Network Marketing Compensation Plans Part 1

Compensation Plans 101

I got a great question that I want to share with you about Compensation Plans. I’m paraphrasing, but he basically said . . .

“I’ve read a lot of your emails and I’ve found them helpful, but the one thing that I’ve never heard you talk about is compensation plans and which is the best.”

I thought this was a great observation.

Generally, I haven’t talked about compensation plans much if even at all because I think they ARE important in the long run, but the more important issues associated with your success in network marketing revolve around how to promote your business properly online.

I teach to focus on the Product and Helping people and not so much on “How Much Money Will I Make”.

Click Here To Check Out Where My Compensation Plan WORKS

Nevertheless, compensation is why we are in the Network Marketing industry to begin with. So let’s go over the basics of the different plans that you’ll see out there.

In general there are 4 different compensation structures that we come in contact with in network marketing:

1. Binary Plans <– The Company I’m Affiliated With Use This One
2. Unilevel Plans
3. Stairstep Breakaways
4. Forced Matrix

So here are the basics on each . . .

Binary Plan:

Personally I think this one is the best one. The Binary Plan is a FAIR One because if you DON’T Work your business you DON’T get paid. This means EVERYONE Needs to take action and not just the few. The word binary means 2, so it’s easy to spot a binary plan because it’s any compensation structure where you have two defined sides, i.e., a left and a right in which you have two immediate spots below you to place new team members and they each have the same.

In binary plans, you are paid on volume and balance. If you have x number of people on one side, in order to get paid for those people, you have to balance it out by having a fixed ratio of people on the other side to balance the volume.

You can place your new enrollees anywhere in your binary matrix including under other people on your team and those new team members can be paid on those people by balancing them out.

In essence, your team members can be paid directly by your work if you are placing people under them.

This creates what is known as spillover and can generate a large deal of excitement within a growing team, BUT Only if you build your own team as well. This is why the Binary is my prefered choice. It also helps when new people see that they are having a large amount of growth around them they immediately see that the business is alive. They will do as you do, this builds an easy to replicate system.

The idea of network marketing and growing an organization becomes real and they are highly motivated to take action to balance their other leg to get paid on the spillover that they can see being placed around them.

Further, this scenario promotes a team mentality because you are greatly benefited by helping your new team member balance their legs and perpetuate the excitement down the line.

One the flip side . . .

The largest (so called) weakness of a binary plan is that often one leg can greatly outgrow the other.

This is known as a “runaway leg.” A “runaway leg” can throw the balance of your organization off and can create a situation where a distributor has a huge amount of payable volume “locked away” in one leg.

Personally I don’t see this as weakness, but rather a HUGE call to action. It’s like seeing money in the bank that you can get access to if you just take action to balance the weaker side. This is why you need to run your own business.

Binary plans can create a huge amount of excitement, momentum, and volume quickly. This can be incredibly beneficial in the right circumstance.

We’ll get to the other plans in another post, I just wanted to make sure you saw the benefit of BINARY because this is the one that I use.

Take Action

Remember it’s not the plan that makes you money it’s what you do with it, so don’t spend the majority of your time on deciding whether or not your chosen compensation plan has the perfect mix or not.

All compensation plans work, they are just different. As long as you know what you’re getting into you can prepare yourself for what to expect.

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