It’s been said that new or inexperienced MLM’ers should avoid binary pay plans. I know. I was one of the ones saying it. More hearts have been broken by this computer-generated genealogy than any pay plan in network marketing history. Yet, there is hope for those who know what to look for.
Some network marketers love binaries, some hate them. Most just don’t understand them. The binary pay plan presents multiple problems for the average home business builder. Unfortunately, these problems are buried behind obscene income claims and massive promotional efforts. Joe Average discovers the pitfalls too late and swears off this devastating compensation format without ever really knowing the cause of his failure.
The Good, the Bad and the Ugly of MLM are all interwoven in the fabric of a pay plan concept that did not exist before computers and the internet. Implementing and tracking the obscure aspects of a binary pay plan are impossible with antique ledgers and spreadsheets. It takes programming. It’s complicated – to the point that companies can profit from built-in loopholes and distributors can invest marketing efforts that produce less than equitable rewards.
A positive note in favor of binaries is their ability to shrink traditional downline formats into simple two-legged structures. This forces more depth, faster. Experts know that downline depth is what drives long-term residual income. Typical unilevel and multilevel plans provide unlimited width on your frontline – but each “leg” grows only if the distributors in THAT leg produce activity. Inevitably, if it could be it illustrated, you would see a very wide downline structure – with uneven protrusions of straggly, non-responsive downline “legs” that generate very modest enthusiasm or prolific duplication – if any.
The two-legged approach that forces all business centers “down” into a left or right position creates mutual benefit for each participant. Power legs and spillover are common terms used to emphasize these features. Millions of uneducated networkers have been recruited into these monstrosities over the years. And, they’ve increased the already discouraging failure rates that cloud the industry.
What makes binary plans good – also makes them a black hole to be avoided – in most cases. They suck newbies into their core. They cyclone a spiral of illusion and promising MLM souls are lost forever. The void claims its victims without so much as a burp – and the so-called guru’s at the top of the binary smile with satisfaction when the next check arrives.
Significant factors contributing to the binary potholes are volume quotas and breakage. Typical binaries require the individual distributor to achieve specific sales volume in each leg before receiving the next reward (commission check). These ratios vary, but traditionally it was a 1/3 vs. 2/3 left to right balance.
Binary volume quotas make binary plans the only ones in the MLM industry that require you to “accumulate” sales before being paid. A huge factor to consider when compared to all other plans that pay you for each and every sale made by you or your downline.
In addition, built-in breakage or blockage by the company keeps them profitable while hobbling the marketer. Note that breakage is built in to ALL pay plans to insure profitability. It comes in the form of qualifiers for various earning plateaus. Your distributor status with your company generally signifies your breakage level to them. Breakage is necessary to keep all participants from “maxing out” the pay plan, which would bankrupt the company.
Examples: if you buy $50/month, you can earn 10%. But, if you order $100/month, you can earn 15% overrides. Or, if you sponsor 2 active reps, you earn on 3 levels verses your neighbor who sponsors 10 and earns on 7 levels. It’s all built into the pay plan structures.
Adding to the binary hurdles is perception, based on the presentation by the MLM’er who introduces it to you. This is where you are told about the incredible Power Leg that he has already built for you. Inexperienced networkers are force-fed the notion that spillover from their upline will make them rich.
Here’s the flaw in THAT concept. If indeed you are blessed with a power leg – a leg that is growing beyond belief – you will be told that “you only have to build one leg.” They built one for you – now go build the other one. So, you start to recruit distributors into your “weak” leg – the empty one. At this point, you can’t duplicate your upline. You can’t offer the Power Leg theory. You don’t have one on that side. You’re trying to start one. But, unless you are among the rare 1% – 2% of major marketers that can mass recruit, no one entering your weak leg will ever experience what you did; a pre-built leg.
By the time Joe Average realizes this uphill battle to reproduce a binary dynasty on his weak side, he’s knee-deep in the “how did I get here” puzzle.
Knowing these flaws, each new binary plan is unveiled with revolutionary twists and creative adjectives to convince wary marketers that “we feel your pain” and this time it will be better. Don’t be so easily misled.
To date, I have found just one bright star on the binary horizon.
Over 14 months in development, with millions of dollars invested and state-of-the-art technology behind it, a company called Cal NutraSciences has finally introduced the only “new binary” that is actually new. Call it a hybrid. It is built on the two-legged structure that gives binaries their power, but the flaws have been nicely addressed.
Do you have to qualify? Sure. Sponsor one active distributor in each leg. Period.
Rejoice if you are among the Joe Averages of the MLM world. Volume quotas are gone. Cal NutraSciences (CNI) simply pays you a % on your weak leg – everyday. Simple, fair, realistic. Having a power leg is no longer an issue. You have two legs and you earn a % of the weaker one – today. Tomorrow, it happens again.
Leveling the playing field even further are the matching bonuses. You now have an incentive to unselfishly – or selfishly – help your members to be successful. CNI pays you a % of the income generated by each of your personal distributors. Again, it doesn’t matter which leg they’re in. If they earn a check, yours goes up!
Michael Clutton
http://www.articlesbase.com/mlm-articles/secret-binary-pay-plan-loopholes-734543.html