The Binary Compensation Plan

The binary compensation plan is the most recently introduced of the various basic types of MLM compensation plans. The binary MLM plan has been used by more and more new MLM companies every year.

Why?

Because, for one thing, this network marketing compensation plan makes it easier to qualify for commissions than some of the older models of MLM comp plan. So MLM distributors start to earn some money sooner and are less likely to give up early on their new MLM business opportunity.

Another reason for the increasing popularity of the binary compensation plan is that it's fairly easy to understand and explain to prospects.

Let me demonstrate it for you.
You sponsor your first two distributors to start your MLM downline. This starts the two "legs" of your tree, which are like two branches from a main trunk of a tree. (You are the main trunk.)
In some companies, as soon as you have two legs started, you may then be considered "qualified" to earn a commission from sales of your network marketing product sold by those in your downline. And you can earn on sales of downline distributors to potentially infinite depth in your tree. Your commission is calculated using the volume of sales in whichever leg has the least sales. This is usually (but not always) the physically shorter leg with the least number of distributors in it. Your longer leg is always there to motivate you, since you keep seeing those sales "points" sitting there that you haven't been paid on yet. This is an incentive to keep recruiting new MLM prospects to grow your business, in order to keep the two legs of your binary tree equal. This can be quite a challenge to do, though.
Why?
Because of one of the other benefits of the binary compensation plan... the "spill over" phenomenon.
Here's how that works. After you join, your sponsor continues to sponsor new distributors.Your sponsor will place her/his new distributor into one of his/her two legs. Well, remember that you are already in one of your sponsors legs, so (and here's where it starts to get a little confusing, but also exciting)... one of your two legs is a part of one of your sponsors two legs. So your upline's new recruits also add to your earnings. You will both be paid commission on sales in that leg, if it is the shorter leg for each of you. If you have a successful sponsor, your sponsor-side leg will grow much larger than your other leg that is added to only by you, unless you work hard to grow it. But even if you don't ever even out your two legs, you still continue earning from your short leg... not really a bad situation.

This setup helps to foster teamwork, rather than competition for each new MLM prospect between MLM upline and downline. This is a big reason why the binary compensation plan is so appealing.

One thing to be wary of, though, is that some binary plans are constructed as "flushing" binaries. This means that they only save those unused points that build up in your longer leg for a certain amount of time, rather than letting them accumulate until your shorter leg catches up and you can cash in on them. So it's very important to look for a "nonflushing" binary plan. Otherwise, not only do you lose that potential income from the long leg, that now-empty (flushed) long leg is now your short leg... the one you get paid on. Ouch!

This one network marketing tip about the binary compensation plan would save a lot of people trying to choose an MLM business opportunity a big headache if they did their homework before signing on the dotted line.

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