The success of the network marketing business largely depends on so many factors such as company structure, leads, and compensation plans. It is very important for the distributors to analyze the compensation plans before entering the business. Here is an overview of the compensation plans involved in the network marketing companies. There are four main types of plans: the unilevel plan, the breakaway plan, the forced matrix plan, and the binary plan.
All the above said plans have three fundamental elements such as commission type, rules, and structure. The commission type is the one where the marketers are paid based on it. The rules defines the criteria and goals for the distributors to achieve in a month and this also defines the benefits and rewards for achieving the target. Structure defines where the distributor is placed in the organization.
In the unilevel compensation plan, the qualified distributors are paid with the level commissions. This means that all distributors are paid with the same amount of compensation for the sales made. In this plan, there are no ranks for the distributor and everyone occupies the same position. This is the simplest plan and the purpose of this plan is to make a large front-line distributors. This plan is considered as the stable plan for running the business.
The breakaway compensation is the next version of the unilevel plan or a hybrid of the unilevel. This is the oldest plan where the distributors after reaching certain ranks with the increased performance break away from the original upline member. This plan is more of group based and this is most recognized by the regulatory bodies.
In the forced matrix compensation plan, the distributors are restricted to recruit only certain number of people at their level until their grid is filled completely. Once all the matrix in this plan is filled, a new matrix is formed. Binary plan is new to the network marketing business. The level is restricted with only two members and if the vacant is filled, the new members are placed in the deeper level. This plan does not have any depth limit.
All the above said plans have three fundamental elements such as commission type, rules, and structure. The commission type is the one where the marketers are paid based on it. The rules defines the criteria and goals for the distributors to achieve in a month and this also defines the benefits and rewards for achieving the target. Structure defines where the distributor is placed in the organization.
In the unilevel compensation plan, the qualified distributors are paid with the level commissions. This means that all distributors are paid with the same amount of compensation for the sales made. In this plan, there are no ranks for the distributor and everyone occupies the same position. This is the simplest plan and the purpose of this plan is to make a large front-line distributors. This plan is considered as the stable plan for running the business.
The breakaway compensation is the next version of the unilevel plan or a hybrid of the unilevel. This is the oldest plan where the distributors after reaching certain ranks with the increased performance break away from the original upline member. This plan is more of group based and this is most recognized by the regulatory bodies.
In the forced matrix compensation plan, the distributors are restricted to recruit only certain number of people at their level until their grid is filled completely. Once all the matrix in this plan is filled, a new matrix is formed. Binary plan is new to the network marketing business. The level is restricted with only two members and if the vacant is filled, the new members are placed in the deeper level. This plan does not have any depth limit.
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