Compensation Plans for
Direct Selling & MLM Industries

Compensation Plans for Direct Selling and the Network Marketing Industry Up Close...

A Network Marketing business is attractive for many because the signup fee is relatively low in comparison to the startup expenditure for a traditional bricks-and mortar type of business.

Compensation plans vary from company to company, but here are the four main types…

Compensation Plans

Unilevel Matrix

Your downline is made up of the people you personally sponsor (frontline) and their people under them. There are no recruitment limits. Your downline, in turn, can sign up as many people as they want, too. And so on.

It is possible, depending up your situation, to receive commissions on sales volume as far down as 7 levels. Some companies, though, only pay you down as far wide as you are. So, for example, if you have 3 people in your frontline who are building a business, they will only pay you 3 levels down. Once you go wider, they will pay you deeper. Retail commission on your downline and/or bonuses (example a car) are also provided in some cases.

Forced Matrix Plan

This plan is similar to the Unilevel Matrix except that your frontline is limited. (For example, 5 people might be the cutoff.) Once you reach the limit, any new recruits go to someone in your downline who still has room.

Binary Plan

In this case, the plan only allows 2 people in your frontline (unless the company allows the "buy in" of more). Once you meet the limit, new recruits are placed in your downline. Both legs of your frontline must match each other and meet the level of payout. So, for example, when Leg “A” and Leg “B” both have 500 in sales volume, the company will send a $100 check for example. It is common thought in the industry that companies with a Binary Plan provide the fairest and most powerful way to earn income and grow your business...

click here to learn more about binary plans

Breakaway Plan

When recruits reach a certain level in the business, your frontline and the people under them can break away and become their own group.

The company will then pay a percentage of this group's commissions to the original sponsor. However, this percentage does not fully compensate for the loss of potential income/bonuses due to the break. A discussion about payment usually leads to the next key question…

Are Distributors Making Money?

Are Distributors Making Money?

Most Network Marketing companies still train new distributors based on the oldschool approach of the 1940's… sell to and recruit your friends and families (i.e.,your warm circle) to grow your business network.

This fact alone has lead to the horrible stigma and reputation that Network Marketing has in the world...

To be honest, much of the negative feedback is justified, especially when you hear horror stories of desparate Network Marketing distributors forcing family to join their business, having to buy lead lists and cold call, friends putting a hard sell on other friends who simply aren't interested in your business, plan or products...

Training materials, business meetings, books, digital products, 'show the plan' materials and large-scale conventions are all designed to motivate you to get out there and start talking!

However, the business world has seen big changes in the last 60 years... Current ways that Network Marketing companies or 'uplines' teach you is outdated and has now become highly ineffective... Factors such as

  • Increased product availability
  • More competition and affordable prices in stores, offline and online
  • Increased number of computer and Internet users
  • Retail purchases on the Internet
  • Disappearance of door to door salesmen
  • ...All make the the old way of building your business irrelevant.

Network Marketing old-school principles need to adapt to the current reality. Many mlm companies are leaving a huge majority of distributors with a feeling of…

  • failure
  • loss of motivation
  • loss of desire to continue with NM opportunities due to poor training and marketing 'rules' or 'policy'

Many spend a ton of their own money on additional training assistance but their monthly compensation totals remain low.

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