How To Start An MLM

Compensation Plan

Compensation Plan Overview

Compensation Plans fall into 3 primary divisions, of which most other models place their foundation. I will attempt to highlight the primary 3, as well as those that follow on their foundations.

UniLevel Compensation Plan (Lines of Personal Sponsorship)

  • Width: Unlimited
  • Depth: Limited
  • Advantage: Unlimited Width
  • Disadvantage: Slow to build Depth

 

Matrix Compensation Plan

  • Width: Limited
  • Depth: Limited
  • Advantage: Potential of Spill
  • Disadvantage: Expectations of Spill can cause Laziness

 

Binary Compensation Plan

  • Width: Limited
  • Depth: Unlimited
  • Advantage: Unlimited Depth, Spill, Potential PowerLegs
  • Disadvantage: Mistakes by members who do not understand the Binary and choose to place people within internal legs, rather than sponsor into depth.

 

Hybrid Compensation Plan

  • Foundation: any combination of UniLevel, Matrix, or Binary
  • Advantage: Potential to earn based on advantages of more than one compensation plan structure
  • Disadvantage: Training and comprehension of more than one compensation plan structure. Also available commissionable funds are often split between structures, or directed toward one structure or the other.

 

Australian/1Up/2Up/3Up, etc.

  • Foundation: UniLevel
  • Width: Unlimited
  • Depth: Limited (Often 1 level only, some offer __ Levels deep)
  • Advantage: Potential exponential growth on frontline
  • Disadvantage: The mental picture of giving up the first __ people to my upline is not attractive

 

Stair Step Compensation Plan

  • Note: often combined as Stair Step Breakaway, but there is a specific difference Stair Step is not so much a Structure, but a Plan or Path of Advancement Largely, almost every compensation plan employs Stair Step without the title Stair Step is the Reaching of new Rank/Status/Income Levels based on Performance Qualifications Reach new Qualifications = Achieve a new Rank/Status/Step often with advancement in income.

 

Breakaway Compensation Plan

  • Foundation: Normally from the UniLevel, but could vary
  • Width: Unlimited (unless foundation of another structure)
  • Depth: Limited
  • Advantage: Extended benefits for those reaching qualifications and achieving breakaway
  • Disadvantage: A group in your downline which reaches qualifications and achieve breakaway are normally not included in your continued monthly residual income. If included, normally at a reduced amount.

 

Reverse Generational Compensation Plan

  • Foundation: Normally from the UniLevel, but could vary
  • Width: Unlimited (unless foundation of another structure)
  • Depth: Does not normally matter
  • Advantage: Recognized and accepted by companies with financial instruments
  • Disadvantage: Training and understanding of compensation model

 

Coop Compensation Plan

  • Foundation: Normally from the UniLevel, but could vary
  • Width: Unlimited (unless foundation of another structure)
  • Depth: Does not matter
  • Advantage: Portion of Company Wide Sales are placed in a Bonus Pool and Divided based on Rank, which is normally based on Sales Performance
  • Disadvantage: The model is A-typical and not familiar by most

 

Straight Line Compensation Plan

  • Foundation: Matrix
  • Width: 1
  • Depth: Unlimited
  • Advantage: Perceived spill and exponential depth growth based on timing, everyone else joins the company after me and lands under me.
  • Disadvantage: Expectation of Spill can cause laziness Visualization of structure and placement can lead to members treating the company as an “Endless Chain of Sponsoring”, which is a “Red Flag”, rather than focus on Sales Performance to End Consumers

 

Please visit MLM Software Consultant for additional information.

Regards,
Scott H Leonard

Consultant
Speaker
Trainer
MLM Software Provider
Guerrilla Marketing Expert
Web Services Provider

MLM Software Central
121 Broadway St, Suite 347, 348
San Diego, CA  92101

1-888-221-0106

 

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