4) The Breakaway
This plan has been said to have become somewhat unpopular in the industry, as you could lose the business you build, once it gets to a certain level of success, and it breaks away to no longer be a part of what you get paid on. It usually appears in stairstep. Lets use the example above in the stairstep illustration.
If I am a Champion and my downline builds his organization faster than me, and qualifies as an Emperor before me, 2 things might happen.
Depending on the company’s pay structure, I will not be eligible to receive overriding commissions from my downline Emperor’s group. Hence the breakaway his bonuses will be passed up to MY upline Emperor or Grand Emperor. In some cases, the ENTIRE group breaks away and join MY upline so even if I do qualify as an Emperor later on, I will not receive bonuses from his group! Selfish people might even involve in SABOTAGE as in trying to slow down his downline from breaking away or overtaking
him.
Today, more and more companies are acknowledging the breakaway problem and will start awarding leadership development bonuses (such as a fixed bonus percentage over that entire group even those they have broken away). This system has still worked out
well in the past though, because it gets people working harder to prevent the breakaway from happening.
In MLM (just like in life), companies reward PEOPLE who work hard to build their groups. If a downline works harder than his upline, he should get paid more – hence it is more fair to them. So in this case if an upline doesn’t work hard enough, he shouldn’t blame the company if the downline breaks away.
5) The Matrix
The matrix or sometimes called a FORCED MATRIX is like a pre-order tree. A computer driven plan puts into your group by computer, and they go in the next available slot. Usually this plan is combined with some form of a Binary (sometimes 3 by 9 or 5 by 25 matrix depending on the maximum width allowed), and it does work well if there are a lot of people that are recruited and WORKING TOGETHER TO FILL THE MATRIX.
When you recruit someone, the computer searches down for the next open slot, and positions them there. There are some plans that allow you to override the commission of those that you personally sponsor even though they are not positioned directly under you within the tree.
How the computer works is like this:
D sponsors a new friend. That new friend doesn’t get slotted under D but rather fills the last position which is the dotted line under C. Once they fill up to a certain level, the distributor gets paid a lump sum.
Once again, the advantages here is that every single distributor in the tree all work together to fill the matrix and the duplication result is fantastic! Imagine if everyone finds 2 and everyone does the same thing, the matrix will be filled very fast. This means that even if you don’t look for ANYONE to join the company, you will get paid when the tree reaches a certain level.
The biggest and most obvious disadvantage is everybody waiting for everyone to fill the tree thinking that they will get their money waiting for others to fill it. This kind of thinking is EXTREMELY WRONG and will ruin the company. Furthermore, unless there is a cut off system in the marketing plan, (for example, after the sixth level the person at the highest position will have to reinvest again at the bottom of the tree), the guy who came first will get all the commissions and not do anything. By placing a cut off point, everyone who reinvests again will fill the tree faster as the deeper you go down the tree, the more people are needed to fill each level.
A
B C
D E F
6) The Australian Two Up
This is a marketing plan that is very unique. Basically, the two people you recruit are given to your upline sponsor and the rest of the recruits are yours. Here is an illustration:
Assume that each person you recruit, you are eligible to earn $100. U sponsors Q1, Q2, A and B. You earn ONLY on A and B but not on Q1 and Q2 as those sales go to your UPLINE SPONSOR. Q1 and Q2 are your qualifying sales. Basically by finding Q1 and
Q2, you have basically qualified to earn from A and B and subsequently C, D, E and as many as you would like.
Similarly,
A recruits A1, A2 and Z. The sales of A1 and A2 goes up to U and the sales of Z goes up to A. As long as U keeps Q1 and Q2 going, he is eligible to earn as wide as he wants and as deep as he wants! (A1 and A2 is now part of U‟s group. This will multiply by 2 each time it goes deeper enabling him to earn income up to Infinity levels!) The biggest disadvantage of this plan is that sometimes people are selfish and will only leave U with „weak‟ distributors (for example, Q1 and Q2 are slow learners) while capitalizing on the stronger ones in A and B (leaving the strong ones for themselves).
U
A B
Q1 Q2
U
A B
Q1 Q2
A
1
A
2
Z
Some might even purchase dummy accounts (known as cats and dogs or potatoes)
This leaves their upline with non-moving legs and creates a hollow organization. Some companies deal with this problem by giving bonuses or special overriding mechanisms where you get special bonuses for building them, or even removing the „qualified‟ status should Q1 or Q2 drops out.
7) The Hybrid
A hybrid is a combination of any of the above features. An example would be a Forced Matrix with Unilevel benefits (ensuring that those who actually WORK to fill the tree gets paid more), or an Australian Two Up with Stairstep advancement (to offset the disadvantages of distributors being too deep in an organization). Many companies that are combining the advantages of many plans to help distributors maximize their income.
REALITY CHECK: Regardless of how good any plan may sound, NONE OF THESE PLANS WILL MAKE YOU MONEY IF YOU DON‟T SPONSOR ANYONE AND DEVELOP THEM.
Only YOU can make the plan work for without you, the plan is dead. DO NOT get too complicated about Compensation plans. Keep it simple while explaining to your prospects and make sure you understand that you CAN MAKE MONEY with it if you work your plan.
The 3 General Areas to make money in any MLM plan.
1) The First area is Retail Profit.
You must show the prospect that they can earn a retail profit with your products and services. The margin can be anything from 10% to 50%.
2) The Second Area is Team Overrides.
This is where, just like a Real Estate broker, or Insurance agency, you get to develop your own sales team. Sales Managers get paid a certain % of override off of them, just like the Real Estate and Insurance Agents do. Your goal is to help your people do the same thing. People don’t understand that you have to help people or help your team in order to succeed. If they achieve success first, then only you will succeed.
3) The Third Area is Leadership Bonuses.
This is where you help develop Successful leaders in your group, and you get an additional bonus or override form your group. You get rewarded by helping others develop their leadership potential. Once your leaders are in place, your MLM business will go on autopilot.