The Most Commonly Used Compensation Plan in MLM Businesses
Posted: May 02, 2018
Short Explanation of Binary Plan
- Binary Plan is a structure very commonly used in organizations of network marketing companies.
- The upline sponsors in the binary matrix recruit their downline members and thus the downline becomes a part of the binary tree.
- The binary tree is the arrangement set up by members according to hierarchy. Another upline sponsor recruits two members and then each of them can recruit two recruits furthermore.
- The new recruits in the organization are known as Node.
- The new recruits or distributors, known as Node in a Binary tree can sponsor two more recruits each via two legs they possess. These two legs, right and left can also be mentioned as for right sub-tree and left sub-tree respectively. One leg is also known as Profit leg and another leg is also known as Power leg.
- The right sub-tree is also known as right leg and the left sub-tree is also known as left leg. One of these legs is known as Power or Outside Leg, and the other is known as Profit or Inside Leg.
1. Binary Plan Working:
Commonly most of the multi-level marketing organizations have started accepting the MLM Binary compensation plan. The binary plan is based on a 2X2 matrix. The hierarchy is built upon a descending order in the binary structure in which upline sponsor is at the top of the chart with two members below him as downline in the tree and so on. This phenomenon is accepted worldwide by all the network marketing organizations. The upline gets its surplus incomes due to the work done by its downline. The upline triesits level best to accommodate most valuable members to its downline.
2. What is MLM Binary Software?
The various binary networks and several features of these networks are looked upon by the MLM binary software. Various MLM organizations’ manual functionalities are minimized by the introduction of this binary software leading to the automation of the MLM organizations functioning to a large extent. The operational simplicity of the MLM Binary Plan software has made it very popular with time. The MLM Binary Plan software works for both large, as well as, small organizational structure companies with ease.
3. Advantages of MLM Binary Plan
Following are the benefits of MLM Binary Plan :
- Infinite depth : The network can be built by having unlimited depth and hence every upline sponsor is guaranteed to make stupendous income from successful downline sales.
- Rapid growth : Since each member in this matrix of two,has to recruit two members in their organization, therefore, the process of building the tree completes quickly without complications leading to rapid growth of the organization.
- The volume of sales is the parameter : The binary plan provides more compensation to the distributors whose volume of sales has been substantial. In calculating these sales, the direct sales are obviously counted upon and also the sales of their downline distributors are taken into account.
4. Various Compensations in MLM Binary Plan
Following are the various compensations in MLM Binary Plan:
- Introducer or Sponsor bonus or Fast start bonus or Direct Referral Commission : When the sponsor directly recruits a member, the member gets added to the binary tree either on the left or right side. The sponsor gets a direct bonus for the recruitment he has made. Some companies have different packages and thus, the bonus is received by the sponsors in accordance with the package selected by the downline members while registering. After the downline completes his registration formalities, the commission amount gets directly credited to the account of the sponsor.
- Pairing Bonus : The volume of sales of the downline members brings about the income for the upline members. The pairing bonus is derived from that. Members above downline can also place members in the binary tree. One gets the bonus as soon as the binary tree gets completed. It is not the case that anyone can receive unlimited pairing bonus for the day. Pairing bonus to be received in a complete day has certain upper ceiling or cap and beyond that upper ceiling, no pairing bonus can be received. Even if the tree gets completed, one would not receive any further pairing bonus for the day after he had attained the maximum ceiling of receiving pairing bonus.
- Matching Bonus : This bonus is an additional income for the sponsors on the Pairing Bonus of its direct recruits up to N generations depending upon the plan type.
5. Spillover MLM Binary Plan:
In normal forced binary plan the sponsors can recruit only two members in their downline. The business sales after that are entirely dependent on the distributor’s downline. The upline cannot help much to improve the sales. All it can do is to motivate its downline. For this reason, spillover MLM binary plan was introduced. In this system, after recruiting two members, the sponsor will have an opportunity to recruit more members. This is an opportunity where the spillovers will not cause any limitations. The upline can control the right and left sub-tree and add new members to the weaker side thereby maximizing the revenue and balancing the binary tree.
The outside leg or the power leg gets benefitted not only by sponsor’s direct recruitment but also by the recruitments of the upline members. This is meant by spillover. However, there can be no spillover in the profit leg.
Finally, on the basis of the above discussions on Binary Plan, we can conclude that the successful MLM business depends mainly on the strong downline members. Relying solely on upline members will not be feasible for the growth of the MLM organizations.
Source : http://mlmbinaryplan.strikingly.com/blog/the-most-commonly-used-compensation-plan-in-mlm-businesses
Kamini is a technical content writer and freelance blogger. She writes for wide range of topics in technology, currently she is writing on Mlm Software India.