Distributor and recruits Charlie and David.
- Once Alice’s team reaches $10,000 in sales, she becomes a Manager.
- When Alice’s sales volume reaches $20,000, she breaks away as a Director.
- Bob continues to earn a 5% leadership bonus on Alice’s group’s sales, even after Alice breaks away.
Advantages of Breakaway Plans:
- Encourages Leadership: This plan rewards distributors who focus on building and mentoring strong teams.
- High Earning Potential: Breakaway leaders can earn significant bonuses from their own and their downline teams’ sales.
- Residual Income: Leaders can continue earning from their breakaway groups, creating a source of passive income.
Potential Drawbacks:
- Complex Structure: The plan can be difficult to understand for beginners due to its multi-tiered structure and multiple levels of bonuses.
- Pressure to Meet Sales Targets: Distributors may feel pressured to achieve high sales volumes to break away, which can lead to aggressive sales tactics.
- High Turnover: Because of the high-performance requirements, some distributors may struggle to maintain their ranks and drop out.
Conclusion:
The Breakaway Plan is ideal for those who are willing to invest time and effort into building strong, sales-driven teams. It rewards leaders who focus on mentoring and supporting their downline, making it suitable for experienced network marketers.