From the category archives:

MLM Compensation Plans

Binary Compensation Plans and Their Complex Balancing Acts

by Wayne on December 16, 2009

in MLM Compensation Plans

The Binary Compensation PlanA binary compensation plan, as its name suggests is based on the number 2. A distributor in a company that operates a binary compensation plan can only build a downline consisting of two legs. A left leg and a right leg.

That’s correct, a binary compensation plan only allows you to have a maximum of two frontline distributors. Any more that you personally sponsor would have to placed underneath one of your two personally sponsored frontline distributors. This is another case of spillover.

The width restriction, however, is not as bad as it sounds as the average network marketer will only sponsor between 2 to 3 people in their entire career. The only way to build a binary is to go deep. Depth cultivates leadership and a team spirit. [click to continue…]

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Which MLM Compensation Plan Is The Right One For You?

by Wayne on December 8, 2009

in MLM Compensation Plans

Do You Know?When looking for a job, you’d look carefully at the job description to understand exactly what was expected of you, wouldn’t you? You would make sure that you have the capabilities to do the job and that you’d be comfortable doing it, am I correct?

After you’ve determined that you’re the right person for the job, you’d probably want to know how much you’d be paid to do what you do best. This gives you options. You can compare several similar roles with different companies and weigh up which one is the best deal before making an informed choice.

So why wouldn’t you use the same approach in choosing a compensation plan and company that would give you the best chance of success? [click to continue…]

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The Aussie 2 Up Pay Plan – Not a Chance My Friend!

by Wayne on December 7, 2009

in MLM Compensation Plans

The Australian Two Up - Gamble At Your Own RiskAn Australian two up, or Aussie 2-up is any programme where you pass up your first two sales and personally sponsored distributors to your upline. Hence the “two up” – I’m not sure where the “Australian” part comes in.

That means your first two personally sponsored distributors are now personally sponsored by your upline, putting them in direct competition with you, and giving your upline the leverage. You derive no benefit, it’s only after you have made your first two sales, you can begin to benefit from your own hard work.

Aussie 2-up programs are always information products or expensive travel packages that cost $1000, $5000, $10,000 even $25,000. They are always one-time sale items. There is no residual income because they are not consumable products. There is no monthly autoship, no repeat custom. [click to continue…]

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The Matrix Compensation Plan – Who Wants Some Spillover?

by Wayne on December 5, 2009

in MLM Compensation Plans

MatrixA matrix plan is any pay plan that has a fixed width and a fixed depth. If you’re in a matrix plan you are limited by how many frontline distributors you can personally sponsor. While there’s no limit to how deep you can go, you are only paid down to a certain level.

Let’s take a look at a 3 x 5 forced matrix plan, that is a maximum of three frontline distributors, paying down five levels deep. On the zeroth level is you. On your frontline (you first level) you can have up to 3 distributors, the second level can have up to 9 distributors, on the third level 27, on the forth 81, and finally 243 on the fifth level. The end of your payline is level 5. [click to continue…]

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Understanding the Unilevel Compensation Plan – The Good and The Bad

by Wayne on December 4, 2009

in MLM Compensation Plans

Unilevel plans are great for going wideThe unilevel compensation plan is a common in modern day network marketing. By and large, a unilevel compensation plan is a linear, whereby your income is directly proportional to the number of people in your organisation.

By contrast to the stairstep breakaway plan, the unilevel plan is a very easy compensation plan to understand and explain. In companies with more complex compensation plans, you would start as a distributor and move up to Silver, Gold, Platinum, Ruby, Emerald, Diamond etc, etc. [click to continue…]

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How the Stairstep Breakaway MLM Compensation Plan Works

by Wayne on December 2, 2009

in MLM Compensation Plans

SpiralThe stairstep breakaway pay plan is the oldest MLM compensation plan. Having stood the test of time, it is the most commonly used compensation plan. The oldest and largest MLM companies, Amway, Herbalife, Mary Kay, Neways, Nu Skin still use this type of pay plan. It is also the most complex form of compensation plan and the most difficult to explain to new prospects.

Before the days of computerised databases and online ordering, distributors did not deal directly with their MLM company. They actually bought products at wholesale price from their sponsoring upline, who bought from his sponsoring upline and so forth until the first “direct” distributor who dealt directly with the company.

In fact, some companies still use “direct” to distinguish their top producing distributors from others, with designations such as Gold Direct, Platinum Direct, Emerald Direct, Diamond Direct etc. [click to continue…]

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The $10K Question – How many do you need in your downline?

by Wayne on November 19, 2009

in MLM Compensation Plans

How much do you need to make $10,000Have you ever considered how many people do you need in your downline to make $10,000 per month?

Once you work this out, the answer to this question may surprise you. It may even anger you depending on how serious you are about becoming financially independent via network marketing. The real question is: how much does your MLM company reward you for bringing in revenue?

The best compensation plan is one that will pay you the most money for the least amount of effort. Why do some companies have “better” compensation plans than others? [click to continue…]

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A Sad, But Often True Story of Network Marketing

by Wayne on November 13, 2009

in MLM Compensation Plans

I worked hard, where's my money?A few days ago, I had a conversation with a lady who reached a very significant pin level in one of the largest MLM companies. She is no longer with this company, but her story is one that’s not too uncommon within the MLM industry and should serve as a lesson to all of those who really want to live the MLM “Dream”.

From the outside she and her husband had what you could call “success”. They were always on stage, speaking and telling inspirational stories at company events. Every week they trained their downline on how to promote the business and its products.

What was missing?… The Money! [click to continue…]

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