Binary Compensation Plan vs. Unilevel Compensation Plan

Distributor behavior is always driven by business models, and the binary compensation plan and unilevel compensation plan follow right along with this. These MLM compensation plans operate in completely different ways, even though some people think they are just another pay plan. Reps have to do different things in each plan in order to be paid the highest possible commissions, and each plan has its advantages and disadvantages.

Binary Compensation Plan Exposed

A binary compensation plan has two legs (binary means two) and only two legs. The idea is to sponsor two distributors, one in each leg. Ideas are one thing, but in reality, things rarely go exactly according to plan. It usually works out that you build one leg and your upline builds the other. Starting with the third distributor you sponsor, you must place them below someone already in your downline, because you cannot build a third leg. Your upline usually ends up building what is known as a power leg for you – straight down, one under another. The biggest thing to remember in a binary plan is that you get paid on your smaller leg only. Sometimes you get paid on both legs down to the balance point, but at a reduced rate. In either case, it is the size of the smaller leg that determines the commission you get paid.

Unilevel Compensation Plan Exposed

In a unilevel compensation plan you don’t build legs – you build levels. Your first level is everyone that you’ve personally sponsored. When your reps sponsor someone, that person becomes part of your second level, and so forth. Usually, 4 to 8 levels deep are what you’ll be paid on, and nothing beyond that. In a unilevel plan, it is best to place everyone you sponsor on your first level, also called your front line. If you build depth by placing people under others, then you’ll be missing out on some commission in the long run.

Binary vs Unilevel – Which Is Better?

A binary comp plan encourages you to work more closely with your team and build depth. You and your upline will be responsible for building the power leg for your team. If you get in at the right spot, it is possible to make good money with minimal work since people will be placed under you. There are no free rides in a unilevel comp plan, as none of your organization will be built by your upline. However, in the long run you won’t be paid on your entire organization, and there is less teamwork going on. If you value equality and fairness, and prefer being rewarded for your own efforts, you’ll want to build a unilevel compensation plan. If you like building depth, teamwork, and being paid on more of your organization, then the better option for you is a binary compensation plan.

Herbalife India Records 154% Growth in Q1

Herbalife, entering its 12th year of operations in India, has reported a growth rate of 154% in Q1 in India. Herbalife India now has over 100,000 distributors, bringing it into the top 10 markets out of the 76 in which Herbalife operates. Herbalife’s Formula 1 shake is the company’s biggest selling product in India, and contributes to a major portion of sales. Further reading: http://www.indiaprwire.com/pressrelease/health-care/2011071892290.htm

Nu Skin Begins Building $85M Innovation Center in Provo

Nu Skin began expanding its corporate headquarters in Provo, UT by breaking ground on an $85 million innovation center.  The center will add an additional 164,000 square feet to the campus, doubling its current size.  It should include an additional 900 employees.  Nu Skin has already added about 8,000 jobs to the Utah economy recently.  More information here: http://www.heraldextra.com/news/local/central/provo/article_14deec0a-e6ab-5de7-bfb0-5c8a66e39220.html

Most Companies Too Busy for Social Media Marketing

A recent study shows that slightly less than half of all companies use social media marketing today. However, more than three quarters of executives believe it is critical for success. This is quite surprising, especially given the low cost of entry, and the huge potential for returns for both large and small businesses. Dell has already announced that it has made over $3 million from Twitter alone. Who knew 140 characters could be so valuable?

Most people in network marketing have at least some experience using social media. Many are experts, building huge organizations and incomes from this one source of clients. If only about half of all companies use social media, what can the other half learn from the network marketing industry? More here: http://www.businessinsider.com/too-busy-for-social-media-marketing-could-be-fatal-2011-7

6 Ways Social Media Helps Home-Based Businesses

As most of us have already learned, home-based business owners, with only some time and creativity, can use social media sites such as Facebook and Twitter as new branding, marketing, and networking tools to grow their businesses at no cost.  For those in network marketing, here are the top 3 ways that social media can help:

1 – Flexible Networking.  You can work in short spurts from home or on the go, and only with your specifically targeted audience.

2 – Camaraderie and Community.  You can interact with other business owners, share ideas, learn tips, and build relationships.

3 – Inexpensive Branding.  Share your brand identity across a large audience cheaply and quickly.

Always remember, it is social media, or social networking.  The key term is social.  Those who attempt to use it strictly as an advertising platform will be missing out on most of the benefits.  You can read the entire article here: http://financialedge.investopedia.com/financial-edge/0611/6-Ways-Social-Media-Helps-Home-Based-Businesses.aspx

100 Largest Network Marketing Companies

Direct Selling News has just released its DSN Global 100 list of largest network marketing companies.  The revenue of the largest company was $11 billion in 2010.  Even the smallest company did $70 million.  Many hundreds of smaller companies have also experienced tremendous growth.  See the complete top 100 list here: http://www.directsellingnews.com/index.php/site/entries_archive_display/dsn_global_100_2010_ranking/

Social-Network Marketing at Morgan Stanley

Morgan Stanley will let its financial advisers share ideas and market themselves to their clients through social networking sites like Twitter and LinkedIn.  600 reps will begin the experiment in late June.  If that goes well, it will be rolled out the the company's 17,800 reps by the end of the year.  The network marketing industry has been one of the pioneers of using social media for business.  Financial advising is another industry built upon relationships, so we'll see what can be learned from this new shift.  More here: http://www.reuters.com/article/2011/05/25/uk-morganstanley-socialmedia-idUSLNE74O07I20110525

Binary Plan versus Unilevel Plan

Business models will always drive distributor behavior, and the binary plan and unilevel plan are no exceptions.  While some see them as just another compensation plan, these plans operate in vastly different ways.  Both have their advantages and disadvantages, and require distributors to do different things to maximize commissions.

Binary Plan Explained

A binary plan is set up so everyone sponsors 2 and only 2 distributors.  You build 2 legs, and if everyone keeps pace, the plan works wonderfully.  Everybody knows that numbers are perfect and people are not, so here’s what really happens: your upline builds one leg and you build the other.  Since you can only sponsor 2 people, every distributor starting with the third must be placed under someone in your downline.  Usually this is done straight down, with no branching, and it is called a power leg.  If your upline can recruit a lot of distributors, you won’t need to do anything to build your power leg.  The catch in the binary plan is commission is only paid on the weak leg, or at a reduced rate on both legs to the balance point (same number of reps in both legs.)  Either way you look at it, your commission is limited by the size of your smaller leg.

Unilevel Plan Explained

A unilevel plan is characterized by building levels, not legs.  Anyone you personally sponsor is part of your first level.  Anyone sponsored by your first level distributors is part of your second level, and so on.  Most unilevel plans pay on 4 to 8 levels.  Beyond that, you earn no commission.  Contrary to the binary plan, in a unilevel plan it is best to place all of your recruits on your first level – also known as your front line.  If you place people below your first level, you will earn less commission – you’ll be paid on fewer levels of their organization.

Binary versus Unilevel – The Conclusion

A binary comp plan allows you to build depth and work more closely with your team.  Your team will depend on you to help build the power leg.  Since the practice of building under people is common, it is possible for people to do only a little work and still earn decent money.  A unilevel comp plan does not give any free rides, and you don’t depend on others to build part of your organization.  However, there is less teamwork, and in the long run you won’t be paid on your entire organization.  If you prefer being rewarded based on your own efforts, and you value fairness and equality, you’ll probably like a unilevel plan better.  If you like teamwork, building depth, and being paid on virtually all of your organization, then the right plan for you might be a binary plan.

Reliv 24K becomes Finalist for American Business Awards

Reliv International, based in Chesterfield MO, was named a finalist in the 2011 American Business Awards for the consumer products category.  The company produces nutritional supplements for health, weight loss, athletic performance, and other related products.  Reliv's healthy energy shot, Reliv 24K, is designed to fight fatigue by providing energy, stress relief, and mental focus.  It is marketed as a healthy energy drink containing no caffeine and only five calories.  More here: http://finance.yahoo.com/news/Reliv-24K-Named-Finalist-for-prnews-1918254354.html

Many Network Marketing Companies Reach Out To Japan

In the wake of the March 11 earthquake that left more than 12,000 dead in Japan, many network marketing companies have begun reaching out to offer aid and support to the country.  Japan has 2.7 million direct selling salespeople, making it the second largest market in the world.  Direct selling companies have been among the first to respond to recent disasters, including Hurricane Katrina in 2004 and the Indian Ocean Tsunami in 2005.  More info here: http://www.directsellingnews.com/index.php/site/entries_archive_display/world_report_direct_sellers_reach_out_to_japan

Binary Compensation Plans – A Practical Guide

Binary compensation plans are characterized by having two legs, and only two legs.  Most binary comp plans will pay you commissions on your weak leg – or whichever has less volume.  Some say they pay on both legs up to the balance point.  But – whether it’s $10 per person on the strong leg, or $5 per person in both legs to the balance point, the final commission number is the same, and the plan functions the same way – you are limited by the size of the smaller leg.

Advantages of Binary Compensation Plans

The key advantage of a binary compensation plan is it pays based on volume.  If you bring in orders, you get paid on them.  There is no automatic cutoff beyond a certain number of levels as is the case in a unilevel plan or a forced matrix plan.  While no plan pays unlimited depth (even though some claim to) the binary comp plan comes the closest.  At first glance you might think so, but “binary creep” starts to erode commission payments as you go deeper and deeper into the plan (you did read the policies and procedures, right?)

Disadvantages of Binary Compensation Plans

The main disadvantage of a binary comp plan is that because it only pays on the weak leg, it tends to favor super recruiters and heavy hitters.  Here’s why: Since binary comp plans only allow 2 legs, anyone sponsored beyond the first 2 people must be placed under other people.  A super recruiter will start building power legs – each one goes straight down with no branching.  Everybody knows that you must – absolutely must – be in the power leg.  That way you only need to build one leg (your “weak” leg) rather than both legs.  If you join a heavy hitter, you are guaranteed to be in the power leg.  If you join an average or above average person, they are building their weak leg in the binary plan, so you will likely not end up in the power leg.  You’ll have to do twice the work (or earn half the commissions.)

To Succeed in a Binary Compensation Plan

Join a heavy hitter, super recruiter, or other strong builder.  Find the person running the meeting with the cool car and expensive suit.  Tell them who your original sponsor was so they can place you under that person – but in the power leg.  Otherwise your sponsor will place you in their weak leg.  Now you’ve got a shortcut to success in any binary compensation plan.  Even with their drawbacks, binary compensation plans have become very popular.

Herbalife to Sponsor Indy 500 Car

Network marketing giant Herbalife announced that it will be the primary sponsor for Townsend Bell's Indianapolis 500 entry.  To be a part of the "Greatest Spectacle in Racing" is huge for not only Herbalife, but also the entire network marketing industry.  Herbalife's CEO Michael O. Johnson said, "Townsend is a talented driver and a terrific athlete who personifies our message of living an active, healthy life. Millions of Herbalife independent distributors around the world are rooting for him."  Here is the full write-up on indycar.com.

Tupperware's New Social Media Campaign

Network company Tupperware has launched its "Chain of Confidence" facebook and social media campaign.  The company will donate $1 for every "like" to the Boys and Girls Clubs of America.  This is a very clever marketing campaign, and Tupperware has selected Kelly Clarkson to headline the kickoff concert May 25 in New York.  More here: http://www.miamiherald.com/2011/05/12/2213615/tupperware-brands-launches-chain.html

Network Marketing Giant Avon Turns 125

Founded in 1886 when women did not have the right to vote, Avon (formerly California Perfume Co.) recently celebrated its 125th birthday.  Avon has moved billions of dollars worth of products with the help of over 6.5 million representatives.  The network marketing giant promoted a 16 city world tour in honor of this achievement.  In a world where 97% of MLMs fail in their first 2 years, this one has stood the test of time.  More here: http://www.directsellingnews.com/index.php/site/entries_archive_display/exclusive_report_125_years_of_inspiring_women

The Best Way to Sell Goods In Emerging Markets?

Many network marketing companies are currently experiencing tremendous growth throughout the world.  CNBC's Jim Cramer thinks the direct selling model could be the best way to sell goods in the developing world.  He noted that people tend to give more credit to testimonials than advertisements.  There is a very good write-up of the story here: http://www.cnbc.com/id/42876221

Is Technology Changing Direct Selling? App-solutely!

Direct selling isn't what it used to be.  Reps are busily promoting their business and products through social media sites and other online methods.  Various lead generation systems are available to build a network marketing business with far more consistency than before.  How do companies, distributors, and customers keep up?  Direct Selling News has begun a 3 part series on the topic: http://www.directsellingnews.com/index.php/site/entries_archive_display/is_technology_changing_direct_selling_app_solutely

bHIP Global announces Strategic Acquisition of Ceregenex

Network marketing company bHIP Global has announced that it has acquired key assets of Ceregenex, a direct sales company with a focus on science, health, and wellness.  As part of the deal, bHIP will get the entire distributor and customer database of Ceregenex, along with its proprietary products.  Both companies use a binary compensation plan, so hopefully the transition will be relatively smooth for the distributors of Ceregenex.  You can find the full article here: http://frontpage.bhipglobal.com/es-mx/news/pressreleases/acquisitionofceregenex.aspx