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MLM Binary

What is an MLM Binary Compensation Plan?

You have checked everything out and you think you’re almost ready to start your MLM or Network Marketing business. But when your sponsor was talking about compensation the phrase “MLM binary” came up and although you tried to look intellectual you really had no idea what they were talking about. Relax… You are not the only one… Multi-level marketing compensation plans look as if they were written by mathematics PhD’s and seem to be exceptionally complex. On the surface they may look difficult, but if you sit down with someone who understands them they’re easy to work out, and soon you will understand it inside and out. One key piece of advice however… many of the top earners in each company have never learned how their company’s compensation plan works… They dont get caught up in the details… they see that its working for others and have an attitude of “It is what it is”… This mindset allows them to focus on the real important aspects of growing their business.

Here’s what a Binary Plan is

As you probably already know, binary means 2. In a Binary you have a Left Team and a Right Team. One of the first things that you’re going to have to do when you begin building your new business is to find and enroll 2 new people who have dreams and goals and, like you, would enjoy the financial independence that can be obtained through MLM or Network Marketing.

When they enroll they will be placed in your business on what is called your front line… Because you are working within an MLM binary compensation plan, you and everyone else in the company are only permitted to have a maximum of two people on your front line. Two and ONLY two… One in your Left Team and the other in your Right Team… This is assuming that they are from different spheres of influence and you have yet to receive any spillover (more on that later). Since your Teams essentially compete with each other you wouldnt want relatives in opposite teams… The same could be said for coworkers, or close friends who hang around the same people… We want to foster teamwork within each team which is one of the advantages a binary plan has over old school uni-level plans.

So now there’s 3 people on your team… you and 2 others. Let’s call them Mary and John. In the perfect world within a binary system, Mary and John would go out and sponsor 2 people each, and so on and so on, and in theory everybody would make lots of money and lives happily ever after. Unfortunately, this doesnt always work that way and some recruits won’t do what they say they are going to do. I wouldn’t spend much energy trying to figure out why people quit or never get started… The best thing you can do is focus on learning and improving your skills then teach others what you’ve learned… For now get your new recruits plugged into the proper mentors within your company and the industry as quickly as possible and lead your team by setting a strong example and actively working the business.

If you want to build your business quickly you will want to sponsor more than two people. These new recruits must be placed underneath Mary or John. It’s your choice but in this example we recruit and place Bill under Mary. This creates spillover.

What’s Binary Spillover?

Bill went into the Mary’s downline and that’s simply what binary spillover means. You have helped to build Mary’s business by placing Bill on her team. This is one of the huge advantages of the MLM binary plan and if you have got an active up line, this should be happening all the time and may help you to build your business. Your company will still distinguish that you are Bill’s sponsor and you will still earn credit for the sales and purchases that are made but Mary will get credit for Bill’s volume as well. Companies will reward the sponsor through additional compensation and rank advancements so you never want to give away the sponsorship unless there are circumstances that would make it beneficial to do so.

What is Balanced Volume?

Every company is different so I will give a generic example here: The challenge now becomes a balancing act. Binary MLMs  will typically pay a commission on the balanced volume… Lets say they pay 5% on each Team… Your Left Team has grown to $10,000 in sales while your Right Team has only grown to $5,000 in sales. Your smaller volume leg is commonly referred to as your PAY LEG because you will be paid $250 (5% of $5,000) on your Right Team and an equal amount on your Left Team. The remaining $5,000 in volume on your Left Team will usually roll over to the following month.

In order to maximize your compensation plan there is a placement strategy. You would most likely want to place any new recruits in the Team with the least amount of monthly sales. There are exceptions to this as some companies place an emphasis on how much of your sales volume is spillover. But that is an advanced topic for another post.

It’s not a question of whether MLM binary is the right choice for you but rather the big issue is how can you market your business effectively? You’ve got to have a plan in place to promote your opportunity and your products. One key question is should you use an online lead generation system and learn attraction marketing in order to build your business faster and become more profitable? What’s your advertising budget? Have you thought about leadership, because your downline Success Team will look to you as a leader and coach to help them achieve success in their own businesses?

These questions are vital and must be addressed, because really it isn’t the compensation plan that’s so crucial it is how you approach your business. You should know what you are going to do to build your business before starting.

If you are new to MLM Binary Compensation Plans or Network marketing in general and are looking for ways to expose your business to the right kind of people I would highly recommend that you consider learning attraction marketing.

Learn Attraction Marketing

About The Author

Jeff Atkins is a TOP 1% Network Marketing Professional who helps struggling networkers create time and financial freedom to live a happier, more fulfilling life by teaching the fundamentals as well as how to create online systems that generate an endless supply of qualified prospects eager to follow them in their MLM.

2 comments

  1. I want to start an mlm system without selling any physical product but only through registration and making of money. But I want to know how much I will make after every stage and how to increase level and stage bonus as well as referral bonus and other incentives. My plan is a forced follow me matrix. It has 5 stages but stage 1 has 3 levels, stage 2,3, and 4 has 4 levels each and stage 5 has 2 levels. Can you help me calculate the total number to be involve after each stage? I will be grateful

    • First, before I attempt to answer your question, let me start by saying that “systems” without a product or service are nothing more than a money game in which there necessarily will be losers when no new participants can be recruited… These are considered pyramid schemes and are illegal in the united states (and most countries actually)… I believe in freedom (including the freedom to make bad decisions) and that individuals should be allowed to do whatever they want to do with their own money… the problem comes in the form of fraudsters making claims of “guaranteed profits” or “a sure thing”… Regulators have better things to do with their time than to police these activities so by making them illegal it deters people from creating them in the first place… ok.. back to your question…

      You state the number of levels but fail to define the number of participants on each level… therefore im going to make an assumption of the minimum number being 2… i.e. each person refers 2 people into the system…

      Forced matrix systems like what you are describing, IMHO, prey upon peoples lack of math skills… the numbers required to complete a final stage payout are staggering… I’ve been pitched by many SMART people who have been fooled by the misdirection in company explainer videos…

      So in order to move to stage 2 you have to complete stage 1 which has 3 levels… you recruit 2… those 2 recruit 4… and those 4 recruit 8… (8+4+2=14) 14 people total to move to level 2.

      pretty straightforward so far… here’s where it starts to fall apart…

      In order for you to move from level 2 to level 3 you have to have 4 levels of recruits complete level 1… that means that your 3rd row (8 people) not only has to get their 2… creating your level 4 of 16 people… but each of those 16 have to complete stage 1 and move into stage 2… since we know it takes 14 people total for each person we can do some quick math… 16 * 14 = 224… so once you move to level 2 you need another 240 people (16+224) to join the system under you… looking at this another way.. those 16 get 2 = 32… those 32 find 2 = 64… those 64 find 2 = 128… (128+64+32=224)…. so far in order to cashout of stage 2 you need a total of 254 people (14+240)..

      to move to stage 4 the numbers grow even larger… your level 4 of 16 have to advance to stage 3… so their level 4 of 16 (256 people) must advance to stage 2 which we know takes 14 people… 14*256=3584 new people (4080 people total)

      To move to stage 5 your level 4 of 16 must advance to stage 4 which requires their level 4 of 16 (256 people) to advance to stage 3 which means their level 4 of 16 (4,096 people) must advance to stage 2… since we know that takes 14 people each, 14*4096=57,344

      To cash out of stage 5 you say theres only 2 levels to fill… so your level 2 of 4 has to advance to stage 5… their level 4 of 16 (64 people) have to advance to stage 4… their level 4 of 16 (1024 people) has to advance to stage 3… their level 4 of 16 (16,384) has to advance to stage 2… so 14 * 16,384 = 229,376 people

      So in total you will need to have a team of 262,144 to cash out of stage 5 if my assumptions are correct… if you would like to provide a correction I will be happy to redo the numbers…

      level 1 …………. 2
      level 2 …………. 4
      level 3 …………. 8
      level 4 …………. 16
      level 5 …………. 32
      level 6 …………. 64
      level 7 …………. 128
      level 8 …………. 256
      level 9 …………. 512
      level 10 ………… 1,024
      level 11 ………… 2,048
      level 12 ………… 4,096
      level 13 ………… 8,192
      level 14 ………… 16,384
      level 15 ………… 32,768
      level 16 ………… 65,536
      level 17 ………… 131,072

      The reason it unsustainable is in order for those 131,072 to cash out of stage 5 they would each need to have another 131,072 people join under them which would be over 17 billion people… over 4 times the worlds ADULT population…. Many savvy con artists will try to dazzle you with BS birth rates and examples of people rejoining but math is math… any network marketing/mlm program growth rate cant outpace the growth of the adult population for very long… spurts can occur but necessarily must decline… to think otherwise is naive.

      The game you are playing is a bet that you have gotten in early enough to profit at the expense of a greater fool down the road who makes the same bet and loses…

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