BEST BINARY COMPENSATION PLAN

What Is a Binary Plan?

In every kind of compensation system, distributors are rewarded for selling products to consumers. They’re also rewarded for the sales made by distributors they have recruited, and by sales made by distributors they in turn add to the organization. In the everyday language of direct selling, the “frontline” is made up of people personally recruited by the distributor. When people in the frontline add distributors, these form a second tier, and when they in turn recruit new distributors, that creates the third tier, etc.

Many compensation plans allow distributors to recruit an unlimited number of frontline people. This is one way binary plans are different. The distributor’s frontline consists of just two people, creating two so-called “legs” sometimes known as the “power leg” and the “inside leg”. Commissions are normally paid on the power leg only.  More precisely, pay is based on matching the volume of the “power leg” with the available volume in the “inside” leg, in what’s called a “cycle.” Both legs will be grown by the distributor’s own activity, but also by those both above and below her.

Benefits of the Binary Plan

The binary plan is a very simple concept, and that makes it easier for novices to quickly grasp. Distributors like that they get paid to unlimited depth, unlike most unilevel or stair-step plans where payments stop six or seven levels down. Probably the single most attractive feature of the binary plan is that it tends to drive faster growth, which appeals to both companies and distributors.

Downsides of the Binary Plan

There are some key negatives about even the best binary compensation plan, and with a few notable exceptions, binaries tend to have higher failure rates. Rapid growth followed by company collapse is not uncommon with this type of plan.

With binaries, there tends to be a high emphasis on money rather than the product. This has a cultural effect that can be damaging to any direct selling company, especially in today’s consumer and regulatory environment. Binary companies sometimes feel more like a money game than a serious product-focused enterprise.

Pay is sometimes “capped” by the company to avoid overpaying, and this can be disheartening for ambitious distributors. Since the upline is usually focused on building the power leg, people in the downline frequently get little support in building their “inside” legs. The effect is that they fail to match the two legs adequately and don’t make the money they hoped. As a result, binaries tend to have high attrition.

How Sheffield Can Help: Your All-Round MLM Experts

The Sheffield Group is known throughout the direct selling industry as the leading authority on MLM compensation plans. Over the past 30+ years the Sheffield team have launched or advised more than 1,000 direct selling companies. They’ve helped their clients select the optimum compensation strategy and then provided customized solutions that match their unique needs.  Sheffield is ideally positioned to guide you to the best binary compensation plan for your company, assuming a binary is the right solution. If it isn’t, your Sheffield consultants will propose a more appropriate alternative.

Beyond that, Sheffield will offer detailed advice, and introduce the best resources, addressing all the important areas your company needs to consider: product, marketing, distributors, operations, and finance.

Take a look at the scope of services and resources the Sheffield Group can offer your company: