Network marketing or multilevel marketing is a popular platform for doing business today. Many network companies exist, and each one offers a wide array of products and services to offer prospective home-based entrepreneurs. While each network marketer knows that it takes a lot of hard work and determination to succeed, the trick is finding an MLM company that pays the best. Paying the best also means that the company may have a feasible compensation plan in place. However, most MLM distributors and affiliates are sometimes duped into believing that a certain compensation plan will make them lots of money. So how hard will you have to work for your money?
What are the common MLM compensation plans?
In multilevel marketing, there are basically 4 major types of compensation plans. These are the Stairstep, Unilevel, Matrix and Binary plans. First let's discuss how a binary compensation plan works. A Binary plan is a pay structure that's based on the number two. Each level of your network marketing organization is composed of two people. This means that once you sponsor two people to your MLM business organization, you already have filled your front line, and have set up yourself to create viral growth that's very much typical with these types of compensation structures. There are 5 advantages that distinguish the binary compensation plan from other MLM compensation models.
1. You Actually Profit From the success of your up-line
With a binary compensation model, your up-line or (the person that sponsor you into the business) will actually benefit from your success, since the binary system makes your up-line place new members under you. This is called the spillover, and can truly change the amount of residual income you get, regardless of your level of success, or how you mentor other people in your MLM organization.
2. It offers a "Two to Infinity" Payout
Because this system enables your MLM business organization to grow two fold, it swill offer what is referred to as the "two to infinity" payout. So, regardless of whether how deep you install new members into your down-line, it's most likely that you'll make the same amount of compensation or commissions, from other people's sales and referrals. The binary plan is often viewed to offer the best benefit of all, as compared to other comp schemes.
3. A Binary compensation plan works best in fostering teamwork
According to veteran MLM distributors, the binary plan is often viewed as a structure that best promotes teamwork, both for the up-line and down-line. With this model, you'll still benefit even if you think that your sponsor is "stealing" a new recruit from you, because the system automatically places a new member beneath you, so you don't have to worry that you're being ripped off by your main sponsor.
4. Your up-line usually helps you build one side of the leg
Often times, in a binary system, your up-line will most usually help you build the other leg, while he guides you into building the other leg. The binary system is advantageous because half of your compensation can be made or developed by another entity, which may usually be more experienced than you. Therefore, all you need is to just build your side of the leg, and you collect double compensation after. The binary system is often referred to as a robust synergy-based system, where your up-line is able to directly contribute to your overall efforts.
5. You dictate how many down-lines are placed on each of the two legs
Depending on how your MLM Company interprets the binary compensation system, with this model it's most likely that you can actually dictate how many members will be placed in each of the two legs. Here's an example: If an MLM program states that you need to sponsor one member into your left leg, and one member in the right leg, to allow you to qualify for commission. So your mission would be to sponsor two members, one in your original leg and the other in the new leg. In the end, you will be paid royalty or group commissions based on "groups" of members.
In a binary compensation model, all members will benefit from all new members that are sponsored by their up-line in the same leg. And apart from getting group commissions depending on the network marketing program you join, you'll also be able to get extra bonuses from each individual that you personally sponsor.
Article Source: http://www.articlesbase.com/home-business-articles/5-advantages-of-binary-compensation-plan-2003720.html
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