Myths And Truths About the Binary/Unilevel Hybrid Compensation Plan

Binary/Unilevel Hybrid Compensation Plan by Rob Sperry

Anyone who has studied binary compensation plans probably has heard a wide variety of opinions. That’s no different than with any compensation plan. There are strengths and weaknesses in every plan. Most companies pay out about the same 35% to 45%. When they say they payout 50% plus, they are basing it on a percentage of commissionable volume, which comes to between 35% and 45% when based on total revenue. The goal of this article is not to describe how the plan works specifically but more to discuss the strengths and weaknesses. My goal is to not tear down any other compensation plan but to point out some of the strengths of the binary/unilevel.  Just about every company feels their plan is the best and that the other plans aren’t even close.  There are definitely many different positive ways to skin the cat or in other words there are a bunch of different comp plans that are great.  Too often our industry has gotten caught up on building whatever they are a part of and tearing down whatever they are not apart of.  The keys to every compensation plan are where the money is allocated and what compensation plan is the best fit. Although I personally am of the belief that the better the compensation plan the more people it will fit.

Many studies conducted in the network marketing industry have shown that the average distributor sponsors 2-3 new distributors into their business. This is important to understand because 90% or more of the people in this industry are part-timers. What is also critical to understand is that what works in the network marketing industry is what duplicates. These findings mean that it would be very difficult for 90% or more of the distributors to be successful using some of the older compensation models that require distributors to recruit at least 6 or more frontline distributors to see a return. The other aspect to consider is with a down economy, most Americans have massive debt; it is even harder for a new distributor to commit to full-time. That being the case the industry has evolved to where a compensation plan has to accommodate the part-time network marketer. If the part time distributors are taken care of then those who aspire to make big money have as much or more of an opportunity to do so because they will naturally create more duplicable volume.

Mathematicians as well as company owners and top distributors saw these studies and the Binary plan was born in the 1990’s. This was created to give everybody a fair chance of success. Because the Binary Compensation Structure only allows the sponsoring of 2 frontline distributors it meant that network marketers who recruited even less than average still had the potential to achieve financial freedom using this compensation model. Additionally the binary compensation plan was developed such that if a new recruit is really struggling to build their downline it is in the interest of their upline distributors to give them as much help as they can. In other words the goal was to create MORE teamwork. Everyone wants a residual income but most of the time the outsider looking in doesn’t believe that to be possible. The binary compensation plan gives the average person (part-timer) a greater chance of making a residual income. Those who are interested in making the big bucks also increase their chances of doing so as they now have a compensation plan that will help the masses. As I alluded to above the best way to become successful is to help a lot of people have some success.

Before I go into some more of the strengths of the binary/unilevel hybrid compensation plan I wanted to cover a little bit more of the history as well as some of the pitfalls. Unfortunately in the early 1990’s there were several companies that gave binaries a bad rap. Those companies’ problems weren’t the compensation plan. It was the fact that they were frontloading as well
as solely promoting a compensation plan without making the products an important part of the foundation. Read the following article that gives some great insight on the history of the binary compensation plan: http://www.marketwaveinc.com/viewarticle.asp?id=32. Also notice that the author says this “Personally, I have no great affinity towards the conventional binary plan (although I’m a huge fan of the binary/unilevel hybrid concept).”
I agree 100% with the author. I am not a huge fan of the conventional binary programs. The new binary/unilevel hybrid concept has caught on fire in the industry. It has taken the simple aspects of the binary, with just two legs to build, that everyone likes, and adds a unilevel recruiting aspect. The biggest issue with the binary compensation plan is that it is so simple that sometimes distributors aren’t as incentivized to recruit. The newer binary/unilevel hybrid programs have corrected that problem with personal enrollment trees. In short there is the binary downline as normal but there is also a secondary downline that the company keeps track of made up of people who are personally recruited. As they become leaders and as those leaders produce leaders the recruiter gets paid accordingly. Again I want to reiterate the biggest downfall of the binary is that it is promoted as easy! Yes it is much simpler. Yes I believe the part timer can succeed much more easily but as always it is still hard work and should be promoted as such. Otherwise it is a disservice to the recruiter and more importantly to their downline organization. There is no such thing as easy.

Another great point is made by the author of the above link “Companies today that employ binary or binary-hybrid plans, such as Usana, Monavie, Vemma, Mannatech and Market America, are all considered safe, legal companies and, with a combined history of over 50 years, have had no legal challenges specifically to their method of compensation. The legality of a network marketing opportunity has little to do with the design of their compensation structure and everything to do with the motivation for buying their products. History has shown us, over and over, that this applies to all companies equally regardless of their type of compensation plan.”  Bigger companies that rip on the binary compensation plan either don’t fully understand them or use the bad examples from the early 90’s as scare tactics. I find these scare tactics very distasteful.  Don’t you think there is a reason why newer companies don’t use the old compensation plans?  Those that have older compensation plans may tout how many new successful distributors they have which you would expect from a huge company.  That isn’t enough to justify that their compensation plan is a great one.  Each company will inevitable have different strengths that drive their business.  For some it may be their leadership while others it may be their product.  Obviously the goal for each company is to strive to have the best of each.  All companies I have studied believe they are different and they do indeed have the best product, leadership, systems and compensation plan.  That is normal and will never change.

THE ADVANTAGES OF THE BINARY/UNILEVEL HYBRID 

1. Urgency equals wealth. This was one of the first principles I was taught when I started in the network marketing industry. We all work off of deadlines. We had or have deadlines in school, work and just about everything in life. The binary compensation plan has a weekly deadline which at the beginning can be a little stressful. However, the stress is self inflicted as an individual may work as much or as little as they want. Weekly deadlines create more urgency/focus which creates more wealth. It also creates more long term stability.

2. The next component to the weekly deadlines is that commissions are paid weekly in the binary compensation plan. No other compensation plan does that. They may pay small bonuses for new sign ups but they don’t pay weekly commissions from the volume of the distributor’s entire organization. The world has turned into a world of instant gratification. Weekly commission checks help the new distributor survive financially as well as give them the much needed confidence that the business is real in a timely fashion.

3. Teamwork! When a distributor is new, it is scary to build a business that they know very little about. The more teamwork and support they receive, the better. When the compensation plan only allows sponsoring two people on the frontline, that helps the sponsor to focus on helping their downline. It narrows their focus. In the binary compensation plan, payment is not based on a certain number of levels deep. Distributors are paid until their volume reaches the cap. (Note that once the cap is reached, the distributor is given another position with more income potential.) This concept is brilliant as it incentivizes everyone to help everyone. Compensation plans drive human behavior. When the plan rewards people financially to build their depth based on volume, not levels, more people win. No one wants anyone to roll out of this plan as that doesn’t help anyone. Isn’t that how it should be?  Shouldn’t the compensation plan help everyone to succeed? That comment makes sense to
those who have some extensive experience with other compensation plans.

4. To help avoid people rolling out of the binary compensation plan there are no huge minimum volumes required. Most binary compensation plans require a monthly order of around $100 to $200 to be auto-shipped for commissions to be paid to a distributor on the volume on their organization. This enables the masses the opportunity to do the business part time.                                                      

5. Simplicity and Targeted Rewards.                                                                                                  

• a Binary is very simple to explain and understand

• immediate income with each enrollment

• target specific behavior by paying bonuses

• high end pools that reward successful leaders

CAN YOU MAKE BIG MONEY?
http://www.businessforhome.org/. At least 20 of the top 100 network marketing earners are from companies with some form of binary compensation plan. And almost all of those companies with the exception of one or two are from the late 90’s and on. That is pretty remarkable considering these earners are competing with many top earners who have had decades longer to grow their organizations. Is there big money to be made in the binary plans?
Absolutely!

My goal is not to rip on any other compensation plan. Every plan has its strengths and weaknesses. My goal is to point out how the newer binary/hybrid unilevel plans are very beneficial. I have heard leaders and companies say that the compensation plan doesn’t matter much. I disagree. One of the top earners in the industry recently said this about compensation plans, “if it isn’t the most important thing then it is right up there.” I completely agree with that statement. Of course there are many other considerations such as “What are the products?”,Who are the owners?” and ”What’s the track record of the company?”, but make no mistake, not all compensation plans are created equal.  Overall pay out means something but the real value is in the details.  The industry is evolving as are the compensation plans.  There isn’t one true perfect compensation plan.  There are many that are great.  All have there strong points and weak points.  I guess the question is what are you looking for?

Who Wants to be That Crazy Network Marketer and Annoy Everyone?!?

How do you have posture; showing enough confidence but not arrogance???  Showing true confidence by being yourself and not fake??  Stating your intentions in a direct way without throwing up on the prospect with too much info??  Creating urgency without chasing??  Balance balance balance.  We listen to calls, go to meetings and even read books to fine tune our skill set.  To pick up little insights that will give us more vision and enable us to pass that vision onto others.
Most people think that either they have to annoy all their friends and family to succeed in Network Marketing or they won’t succeed.  You don’t have to be in the NFL to succeed. For those of that think the NFL is the National Football League it isn’t. In our industry the NFL would be the No Friends League.
I believe that there is a way to respectfully approach all of your family and friends so that you don’t become that annoying MLMer.
I heard a leader say this once, “all I talk about is (she named her mlm company).  All my friends are only from my mlm company because my other friends know that I am going to keep dripping on them about my company until they do it.”
Really??!!! Now wonder so many people don’t even want to talk to us!! Be a real person. Amateurs convince experts sort. Your job is to get your prospects to take a close look.  Your goal is to make sure that they at least KNOW what you are doing to make some sort of an educated decision. Then whatever decision they make is their choice.
Moving on to the topic of posturing, let me give a personal example. I just ran into a friend randomly.  This friend was approached about several years ago by someone in my organization.  His first question was, “are you still doing that MLM thing??”  I said yes.  It isn’t a job.  It is my lifestyle.  This guys name is John.  John said, “really?” I could never do that kind of thing.  I quickly told him it isn’t for everyone.  Only the willing.   I know how to teach you and anyone for that matter to do Network Marketing as a business.  I also can teach you a way to do it where you won’t lose any friends or family.  Most companies don’t know how to do that.  By the end of the 3 min conversation John said to me that he was leaving to go do sales for the summer but that when he got back he wants to explore doing Network Marketing as his future because residual income is what he has been looking for.
Now I don’t know if he will really sign up.  The point is this.  All of you have the tools to do this business and can say what I said in your own words.  You don’t have to have had massive success to say what I said.  I walked and talked just like I do now after a few days in the business.  Of course you learn more as you go but I kept it simple, passionate and confident.  If you don’t have confidence in yourself then don’t make yourself the issue.  Find something that you do have confidence in like the company and the leadership.  The next important part of that story is this…..  You can’t take away something you haven’t given them. I hear this all the time.  I just took the business away from them because they didn’t seem interested.  Of course there comes a point where that is the best strategy but all too often we take something away from prospects that don’t even know what it is we have to offer.  So posturing isn’t acting so cool that you act like you don’t care about them.  It is a balance.  Have your prospect get on a launch call (which is an introduction to the business), go to a meeting or get on a 3 way call.  Be careful to not sift too early and make sure that as you sift through prospects that YOU GET REFERRALS. In the story about John I was short in conversation, confident, let him know he could do this business.  I let him know I would love to work with him but I didn’t sound desperate.  I didn’t come off as arrogant like I make so much money that he didn’t matter.  What I did is I postured with an attitude that Network Marketing works and it will work for him if he is willing!
The next piece of advice that I have is this…
Call all your friends that said NO. Ask how they are doing without mentioning Network Marketing. When someone says no to you give them a follow up call just to be a real person and let them know there are no hard feelings by your actions.  People don’t care how much you know until they know how much you care.  BUILD THE RELATIONSHIP WITH PEOPLE is not an easy topic.  Some interpret that as, I have to talk with my prospects X amount times before I can mention my business.  Others don’t care and go the other extreme only interested in taking one’s money and their intentions are clear which will turn the prospect off.
Like I said, the balance on this topic isn’t an easy thing to do.  There is no set way.  There is no systematic way with people.  Every person is different and every relationship is different.
Always clearly state your intentions
That isn’t easy.  From your standpoint you want to make money off this individual but you also want to help them make money.  Neither is wrong and both are important.  I always let my prospect know why this is the best business plan on the planet.  In this business we make more money if our prospects make more money so we are incentivized to work as teams. The greatest part is your organization has the opportunity to make more money then you do!!!  If that doesn’t make sense to you then please talk to one of your leaders.  It is called geometric growth.  Each distributor who comes in has the opportunity to make more money then the person who sponsored them and in fact they have the opportunity to make more money then every single person in their upline.
The next bit of advice is FACEBOOK.  As always, don’t take just take my advice.  Each leadership team will have a little different perspective.  Whatever they tell you is RIGHT.
Facebook
I have never heard anyone who has had massive success from postings on Facebook.  Status updates like, do you want easy money, call me if you want to make money and business is so good are so cliche and overused they make people want to run the other way. They don’t help you sponsor the leaders; which is who we are all looking for. If you know of someone that has had success through postings on Facebook it is a lucky exception and WILL not duplicate properly.   Remember what works in our business is what duplicates.  Sure many of the leaders in your company may post stuff about their business but they are plugging their whole organization into the most recent news.  Most of their friends on Facebook are probably from their business.  They also have formed credibility so what they say doesn’t sound as cliche.
Just imagine a scenario with me.  The common person gets on Facebook.  Every week they see their friend post something new about your business.  The more they see the more MOST of them will think, “wow I don’t want to be that annoying person.  I could never do that.”
For some of you it isn’t bad to post something every once in a while but constant bombarding will not attract leaders nor will it attract those who aren’t in our industry.  I separate my contacts on Facebook.  I scroll over each new friend and if I want them receiving my Network Marketing updates then I  list them as business.  If they are just friends then I don’t need to change anything.  This way when I post something that is strictly for my business contacts I am able post solely for them.  If you aren’t sure how to do that just google it and you will learn quickly.  Using this technique I am able to be much more efficient and can properly utilize social media.  
Facebook does have great value.  Use it to build relationships.  Use it to promote lifestyle but don’t use it to spam your friends (your non network marketing friends).  They already think you are crazy!  🙂
Many of you will disagree with me and that’s ok.  Do whatever your leadership team tells you to do.
“Wherever you are be there.” Let me preface this; when hanging out with friends if they ask me about work, “I say this is the funnest  that I have ever done.  It is work just like everything but I love it.  Then say I really don’t talk a lot about work when I am with friends or family.” I change the subject and ask how they are doing. Now understand this is more of a group setting in a bigger function with friends or family.  Also understand that I will call them later to talk about my business. Yes there are circumstances where you probably have someone that is really interested.  In that circumstance keep it short and confident.  If they seem interested then talk about the business but don’t throw up on them. Don’t be DESPERATE!
A couple last little bits of advice
Put all Birthday’s in your phone and text Happy Birthday.  Not just your contacts from your business but all contacts.  If you are on your Facebook account it will say when your friends birthday is.  If you don’t have their birthday in your calendar you should text people asking them when their birthday is because you are updating your calendar and contact information.  Just a simple Happy Birthday goes a long way.  People love to have other people actually care about them.  You will find it becomes fun to see the responses you get back and is great to just stay on contact with people.  Yes that’s even if they never do the business!
Send out a minimum of 3 emails every week to reconnect with friends.  I would send out more and I would do it on red time (meaning do it when it is a non prospecting time like late night or early morning).
Be social. Truly love people and talk to people everywhere.  Do it for the right reasons.  Even if someone isn’t interested in the business I have learned to always love talking and conversing with people.
I learned a valuable lesson from my mentor Lon Wardrop.  I remember coming home from Lake Powell with him in September of 2009.  We got a flat tire on the way home.  There was a gentlemen who was 80 years old who pulled in to see if we needed help.  Lon spoke with this individual for 25 minutes.  Lon never asked this man for his phone number.  He didn’t have any intentions with the business.  Lon just loves talking with people.
I don’t want anyone to take this article and misinterpret it. I was speaking to you directly on the way we handle and approach with those we know. That doesn’t mean you shouldn’t be making contacts with people you don’t know that you come in contact with. We should always be listening and engaging in conversation with those we meet in random places whether that’s at a restaurant, getting your oil changed or wherever that may be.  We are in the business of becoming professional friend makers.
We should ALWAYS be taking massive action.
Don’t think you need to know everything I just taught you.  Don’t be overwhelmed. Your Network Marketing company is a lifestyle.  Walt Disney says, “the best way to get started is to start doing.”  Don’t be afraid to make mistakes.  My point is that you can be a real person and make this business happen.  In fact MOST of the leaders are all Real People and not crazy MLMers.  This business is about leadership.  My goal is to empower you to become better leaders.  Stephen Covey says, “that leadership is communicating someones worth and potential so clearly that they see it in themselves.”  It doesn’t matter where you are at in your Network Marketing business.  What matters is where you are going!  Start seeing yourself for what and who you can be because all of us can be more.  We are here on this earth to be great.  So let’s go make it happen!