What’s the Best Compensation Plan?
In Multilevel Marketing, company owners and distributors get paid for their own sales plus sales made by distributors they recruit. Compensation plan structures place distributors “downline” from the person who recruited them.
Compensation hierarchies can have several tiers and distributors are paid based on their position in the downline. They can also earn a variety of bonuses. A compensation plan has three major objectives. It recognizes, rewards, and incentivizes your distributors.
As a business owner, you need to look at your products and services and decide which compensation plan best suits your company structure and will best motivate your distributors and leaders to perform at the highest level and feel proud of their mission and the industry in which they work.
The three main compensation plan types are; Binary Compensation Plans, Matrix Compensation Plans, and Unilevel Compensation Plans.
The Binary Compensation Plan
We can best describe this plan as a two x infinite depth plan. If this sounds confusing, it is a structure in which distributors can only place two other distributors directly below their frontline. Any additional distributors recruited are placed below the distributor’s frontline. This creates a downline that can extend to infinity but in tiers that has only two distributors at each level.
The Unilevel Compensation Plan
This is the simplest compensation plan to use. This plan has unlimited width but fixed depth. With no width limit, every distributor you recruit can be placed directly under yourself.
The Matrix Compensation Plan
This is a fixed width and a fixed depth plan. This plan gives the company owner better control of distributor payouts. It limits the number of distributors a sponsor can recruit.
Compensation plan add-ons and benefits
There are numerous add–ons you can add to these plans to recognize, reward, and incentivize your sales team.
These add–on features include:
- Matching bonuses
- Generational bonuses
- Infinity bonuses
- Rebate bonuses
- Car bonuses
- House bonuses
If you are launching or operating a multi–level marketing company, you need to know about the various compensation plans. After all, this is how you recognize, reward, and incentivize your distributors.
While the Compensation Plan Structures may seem relatively simple, the fine details can get a bit complicated and we encourage you to contact a consultant with enough experience to help you build a compensation plan that best fits your businesses needs.
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