Are you that person that wants to head for the hills when someone tries to explain a Network Marketing compensation plan to you? For the non-experienced individual this might be the case because they can be very complicated and difficult to understand. But as far as I can tell, there are basically three or four compensation plans, as well as, some variations or hybrids to each of these plans.
“Stair-Step- Breakaway” Compensation Plan
Based on my research and understanding, approximately 90% of network marketing companies have the “Stair-Step- Breakaway” compensation plan. With this plan when your team members become leaders and are making as much as you are, they are allowed to breakaway from you and start building a team of their own. As they breakaway, they will begin to earn a larger commission for themselves. Then you begin to rebuild more leaders from your new team members. This cycle is repeated over and over again. This type of plan requires the constant rebuilding of leaders, therefore, requiring a lot of coaching and training to each new group of leaders. It could make you think that you do not want to help your team member become as successful as you are, because they will just breakaway from you once they are.
The “Stair-Step-Breakaway” compensation plan only allows you to build one level. There is no limit as to how wide you build; however, you do not have a teamwork atmosphere when all team members are on your first level. Amway, Nu-Skin, and Herbal-Life, uses this type of compensation plan or a variation of it.
A “Binary” plan builds two teams or legs. However, with the original “Binary” plan it washes out the totals of Team A and Team B at the end of each month and does not carry any volume over any to the next month. Also, in the original “Binary” plan, if your Team A and your Team B volumes do not match at the end of the month, you don’t get paid. Ex: If your Team A volume is $8,000 and your Team B volume is $10,000, you either have to buy product to get Team A up to $10,000, or you don’t get a check. Usana, Synergy, Mona Vie, uses this type of compensation plan or a variation of it.
“Unilevel” Compensation Plan
The Unilevel compensation plan only allows you to sponsor one level of distributors and there are not any limits set on how wide you can build. This plan, like the “Stair-Step-Break-Away,” does not encourage teamwork because of the first level structure. This plan works best if you are able to recruit a large number of distributors on your frontline and then have your frontline do the same. Tahitian Noni, Sportron, Xango, Unicity, uses this type of compensation plan or a variation of it.
As you can see there are many things to consider when choosing a network marketing company. It is important to have the compensation be fair and be something you feel you can succeed in. However, it is important to have a product that you can put your name behind along with leaders who are ethical. By weighing all of these factors and making an educated decision, you will have a good chance of becoming successful with which ever Network Marketing company you decide to join.