3 Best Types Of MLM Plans
MLM Compensation plans can contribute to your MLM success or failure. But MLM comp plans are not completely understood by very many network marketers. Most don’t even understand all the details of their own network marketing compensation plan. I think part of the difficulty is this: it’s not very hard to visualize a diagram of the basic plan as it applies to you alone; but when you try to superimposing the same diagram for each of your distributors onto your own diagram, it can be too much for the average brain to picture all the diagrams within a diagram.
So most new network marketers just stop trying to understand them and assume that everything will work out. Bad idea. To choose the best MLM compensation plan for your level of experience and the amount of time you have to devote to the business, first spend time learning the basics of the most common types of plans. Then study the particulars of the specific plans for the MLM business opportunities that you are considering joining, since no two are exactly alike. For 3 Best Types Of MLM Plans enquiry and MLM software call or whats app on 8887222713
The four basic types of MLM Compensation Plans are listed below, starting with the most common.
Stair Step / Breakaway Compensation Plan
Stair Step / Breakaway plans are the oldest and by far the most common of the MLM compensation plans, but a little hard to understand and explain to prospects. You can only sponsor on one level, but various efforts raise you to higher and higher earning levels (stair steps) for your teams sales. When you’ve advanced to a certain level, you and your team “break away” from your sponsor and earn more.
However, people in your team, along with their downline, can earn the right to break away from your team, and then you no longer get paid the same commission from sales of that breakaway unit. But you do still earn a smaller percent commission from each of an increasing number of breakaway units downline from you as time goes by.
This plan requires the most work to succeed, so it tends to have more distributors dropping out of the program than other types of network marketing compensation plans. Of those who don’t drop out, but aren’t doing very well, many tend to have a growing stockpile of unsold unconsumed product lurking somewhere in their homes.
Unilevel Compensation Plan
The Unilevel plan is probably the easiest of the MLM compensation plans to understand and explain to prospects. You can sponsor a large or unlimited number of distributors, but get paid based on the work of a small number of levels below that… usually five or so. For example, you could directly sponsor hundreds or thousands of distributors on your first level. You would be paid commission on their sales, as well as the sales of everyone they sponsor, etc, down to approximately 5 levels, depending on the number that your plan specifies.
To oversimplify, if you sponsor 10 people, and they each sponsor 10 people, who each sponsor 10, all the way down 5 levels, you would earn commission on the sales of 10x10x10x10x10 people… 100,000 people. Of course, not every distributor will do this. Many will sponsor no one and drop out. Some will sponsor more.
Forced Matrix Compensation Plan
The Forced Matrix plan, or simply Matrix plan, specifies how many distributors you can sponsor on each of a specified number of levels. These details of any specific Matrix plan are described in terms such as 3×5, 2×12, etc. The feature of this type of plan that benefits new distributors is that once you fill the “frontline” (first level) of your matrix, you “spill over” into your frontline’s matrix, helping them to grow their frontline.
Binary Compensation Plans
The Binary plan is the newest of the four types of MLM compensation plans, and is increasingly popular. Why? Because it’s pretty easy to qualify for commissions. And it’s fairly easy to understand and explain to prospects. You sponsor two people to start the two “legs” of your downline. Then your sponsor may sponsor a new distributor, and you find them located on one of your downline legs. How? Remember that you are in one of your sponsor’s legs, so it’s a similar “spill over” phenomenon, like in the Matrix plan, promoting good teamwork, rather than competition between upline and downline.
And you can theoretically earn commission on potentially infinite depth. But if you have a successful sponsor, your sponsor-side leg will grow much larger than your other leg that is added to only by you, unless you work hard to grow it. Your commission is based on the sales volume in your shorter leg, which is an incentive to recruit. The sales volume in your longer leg is always there to motivate you. A very important characteristic of binary plans that you should avoid, unless you are very experienced and successful at recruiting, is a “flushing” binary plan. This is a plan that won’t save those points that build up in your longer leg until your shorter leg catches up and you can cash in on it. Look for a “nonflushing” binary plan.
This has just been a brief introduction to the basics of MLM compensation plans, without considering other details that are different in every MLM company. Many are hybrids of two or more of the basic types, or have unique features that disguise exactly what the basic type of plan is. Things to consider are:
1– overall company profits paid out as commissions and bonuses,
2– the requirements for qualifying to earn commission,
3– percent commission paid on various levels of your downline
4– unique bonuses for various selling and/or recruiting accomplishments.
The information that I’ve provided should at least help you to decide if you want to find a company that either uses or does not use one or more of these types of plans. After that, examine the plan of any specific company on your list in as much detail as you can, with someone in that company.
For 3 Best Types Of MLM Plans enquiry and MLM software call or whats app on 8887222713