If you are part of the MLM industry chances are high are you often come across MLM companies claiming to have the best compensation plans and offering the highest payout structure for their distributors.
Indeed, the right MLM compensation plan is extremely crucial to your success in the MLM business. What then is a MLM compensation plan? This is a set of rules that determine how distributors or team members earn commissions, bonuses, rewards and all manner of compensations. As MLM compensation plans go there are many in the fray, but the two most dominant that rule the scene are the Unilevel and the Binary Plan.
This post is an attempt to elucidate how the Binary MLM plan or calculator works and what are its many advantages. This plan is based on an organizational structure where new recruits or distributors are placed in a binary i.e. a two-legged structure, or left and right leg in the organization.
Not only is this a very popular but also a fairly simple marketing compensation plan which was introduced in the latter half of the 80’s and still continues to hold sway.
Understanding the Binary MLM plan
As the structure goes, each distributor is permitted to have only two members on the first level, but there is no limit to how deep a distributor can build. Since there are two legs, the left and the right leg in a binary plan, they can grow both on the inside as well as outside. The outside leg is also known as the power leg, as it has the placement advantage of new distributors not only those who your recruit but also the ones who are recruited by the members in your upline and is also called the ‘spillover’.
Again, as the width of the Binary plan is restricted to two members on the frontline, any additional members that are recruited will be a part of the ‘spillover’ in the downline’s power leg.
In the case of the profit leg though, there is no spillover and only consists of personally sponsored distributors. This should be factored in when building an MLM business where you intend to use the Binary MLM compensation plan for commissions.
So, how are the commissions calculated
Commission calculations in a binary plan are typically based on business volumes and not levels. It is distributed on the basis of matching pairs from the Left & Right leg of a distributor, in a defined ration such as 1:2, 2:1, 1:1 etc.
The compensation is calculated at almost 10% of the total business volume of the weaker leg, which makes it important to build each leg equally so that you gain a rich compensation.
The commission is also based on adding more distributors in the network as well as different awards and rewards on achieving the specific target to grow within the network. Royalty commissions are also very popular in a Binary plan and are based on company turnover and are usually credited to those distributors who play a prominent role in expanding the network.
This plans also owes its immense popularity to the different types of incomes that are a part of this plan such as the Binary/ Pair Matching income, Spill income, Direct Sponsoring Income, Spill Network Income, Referral Income, Single-Leg/ Level Income, and various other awards and rewards along with offers and schemes.
What are the advantages?
The Binary plan is well known for a host of advantages and is extremely popular not just in India, but other Asian countries as well –
Simplicity at its core – The Binary plan is extremely easy to understand, as all you need to follow is to get 2 distributors in the network.
Income opportunities aplenty – This plan affords huge income opportunities, owing to its infinite depth. Though there is a limitation on the width, there is no restriction on the depth of this plan.
Builds team spirit – As this plan is based on the need to balance the business volume of the two legs, it encourages distributors to help members of the weaker leg to achieve a better balance and in turn fostering team spirit and enabling company growth.
The Binary plan is not without its pitfalls, but its advantages far outweigh any drawbacks. Straightforward as it is, all it requires is complete alertness. Understanding the rules can help you achieve your goals and maximize your payouts with the Binary MLM compensation plan.
As an MLM company, you may feel short of understanding the full implications and workings of a Binary plan, here it would be highly beneficial that you seek out an MLM software that offers the Binary MLM compensation plan, along with offering customizations for any MLM business based on their requirements and needs.