Compensation Plans: THE BINARY PLAN || Network Marketing Plans

Summary

In this video, the speaker introduces a new series focusing on binary compensation plans. They break down how binary plans work, highlighting their strengths, such as explosive growth through spillover and the power leg, and the potential weaknesses, like orphans and runaway commissions. Key concepts like pay leg volume, matching volume, and banked volume are explained in detail. The speaker also discusses strategies to address challenges, such as focusing on retail sales and normalizing commissions. The video encourages viewers to subscribe and support the channel to enable live streaming.

Takeaways

• 😀 **Explosive Growth Potential**: The binary compensation plan offers rapid growth through spillover and a power leg structure, where one leg grows faster due to team efforts.
• 😀 **Two-Leg Network**: Members create two teams (left and right legs), and recruits are placed into these teams, allowing for growth in both directions.
• 😀 **Commission Based on Weaker Leg**: Members earn commissions based on the weaker leg, meaning the lesser of the two teams' total volume dictates the payout.
• 😀 **Matching Volume**: If the volume on both legs matches, the system deducts the matched volume and the remaining balance is carried forward as 'banked volume' for future payouts.
• 😀 **Spillover Creates Momentum**: New recruits can spill over into the down-line, helping those who haven’t recruited anyone, creating excitement and motivation in the team.
• 😀 **Power Leg**: One leg in the binary system grows more quickly, which allows members to focus on building the other leg while the power leg continues to expand.
• 😀 **Orphan Problem**: Some recruits, known as orphans, may find themselves without support and must grow both legs on their own, making it harder to succeed.
• 😀 **Solutions for Orphans**: Orphans can be helped by placing their first recruit in the dominant leg and by focusing on retail sales to drive their success.
• 😀 **Runaway Commission Risk**: Binary plans can lead to runaway commissions that may exceed the company’s earnings, requiring safeguards to maintain financial stability.
• 😀 **Normalization to Cap Commissions**: To prevent runaway commissions, the system caps payouts at 40% and adjusts commissions to keep the business sustainable.

Q & A

What is a binary compensation plan?

A binary compensation plan is a network marketing structure where recruits are placed on either the left or right leg of a person's network. Compensation is based on the weaker leg, allowing for exponential growth as people build their teams.

How does the spillover concept work in a binary plan?

Spillover occurs when recruits are placed in your team from downline members. Even if you haven’t personally recruited anyone, you may still receive recruits from others. This creates excitement and motivates team members to take action.

What is a power leg in a binary compensation plan?

A power leg is the leg in the binary structure that grows rapidly, often without additional effort from the person at the top of the network. This leg can grow explosively as recruits build their teams, allowing the person to focus on building the other leg.

How are commissions paid out in a binary compensation plan?

Commissions are paid based on the weaker of the two legs (left or right). The volume from the weaker leg is used to calculate the payout, and a percentage is given to the person at the top of the network.

What is banked volume in a binary plan?

Banked volume refers to the volume from the weaker leg that is not fully matched in a given cycle. This volume is carried over to future cycles to help balance the legs and ensure continued compensation payouts.

What is the role of matching volume in a binary plan?

Matching volume occurs when the volumes of the left and right legs are balanced. Once they match, the system deducts the matching amount from both legs and may bank any remaining volume for future use.

What is the main advantage of spillover in a binary compensation plan?

The main advantage of spillover is that it generates excitement and momentum within the network. Recruits can receive team members without direct effort, which motivates them to take further action and helps the network grow faster.

What challenges can arise from the orphan concept in binary plans?

Orphans are recruits who do not receive adequate support because they are not part of the power leg. These individuals must grow both of their legs independently, which can be difficult without the help of their downline or spillover.

How can orphans be supported in a binary compensation plan?

Orphans can be supported by placing their first recruit on the dominant leg and encouraging them to focus on retail sales. By focusing on retail, they can generate income while gradually building their teams.

What is normalization in a binary compensation plan, and why is it important?

Normalization is a mechanism used to limit runaway commissions, ensuring that payouts do not exceed a sustainable level (usually 40%). This helps to maintain the financial health of the business by reducing the risk of paying out more than is feasible.