MLM Compensation Plans
Compensation Plan Overview
Compensation Plans fall into 3 primary divisions, of which most
other models place their foundation. I will attempt to highlight
the primary 3, as well as those that follow on their foundations.
UniLevel Compensation Plan (Lines of Personal Sponsorship)
- Width: Unlimited
- Depth: Limited
- Advantage: Unlimited Width
- Disadvantage: Slow to build Depth
Matrix Compensation Plan
- Width: Limited
- Depth: Limited
- Advantage: Potential of Spill
- Disadvantage: Expectations of Spill can cause Laziness
Binary Compensation Plan
- Width: Limited
- Depth: Unlimited
- Advantage: Unlimited Depth, Spill, Potential PowerLegs
- Disadvantage: Mistakes by members who do not understand the Binary
and choose to place people within internal legs, rather than
sponsor into depth.
Hybrid Compensation Plan
- Foundation: any combination of UniLevel, Matrix, or Binary
- Advantage: Potential to earn based on advantages of more than one
compensation plan structure
- Disadvantage: Training and comprehension of more than one
compensation plan structure. Also available commissionable funds
are often split between structures, or directed toward one
structure or the other.
Australian/1Up/2Up/3Up, etc.
- Foundation: UniLevel
- Width: Unlimited
- Depth: Limited (Often 1 level only, some offer __ Levels deep)
- Advantage: Potential exponential growth on frontline
- Disadvantage: The mental picture of giving up the first __ people
to my upline is not attractive
Stair Step Compensation Plan
- Note: often combined as Stair Step Breakaway, but there is a
specific difference
Stair Step is not so much a Structure, but a Plan or Path of
Advancement
Largely, almost every compensation plan employs Stair Step without
the title
Stair Step is the Reaching of new Rank/Status/Income Levels based
on Performance Qualifications
Reach new Qualifications = Achieve a new Rank/Status/Step often
with advancement in income.
Breakaway Compensation Plan
- Foundation: Normally from the UniLevel, but could vary
- Width: Unlimited (unless foundation of another structure)
- Depth: Limited
- Advantage: Extended benefits for those reaching qualifications and
achieving breakaway
- Disadvantage: A group in your downline which reaches
qualifications and achieve breakaway are normally not included in
your continued monthly residual income. If included, normally at
a reduced amount.
Reverse Generational Compensation Plan
- Foundation: Normally from the UniLevel, but could vary
- Width: Unlimited (unless foundation of another structure)
- Depth: Does not normally matter
- Advantage: Recognized and accepted by companies with financial
instruments
- Disadvantage: Training and understanding of compensation model
Coop Compensation Plan
- Foundation: Normally from the UniLevel, but could vary
- Width: Unlimited (unless foundation of another structure)
- Depth: Does not matter
- Advantage: Portion of Company Wide Sales are placed in a Bonus
Pool and Divided based on Rank, which is normally based on Sales
Performance
- Disadvantage: The model is A-typical and not familiar by most
Straight Line Compensation Plan
- Foundation: Matrix
- Width: 1
- Depth: Unlimited
- Advantage: Perceived spill and exponential depth growth based on
timing, everyone else joins the company after me and lands under
me.
- Disadvantage:
Expectation of Spill can cause laziness
Visualization of structure and placement can lead to members
treating the company as an "Endless Chain of Sponsoring", which is
a "Red Flag", rather than focus on Sales Performance to End
Consumers
Regards,
Scott H Leonard
- Consultant
- Speaker
- Trainer
- MLM Software Provider
- Guerrilla Marketing Expert
- Web Services Provider
MLM Software Central - San Diego
121 Broadway St, Suite 347, 348
San Diego, CA 92101
1-888-221-0106