5 Different Ways You Get Compensated in Network Marketing
5 Different Ways You Get Compensated in Network Marketing
If you're interested in trying out network marketing,
the first thing you should learn about is the different
ways a company can compensate your efforts. Take the
time to understand how each compensation method works
before making your choice.
Binary Plans
Network marketing companies using a binary compensation
plan often have two types of product lines or businesses
to offer. The general aim of binary plans is to ensure
that each leg achieves the minimum quota for sales. If
only one of the leg reaches the minimum quota, youll
actually lose money because of it.
In most cases, one branch is referred to as the power
leg while the other one is called the profit leg. In
power legs, there's an automated system that determines
where new members get placed. In profit legs, however,
the person responsible for having the new members
enrolled reserve the right to determine where they get
placed.
Stair Step and Breakaway Plans
Although these are two different plans, they are usually
combined by today's network marketing companies. With
the stair step structure, new members start off as
distributors and get to climb up the networking ladder
according to how much they're able to sell. Naturally,
every promotion offers more benefits. With breakaway
plans, a member that reaches a certain level can break
away from his current network and start one of his own.
Labels used for various ranks in this type of
compensation plan differ from one company to another.
Stair step and breakaway plans are driven by performance
and volume rather than the sheer number of recruits you
have. Tupperware and Amway are just a few of many
established network marketing companies making use of
this plan.
Matrix Plans
People have varying opinions about what matrix
compensation plans are. For some, this is a compensation
plan in which a computer program is utilized for
deciding a new members placement and position. This
decision may, however, be overruled.
For others, matrix plans are those that restrict the
width of every level in a distributor's tree, similar to
how things in binary plans work. Lastly, some people
consider matrix plans and matrix schemes to be one and
the same. Also known as escalator, elevator, and ladder
schemes and matrix sites, a matrix scheme is where
products may be exchanged for money together with a side
bonus of being waitlisted for better products. This last
definition is considered unsustainable by the UK's
Office of Fair Trading.
Uni-Level Plans
Unlike binary or matrix plans, there are no promotions
to work for and there are no limits to the width of the
levels that make up your group. On the other hand, you
can only expect a fixed percentage for each level,
regardless of whether you went past or met the minimum
sales quota.
Differential Pay Scales
In this type of compensation plan, you can expect to get
higher commissions or overrides if, for instance, you
have a higher pay level compared to those occupying legs
above you.
Last but not the least, network marketing companies also
hand out bonuses to distributors or managers with
exceptional performances. People who display impressive
leadership qualities and those who able to successfully
train members of their group are usually given cash and
non-cash incentives. What do you think then? Have you
chosen which network marketing compensation plan is
ideal for you?
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