Friday, April 4, 2008

MLM Comp Plans - How Companies Hide Binary Breakage

In "MLM Comp Plans - Why Companies Love The Binary" I revealed the scandalous features that attract MLM companies to binaries like teenage boys to girls. Today we'll see how breakage is hidden from reps and their prospects working this type of comp plan.

Here's what a basic binary looks like.

A binary comp plan has two downline legs of sponsorship. One leg is "weak" while the other is "strong". A classic binary requires ⅓ of all sponsored recruits be placed in the weak leg While ⅔ must go into the strong leg.

Here's where the breakage occurs in a binary.

  • The Strong Leg
  • Unbalanced Growth
  • Imperfect Timing
  • Viperous Up-Line
  • Run Away Strong Leg Growth

The most obvious place breakage occurs in the binary is in the strong leg. Absolutely every single penny of company-wide strong leg earnings go directly to the company.

Nothing less than perfect growth and timing relative to the pay cycle qualifies for payout.

Some naïve prospects have accepted offers of a "pre-built downline" only to discover this downline is their strong leg. Most of these folks never catch up to achieve that coveted ⅓ - ⅔ balance. Meanwhile the upline sponsor that offered this "deal" cashes his fat commission check while saying, "Thanks sucker!"

Even if everything else goes according to the ideal scenario, all it takes to disqualify a business builder is a sponsor monster in the strong leg to strangle the dream of financial independence.

Here are my thoughts on the binary comp plan.

Some compensation plans have much simpler and easier qualification requirements, and actually pay out 50% or more of total earnings to the distributor base. So why would anyone want to settle for maybe just 33%?

This is probably the hardest plan to earn a check from because it requires total perfection. Perfect balance, perfect timing, and perfect upline cooperation … oh, and then there's that wild card run away super recruiter thing.

I am not perfect and I doubt you are either. And even if you are you still can't control what others do. So, unless you are part big-time gambler and part super analyst, then I suggest you look for a company with a comp plan that doesn't stack the deck against you like this one does.

I appreciate you,

Bill Tessore

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