MLM Comp Plan Ups And Downs - The Matrix

In my previous post "MLM Comp Plan Ups And Downs - The Stair-Step Break-Away" we examined the advantages and disadvantages of that type of network marketing compensation plan. Now let's see what we can learn about the Matrix.

WARNING: Neglect to ask these three critical questions at your own peril.

1. "How many people do I need to make a given income goal?"
2. "How much volume do I need to make a given income goal?"
3. "What do I need to do to make a given income goal?"

What makes the matrix compensation plan so popular among network marketers?

The fixed width and depth: make a matrix easy to understand.
Spill over: a typical feature of matrices wherein a new recruit is placed below an existing member of the recruiter's downline, can help build your team's downline.

The up side of the matrix.

1. Spill Over - it's a great team builder.
2. Sponsor-Placed Spill - if you're placed under one of your sponsor’s front line reps, then you could benefit from the spill over that front line rep may create in the future.

The down side of the matrix.

1. Spill Over - this will choke your long-term income potential if it happens in your front line. These are lieutenant positions that must be occupied by strong builders. A dead-beat in one or more of these upper-echelon positions minimizes your comp plan potential. Your only hope at this point is for the dead beat to drop out and leave that position open.
2. Unwanted Spill - moving a spilled member out of your front line is difficult, if not impossible.
3. Fixed Depth - since there can only be "X" people placed in any matrix this also means this comp plan has a maximum earning potential of "X" number of reps. (a full 3 x 5 matrix pays on 363 recruits, you do not get paid on recruit #364 and above.)

There are two types of networkers that do well with the matrix comp plan.

The Robo-Recruiter: he can manipulate the plan for maximum pay-out
The Educated Team Builder: she guards those front-line positions like a general.

Always remember the 3 critical questions before joining a company. What do I have to do, how much volume, and how many team members do I need to make my income goal?

If you join a company with a matrix comp plan, then shut-up about spill over. This feature leads to a Welfare mentality that swallows up front-line positions and reduces pay-outs for you and your team. There are dead beats out there looking for just such a "free ride". Oh, and don't forget your sponsor's incentive to fill those top positions for you.

Do you believe the advantages out-weigh the disadvantages? Great! Then go for it.

If you prefer a comp plan that pays you true unlimited residual income for all your hard work with no surprises, then keep looking.

I appreciate you,

Bill Tessore

MLM Comp Plans - Why MLM Companies Love The Matrix

In my previous post, "What Is Breakage In A MLM Comp Plan?" I explained what breakage is and how companies use it to pay reps less than what they claim … often a lot less. Now let's take a look at the Matrix compensation plan to see why it is so popular with some companies.

Here are the basics of a matrix.

Let’s say you’re in a company with a 3 x 5 matrix comp plan. In this plan you have 3 recruits on the 1st level, 9 on the 2nd level, and so on down 5 levels. A 3 x 5 matrix pay-line is complete at rep number 363.

Here's why network marketing companies love matrix type plans.

• They're easily understood so lots of people join.
• "Big money" claims attract new prspects regularly.
• "Spill-over" appeals to impulse buyers.
• 90% of network marketers are blue personality types, so the matrix plan plays well to a huge number of prospects.
• Reps who receive "spilled positions" are paid fewer recruiting bonuses on a full matrix.
• Drop out rates are high, so fewer residual income is paid out.
• Earnings "outside the pay-line" go to the company, so residual earnings are limited.
• Though some matrix plans offer unlimited one-time bonuses for sponsoring outside the pay-line, very few reps ever earn them because most reps sponsor an average of 2.7 people in their network marketing career.
• Since a matrix can have any number of "first level positions" and "levels of depth" the company can determine if they want to attract mostly recruiters, or average networkers.

MLM companies like the matrix comp plan because there are many structural variables they can use to their advantage. Pay out caps and the ability to choose to attract sponsor monsters or average Joes are just a couple things in the company's favor.

The built in income limits of a matrix attracts fewer networkers capable of building stable team growth. Most of the folks who join a company with this type of comp plan never do anything with it because they expect spill-over to do the work for them.

If you are a sponsor monster, then a matrix comp plan is perfect for you. However, if you are like the vast majority of networkers who want to build a team with real residual income potential, then you might want to keep looking.

I appreciate you,

Bill Tessore