MLM Compensation Plans. What Difference Do They Make?
Companies clearly believe they make a difference. Basically what MLM Compensation Plans are trying to do is reward behaviour that moves their product, so motivating you to take action.
The basic principle of different plans remains the same - duplication, sponsoring other people and finding new people who will use and buy the product.
The different plans have developed in an attempt to "tweak" behaviour... and be more motivating than the next plan - which is why just about every company lays claim to having the best, most powerful, brilliant compensation plan!
Here we will keep it simple and explain the differences in the basic types, starting with the simplest...
Unilevel Compensation Plan
This is really the original of all the MLM compensation plans, and predates modern computers and software that can handle large volumes of data, and is the simplest.
You can sponsor as many people as you want onto your front line - you can go as wide as you like, as shown in the diagram!
If the plan pays a high percentage on the first couple of levels you can benefit by having more people on those levels.
But for the longer term you will be more effective in building residual income by building deep...
Forced Matrix Compensation Plan
In a Forced Matrix Compensation Plan you have a limit on the number of people you can have on the "Front Line", usually between 3 & 5. Typically though they pay commissions on more levels down than the Unilevel Plan.
Eg a 3 x 9 Forced Matrix allows 3 people on your first level and pays 9 levels deep. a 5 x 7 gives you 5 on your first level and pays 7 deep.
If you fill your first level the "Forced" Matrix literally forces you to place people lower down in your organisation and so encourages you to build deep.
What this produces is Spillover, where a productive upline places people under you.
Indeed you will not usually have to fill your front line before you start placing enrollees further down your matrix and even with a 5 x 7 matrix you may decide only to build up a couple or three legs at a time.
Binary Compensation Plan
The Binary Plan has only two legs. The idea is that if you joined your sponsors' Left Leg, they will continue to sponsor new people under you on the Left side and you add your people on your Right leg.
It sound great in theory, but payouts depend on the legs growing at an even rate. As you strive to get momentum in your business then you may find that very difficult to achieve.
Companies come out with ever more complicated plans, but the basic principle is very simple. A good company, with a good product and a simple plan, easily understood, is the best formula for success.
We can recommend some free MLMs and low cost starters which will help you get used to the principle and to some basic plans if you are dipping a toe in the water.
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