Getting into a multilevel marketing business (MLM) can be exciting and lucrative. But in reality, not everyone who enters this type of business will flourish. You must understand that not all compensation plans are equal in this industry. And before you enter MLM, it’s crucial that you know which one you can handle and benefit from to the fullest.
It’s vital to be aware of the type of business you’re entering. Take MLM, for example. While working for an MLM company is a legitimate way of making money, some companies fall short of what is expected of them. Checking ScamRisk reviews will help you decide if a particular company has a good track record or not.
Choosing the best company available to you can let you benefit more from the following compensation plans, especially if you know how to protect yourself from scams.
1. Binary Compensation Plan
The binary plan is named after how it is structured—binary means that there are two options available (i.e., left or right; up or down).
The binary compensation structure can give you two ways to build a downline. A downline is an individual you refer to the business, and you can gain from every person you can recruit.
There is the left leg and the right leg where you can place your recruits. To complete the first level, a distributor only needs two people beneath them.
Another advantage of the binary compensation plan is that they pay commissions faster than unilevel and breakaway plans.
2. Unilevel Plan
The unilevel compensation plan has a single business level where you can place all of your required sponsored referrals. There can be an unlimited number of recruits. It means if you, the distributor, work as the leader. Your combined team efforts directly benefit you from it, and there are no spillovers.
The unilevel plan is also referred to as a universal plan because it is the most common compensation plan. It’s simple and straightforward, and referrals can easily explain and understand it because it doesn’t involve any other criteria.
3. Matrix MLM Plan
Also called forced matric MLM, the team members or recruits are placed in a pyramid by row and column. They are set depending on who joined in first. Companies or organizations can decide to expand the number of people and keep the fixed number of members if the width of the pyramid only allows a specific number of entrants.
The way it works is that there can be up to five or six primary members in a row. Those individuals can recruit and form their downlines next. They get a commission every time they add a new person to their downline.
Because the plan is popular, some members may promote it on social media to get sales or more memberships. But those who do may not be welcomed by all platforms and risk being banned. It’s best to ask questions first before making a post for promotion.
4. Party Compensation Structure
The compensation plan is a strategy implemented by companies to introduce products to the masses. It may involve special events such as parties. It’s also an opportunity for companies who allows work from home setup as they can take advantage of the opportunity to make sales through video conferences and digital marketing.
The event is centered around products showcasing to invited individuals who are interested in generating additional income. It is a known method of direct-selling that can successfully boost the sales of existing products. The hosts of the event are called consultants, who also make commissions per every sale earned.
The types of products can range from cosmetics, apparel, kitchen utensils, and more. It’s also notable that women are often involved in this type of compensation structure as they often have higher purchasing power.
The party compensation plan educates customers about the uses and the features of the products while everyone enjoys the event’s festivities. The attendees receive information in a positive mood and are likely to buy, join the business, or both. It’s also a plus if the products are first sold at introductory prices for first-time buyers or recruits.
5. Stairstep Or Breakaway Plan
Companies that have been around since the earliest days of MLM make use of the stairway plan primarily for the sale of products. Those in the direct-selling business who use the method are more concerned about driving business into their companies than building a network of like-minded business people.
The plan is divided into two segments: the stairstep and the breakaway.
- The stairstep describes the expansion of the network and the continuous reaping of fabulous rewards on the sponsor. Once a sales volume is achieved, the sponsor can climb up to four times and rank accordingly. Those individuals or distributors are the sponsor’s team. That same distributor can get higher ranks through personal sales and group sales efforts.
- The breakaway segment is the point when the sponsor has reached the highest rank and sales volume. The breakaway means that the sponsor can take his or her team or downlines along with sales volume.
6. Board MLM Plan
The board MLM plan, also known as revolving matrix plan, gives the possibility of earning higher than normal because it limits the number of people in the team. A team follows a board plan until all the positions are filled by recruiting a specific number of people. They commonly use the 2×2 board plan that only requires two people.
Once the board fills, people continue to take in. The commission splits into two, wherein the top individual transitions to a higher ranking. The cycle continues until the boards are filled in and split up again.
Members can earn two types of commissions: cycle and referral. The cycle commission becomes available once people fill in the six positions and a switch occurs. The referral commissions are given to those members with downlines who are making the sale for them.
There are a few compensation plans that may work here for you, but it’s essential to learn about them first before embarking on your MLM journey. If you find yourself doubting, list down every question and take as much information as you can. The MLM life is not for everyone, so it’s best to understand what you’re getting yourself into before signing yourself to anything.