Understanding Network Marketing Compensation Plans

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Unilevel Plans: Unilevel plans are considered the simplest type of compensation plan. This type of plan allows a network marketer to sponsor one line of distributors called a "frontline." Each distributor the network marketer sponsors is on the marketer's frontline, and there is no limit to how many people that networker can sponsor. The main purpose of this plan is to create a large number of frontline distributors and train them to create their own frontlines. With unilevel plans, sponsors can usually earn commissions on a limited number of their frontline distributors. Typically the sponsor can earn commissions on the sales of 5 to 7 distributors and their resulting frontlines. Higher bonuses are paid to distributors who have more people in their frontline, which encourages direct enrolment for all distributors.

Binary Plans: Binary plans are nearly the opposite of unilevel plans; a distributor may only have two frontline distributors, as opposed to the unilevel plan where a distributor's frontline is unlimited. If a distributor sponsors more than two new distributors, the excess are placed at levels underneath the sponsoring distributor's frontline. Within the binary plan, the distributor must achieve a certain balance between their two distributor lines in order to receive commissions. Balancing distributor lines requires the volume of sales from one line to make up a certain percentage of the original distributor's overall sales.

Stairstep Breakaway Plans: In Stairstep Breakaway compensation plans, distributors are responsible for personal sales volume and group sales volume. Sales or product volume is created by enrolling new members and selling product. Any distributor with a minimum of one downline can become a group leader and benefit from specific discounts and/or rebates on products. Once pre-defined personal and/or group volumes are achieved, the group leader moves up in rank. This pattern continues until the distributor "breaks away" from their sponsor's line, hence the name Stairstep Breakaway. After this point, the new group is no longer considered part of the leader's line. The majority of stair-step commission plans have other commissions, however they usually consist of a very small percentage of the overall payout. Stairstep Breakaway compensation plans are not level based, but group based.

Matrix plans: Matrix plans are a combination of unilevel and binary plans. Similar to binary plans, matrix plans have a limited number of distributors who can be placed on the first level. Excess distributors are automatically placed on a lower level. Maximum widths and depths are common within matrix plans, and once all positions in a distributor's line matrix have been filled, (in other words, the maximum width and depth has been obtained for all participants in a particular matrix), a new matrix may be started. Similar to unilevel plans, distributors within a matrix can earn unlimited commissions based upon limited levels of volume with minimal sales quotas.

Hybrid Plans: Hybrid compensation plans are compensation plans which employ elements of two or more types of compensation plans.

Article Source: http://depositarticles.com/

Unilevel plans are generally acknowledged to be the most stable network marketing compensation plan. To see an effective example of a binary compensation plan which allows members to earn bonuses in multiple ways, visit <www.trivani.com>.

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