There are four basic types of compensation plans in Network Marketing. The following is a quick and simple explanation of each (assuming you have a basic understanding of MLM):
Matrix: A fixed number of people in width and depth paying a percentage based on each spot.
Unilevel: Unlimited width with a fixed number of levels. Paying out a certain % by level.
Binary: Two people in width and unlimited depth. Pays on volume cycles when a fixed amount of volume moves through each of the sides.
Stairstep Breakaway: Unlimited width with a volume based percentage payout that breaks away once a person hits a particular rank.
Now for the reality….
None of these plans work. None of these plans will make you money.
Only you can make you money in Network Marketing. The compensation plan is a lot less important than experts and pitch artists would lead you to believe.
The only thing that will make you money in Network Marketing is your work selling products and sponoring people. Find a quality product at a fair price and get busy marketing.
What is passport plan? And what is Quixtar's? Quixtar is break away or Matrix?
Passport has a modified unilevel that pays down 3 levels with a cap on the MLM portion of the plan at $85. In other words, if you did $1000 in volume, only the first $85 goes into any type of MLM compensation. The rest goes directly to the person that created the volume.
Quixtar has a stairstep breakaway plan.
This post came about based on a conversation at "making the run. The board moderator likes to call any compensation plan other than a stairstep breakaway, a scam, which is simply not true. It's pretty funny, really. The company he represents scams more people in a given year than most of the other companies combined.
Truth of the matter, the comp. plan makes little difference.
I've certainly had my issues with pay plans over the years. Here's a reality in nwm — 90-97% of your income will come from 3-4 legs, 5 tops. I've never seen that stat refuted by anyone making a fulltime income in nwm. However, I would admit if you're one of the 3%'rs – you CAN make it with differing comp. plans. So, not real sure where I stand on this matter just exactly – but I do absolutely believe depth will always be an issue in the long term viability of your income stream.
Kent
Most companies (Passport included) have some type of additional depth bonus for those that attain those types of business'. The average Network Marketer should focus more on products sales in order to build a viable business.
Ty – correct me if I'm wrong please – but does Passport's volume bonus have anything to do with one's ability to lead distributors? Memory serves me it's based on driving traffic to affiliate sites such as Amazon.
IMHO Passport has simply erred on the retail sales side of the equation. For those that PROVE they can build a sizable organization – they almost invariably want to be paid accordingly in leadership depth – I've never seen this to not be the case.
Take for instance my friend in Mary Kay – she's driven the Pink Caddy for 20+ years. Around 50% of her income comes from personal product sales – a pretty healthy level in anyone's book. However, the remaining 50% come in depth over-rides — not in an extreme Trend 90 plan that rewards the recruiter – AND tops out at a paltry $85. My buddy makes a fraction of a HUGE amount of sales – not a HUGE slice of a small amount of sales. Pretty black and white to me – the leaders will lead and build huge organizations — whereas the recruiters will churn through the numbers to go wide, wide, wide. DEPTH is where residuals kick in – and it is deserved based on years and years of distributor oversight – not just because you got someone to sign an app.
Mary Kay's comp. plan is not on trial here. I wouldn't say Passport's is – but Passport's is still very much unproven. I think there's eventually going to have to be some tweeking and/or pride swallowing – and Passport will have to pay leaders for depth volume – based on leadership – not recruitment or driving traffic. Good topic here Ty.
Kent F.
And the best part, in my opinion, is that distributor titles like Grand Poobah, Starship Administrator, and Caesar Elite are not included in distributor hierarchies.
For Pete's sake, it's a business, not a board game or a video game.
Ok- thanks for clearing it up Ty – I was confused. Funny comments Shannon – I was always hoping for the double platinum master of all civilation – lol.
Passport has added a profit sharing bonus that considers a person's entire volume regardless of level using the following qualifications:
Qualifications:
1. Receive a bonus check in each month of the bonus period.
2. Show exceptional growth and volume (top 20%) in your personal business levels 1-3.
3. Show exceptional growth (top 20%) and volume in levels beyond 1-3.
4. Participate and offer leadership to the Passport U training program.
5. Participate and lead corporate conference calls.
6. Show proof of 5 retail customers or more in the bonus period.
That is about as leadership driven as you can get, wouldn't you agree?
Sorry, forgot to address this part…
Amazon has nothing to do with the profit sharing/leadership bonus, that is a seperate program.
Binary compensation plans aren't that much different than the others. They can give the appearance of fast growth, but the reality is you still must share the products with others and sponsor people in order to make money. Most people in Binary's have one leg built to China and no one in the other leg.
If I had to choose I would rate Binary at the top along with Unilevel followed by the other plans.
and in terms of MLM pay plans, what is the forums opinion on Binary Compensation plans…in any case just out of interest…it is all to do with the person.
I have read a lot of posts. Bottom line, if you don't sponsor or move product, you will not make money in any of the plans. That is one thing I agree with.
But when you remove the "smoke and mirrors," every plan has its limitation. I favor the binary, because its limitation is up to me. If I can't find two solid people and train them (even if they are sponsored and trained by someone else), I don't make money.
Other plans often require personal sales volume requirements that create a non-residual income situation.
My 4 top people were sponsored by someone else and I reached down and helped them since I am not paid on levels. I can go as deep as I want until I find my leader.
Other plans kill you on this because of levels and the breakway will kill you if you are not selling a lot. That is where you hear the stories of the "garage full of products."
If you are heavy hitter and unique in your production, you will make a ton in the break away, however, if you are average (like me) and binary and unilevel should be your choice.
Great comments. I have probably looked at 200 comp. plans since I wrote this post.
Today, I would tell you that the best compensation plans today are hybrids (a combination of compensation).
I don't care for a pure binary because the % of money you make on the volume is small. Yes, you get paid very deep, but the cycle is almost always capped, so it doesn't go on forever.
The plan I like the most is the unilevel with some escalating depth bonuses. The unilevel plan is the most fair in the industry and it allows people to make money rather quickly. The original knock on the unilevel is that it was pretty hard to make big money because of the massive limit on depth. Many companies answered that by putting in additional depth bonuses that corected the problem.
Add on a nice bonus for the initial product that you sell to a person and you have a compensation plan that pays well in all 3 mlm pay quadrants. Up front, part time and full time.