Choosing the Best Network Marketing Compensation Plan
There are basically four compensation plans in network marketing. They are the:
- unilevel plan
- stairstep breakaway plan
- matrix plan
- binary plan
The Unilevel Network Marketing Compensation Plan
Under the unilevel plan there is unlimited width with a set number levels of depth. This means that every person you sponsor is on your frontline. You receive compensation based on a percentage for each level in your organisation. One advantage of the unilevel plan is that it's easy to explain to potential associates. The unilevel plan promotes recruitment volume to build your organisation.
On the negative side, the people you sponsor in your frontline will be in competition with each other so it doesn't promote teamwork.
The Stairstep Breakaway Network Marketing Compensation Plan
The stairstep breakway plan is the oldest and most widespread network marketing compensation plan. It's basically a unilevel plan, but once you reach a level certain sales level, you break away from your sponsor and they receive a smaller override commission on the sales volume.
The fact that it's similar to the unilevel plan means that there's no incentive for teamwork and your frontline members are competing with each other. This plan is best suited for people who are good at high volume recruiting and are experienced network marketers who don't need network marketing training or support.
The Matrix Network Marketing Compensation Plan
This plan, also called the forced matrix plan, limits the width of each level. For example, a 5 x 7 matrix will have three distributors at each level down to seven levels. Once you have filled the top line of the matrix you can place the people you sponsor under others to fill the matrix.
This sounds good in theory, but it means that there can be unmotivated people in your downline who end up getting something for nothing. It also can create resentment among hard workers who see others profit without putting in the effort.
Another big negative of the matrix plan is that very few network marketing companies using it survive.
The Binary Network Marketing Compensation Plan
This is the newest, and many believe the fairest, plan. In the binary plan you have two 'legs', a left side and a right side, so you have two frontline associates in each business centre. Commissions are paid when the sales in both legs match at a certain amount. Additional volume in a leg is carried over to the next commission period.
Associates after the first two you sponsor are placed under existing frontline members. This creates an incentive for people to work together for mutual benefit. Placing members on one leg creates an incentive for the member to build the other leg to balance them out. This is why the binary plan has been called the most synergistic of all network marketing compensation plans.
One telling fact about the binary plan is that one major network marketing company using it has received the distinction of being voted the number one people's choice in Network Marketing Magazine for ten consecutive years. Recently 2 exciting enhancements was added to this compensation plan which makes it a very lucrative option
Regardless of which network marketing company you join, it's important to understand its compensation plan and whether it will work for you in the long run.
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