All you need to know about Binary Plan in Network Marketing or MLM
Binary compensation plan has now become a basic strategy for companies to attain success. A binary plan is a multi-level compensation plan of marketing. This enables the distributors to have only two-front line distributors and if a distributor sponsors any other distributor then that one is placed below the front line of the main distributor. Usually, the number of distributor for each distributor is 2, this is why it is called ‘binary’, i.e. two in number at first level – called business centers. The spillover generated in this plan is one of the most attractive features because the excess of distributors are placed below the particular distributor and the distributor had to sponsor only two distributors to be in the compensation plan.
One must be clear that the binary plan is not a matrix plan. There exist only two legs- left and right. The two legs are grown to inside and outside leg. The outside leg is referred to as power leg which is benefited from the placement of any new distributor and also from one’s recruiting efforts or in fact recruiting efforts of one’s in the upline. This is called Spillover. Since only two members are allowed in the front line, so any new member that you will be signed up with will spillover to the empty space available in the downline power leg. On the other hand, the inside leg is called as profit or income leg. This leg is filled by a personally sponsored distributor, i.e. there exist no spillover in case of profit leg. These things play an important role in network marketing when a company has to pay commission using a binary plan.
Among all the commonly used plans of network marketing, it is easy to understand and thus execute. The factors needed to take care while using binary plan
SPILLOVER: Spillover is a crucial factor contributing to both advantages and disadvantages of using a binary plan. Many distributors use spillover to attract the prospects and sign up with them to increase their chances of getting profits. And if you are one of those organizations coming in the active & successful upline power leg then half of your work is done! Then you need to focus only on your inside leg.
• Spillover always marks a growth in outside leg so you and your efforts are responsible for your inside leg and its growth.
• It has been seen that many companies sign-up with new members and sit back expecting a downline building through their spillover in upline. This is likely to take place if you are an active upline organization. But if you are not the only one in your upline’s downline then the competition is huge.
BALANCING THE TWO LEGS: The challenge faced by MLM companies using a binary plan is to balance the two legs. The purpose is to make sure that the maximum of the commission is paid out. The commission is paid on the lesser volume earned by any of the two legs. But if one leg produces large volume than the other then you are likely to face a loss in commission payment. Thus, teamwork is required to manage both the legs. This encourages distributors to help their distributors to overcome their loss in weaker sections creating a better business volume.
• Since the commission is paid on the basis of the lesser volume produced, if your legs do not meet the necessarily required balance then you will not only lose the commission but also the points that you accumulated. This is called flushing.
UNLIMITED DEPTH OF LEVELS: Binary plan creates no limit on how deep you can build your empire! It doesn’t matter how many distributors you have in your downline. Binary plant put limits only on the width under which you can grow. The plan is purely volume driven. If you are having a good capability of managing your two legs then you can deep build as much as you want and can earn a lot.
The plan stimulates the teamwork and reduces the risk of unsupported distributors. If planned & implemented properly, a binary plan is the most powerful and beneficial compensation plan for the network marketing industry.