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Saturday, November 05, 2005



Before choosing a Network Marketing Business you will want to know the compensation plan. You want the right plan, one that will generate a good income in reasonable time, one that you can build an organization as wide and deep as you want to go. You want a plan simple enough to explain to possible recruits. You want it to be replicable making it easy for your recruits to duplicate what you have done, thus setting up a great down line which will bring in reoccurring income not only for you but them also. Build it once, Build it Big, Build it for your children’s children. Never forget you want a company that also builds from great relationships, creating team work within your organization which will benefit everyone. So what are the major compensation plans and their differences? There is the Stairstep, Breakaway, Unilevel, Binary, and Matrix.

1. Stairstep: This plan is the oldest and is very simple. Each promotion you meet will advance you within a set structure made up of stair steps. Usually, the distributor works on volume, and the sponsor will receive a percentage of that volume. This compensation plan is sometimes combined with other plans.

2. Breakaway: Usually this plan is combined with the Stairstep plan. If you don’t mind building a team or company again and again, this plan could be a challenge. If you do not understand where the breakage is; at what level it is, or what volume amount it is, you can wake up one morning and find your commission check cut in half, making this plan very unpopular. You have to be alert where your down line is at all time. If you have a great distributor reaching whatever monetary limit or recruiting level close to the breakaway point, it drives the sponsor into discouraging any downline person from reaching the point of the breakaway.

3. Unilevel: You can build this plan as wide as you want on your first level. However building to wide can cause you to lose tract of your distributor. This plan will give you a percentage of the volume that is sold, but it leaves little to promotion or rank for yourself. The advantage of this plan is it is easy to explain to a potential distributor. Sometimes this plan can limit your depth of levels and in the payment plan which would discourage a deep sale organization.

4. Binary: Binary plans are limited to two on your first level. Everyone else goes below in depth. The drawback with this plan is you may get a recruit who works hard and you see the potential of a great team member, but because you have your first level filled, you have to place the hard working advancing recruit at a level which will give you little benefit. Sometimes the Binary is also combined with the Matrix in a so called 5 x 9 or 4 X 7 or 6 x 9. The first number being your first level, and the second the depth. This is the size of your organization, period. There is little chance of a great reoccurring income with this plan.

5. Matrix: This plan is sometimes called the “Game” plan. It is the most unsuccessful of all the plans because you are placed wherever the sponsor or the company wants to place you. The only way this plan works well is the products are used mainly by the distributors rather then to customers. Virtually there is not productivity.
There is a new Compensation plan on the horizon that has been out for a short time called the “Australian Two-up”. This plan is structured so that the first two people you recruit are given to your sponsor, everyone else you recruit is yours. Some have been known to keep the strong prospects for themselves giving the weaker recruits to the sponsor. Thus some companies have come up with something called an over-ride, or offering a bonus for the people you give up. Good luck if you can keep up with this one!


I have touched briefly on the basic compensation plans in the Network Marketing Industry. Some combinations have been successful. It goes without saying most of us would like a plan which works with our personality; one which will bring us a good reoccurring income without having to rebuild because of breakage, heavy front-end loading (high upfront money’s paid out to join), spillovers which usually do not come, or passing great recruits on to someone else.
There are some great Network Marketing companies with beneficial compensation plans. These companies know their distributors are their biggest asset, so they give them every advantage possible. They have small joining fees, have a lead product, pay out on volume as well as on level of GBP giving each person that works for them a fair and respectful piece of the pie. These companies are a joy to work for. So, before you sign on the dotted line, make sure of the compensation plan. If you don’t understand it, get in contact with us, or someone who can explain it to you. Do your homework first. Just because you like a product doesn’t mean you have to work for the company under a bad compensation plan. Buy the product, but join a Network Marketing company which will keep you in mind at all times during you climb to be successful. We can help you. Our team is working to make Network Marketing the best it can be.

Success in your Marketing Business

Deana Miller

Learn more about how to become a Success in Marketing
Persistence in Network Marketing
Network Marketing Income-Linear Versus Recurring
Seven Core Values to Success
Network Marketing and the Choleric Red
Network Marketing Building Momentum


At 9:41 PM, Blogger Network Marketing Success Team said...

Understanding ones compensation plan is like getting a job and 'asking how much does it pay?' I have heard Network Marketers say "don't worry about the money, it will come. Just choose a company whose products you love." While I agree one should love the products, I believe it is equally important to know how you are getting paid. Know the rules. Get educated. Find a system you can work with. They are not all the same. Different personalities work best with different compensation plans. Thanks Deana for the great article.


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