Different Compensation Plans In Network Marketing
People will always be talking about which is the best comp plan in network marketing. But all compensation plans have advantages and disadvantages and the purpose of this post is to help you choose the right compensation plan, but only you know which one is the right one for you… so do your due diligence.
The Unilevel Comp Plan
With this plan you can recruit as many people you want, there is no limitation going wide. However, you are limited on how many levels deep you can go. The unilevel comp plan is all about recruiting and very easy to explain to someone who is new.
The bad thing about this comp plan is that everyone is a distributor regardless of performance, there is no rank. The people that you sponsor in your frontline will be in competition with one another. In other words, it doesn’t promote teamwork.
The Binary Comp Plan
With this plan you are limited to 2 people in your front line, but you have no limitation going deep. So you have two legs, a right one and a left one. The binary comp plan is all about team building.
Any personally sponsored distributor more than 2 will go to the second level. If the second level is full, the new distributor is placed on the next vacant slot at deeper levels. You are building a power leg, where you place everyone you sponsor at the bottom most point of either your right leg or the left leg.
The problem with the binary comp plan is that people can get lazy. People will join you if you put them in your power leg. They will expect you to put people under them and have you build a team for them.
The Matrix Comp Plan
With this plan you have limitation going wide and you also have limitation going deep. For example with a 5 x 7 matrix, each level down to 7 can only have 5 distributors.
With the matrix comp plan, if you personally sponsored a 6th person, it would follow on the next level below you because you are allowed to have a maximum of 5 people in your front line. And you won’t make a dime from people in your 8th level deep.
Another big negative of the matrix comp plan is that very few network marketing companies using it survive.
The Breakaway Comp Plan
With this plan you have no limitation going wide and you also have no limitation going deep. This is the oldest compensation plan in network marketing. width gives you profitability and depth gives you stability.
If you have a successful distributor and they are super successful, they can breakaway from you. The bad thing about this is that you could end up losing a large part of your downline. Even though they are still in your team you can still lose money. For example, if you sponsored 6 people and one of them makes the most volume for you, once they breakaway, you could lose your achievement level in the company.
This is a full-time compensation plan and to succeed you have to be really good at recruiting and develop other leaders to really maximize the compensation plan.
My Final Thought
Like I said earlier, all compensation plans has their advantages and disadvantages, none of them are perfect. Before you start with a company, make sure you fully understand it.
Regardless of what company you join, if you are a great leader, salesperson and a recruiter, you can make a boat load of MONEY in any company. But if you struggle to sell, recruit and have no leadership, you’ll probably struggle with ANY company… until you develop the skills.
Let me know what compensation plan you like and why. I like to hear from you.
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"A good plan violently executed now is better than a perfect plan executed next week." - George S. Patton