Note: It has become increasingly clear to me that it's just as important for network marketing distributors to understand MLM compensation concepts as the MLM companies, themselves. Why? Because distributors invest their all into building a downline. The bottom line is if distributors understand MLM commissions, they can make better choices about the companies in which to invest their lives!
If you don’t really understand the differences between the three proven compensation plans in the MLM industry today, you should! So, here you go.
o Breakaway features two classifications: 1) distributor or pre-sales leader, and 2) sales leader. There are two types of sales plans and commissions: 1) one where you get paid on your distributors—non-breakaways, and 2) another where you get paid on your breakaways/sales leaders. You make more money on your distributors than on your sales leaders because of the differential. The Breakaway is the only plan that focuses on building sales leaders.
o Hybrid Uni-level has one sales force classification. Everyone is a distributor. There are no sales leaders. You get paid on your distributors down X number of levels, and then the company pays extra money to you based on another criteria besides sales force classifications. This factor is how long a distributor in your downline has been in the company. Fast start programs provide a period of time where if you sign people up, you make more on them as new recruits and less on them later. These programs also pay higher commissions to a new recruit for the fast start time period.
o Binary also has one sales force classification—distributors. This plan features a division and organization of distributors into business centers consisting of you and your two downline legs under you. This is your line of sponsorship, including each personally-sponsored distributor and all his/her downlines. The Binary Plan’s sales force structure makes it extremely different from the other compensation plans. There’s a whole different set of motivations besides building an organization that’s deep. You don’t get paid on your downline at all, but on the weakest leg of your downline.
To summarize, with the Breakaway Compensation Plan, there are very defined roles. With the Hybrid Uni-level Plan, everybody is the same as everybody else. There are ranks, but bonuses are basically paid the same to everyone. The same is true of Binary Plans. Ranks are almost meaningless. The focus is for distributors to try to balance volume between both legs of their organization.
- Probably the biggest difference between Breakaway Plans and Hybrid Uni-levels comes from the monthly qualifiers. In Breakaway Plans, once distributors achieve the rank of breakaway/sales leader, their sales volume no longer helps their sponsors achieve their monthly qualifications. They literally break away from their sponsor and get paid at a different commission rate. With Hybrid Uni-levels, sponsors achieve their monthly qualifying volume either with total organizational volume or the volume within a specific number of levels. Sponsors, therefore, never experience losing breakaways/sales leaders plus the income from them, and they never have to replace that volume like in a Breakaway.
- A major difference between Breakaway Plans and Hybrid Uni-levels is that percentages for the Hybrid Uni-levels are paid on personal volumes in the downline. The generation commissions in the Breakaway Plans are paid on the group volume of the downline sales leaders. This means that the generation commissions are typically much larger and a distributor is paid much deeper into his/her organization. In other words, the payline is much deeper. With a Breakaway Plan, if you’re a breakaway/sales leader, you’re always going to make more money on your group volume or on the distributors in your downline than you are on breakaways/sales leaders. That’s because the breakaways/sales leaders have theoretically progressed further in the business.
- With a Hybrid Uni-level Plan, typically everybody that comes into the company will make a higher than average percentage commission on the people they sponsor. As new recruits, distributors receive a higher percentage on volume in the first 30-60 days, depending on the duration of the fast start program. The Hybrid Uni-levels that survive all have some form of fast start or other bonus program to get distributors a higher percentage. For example, a 5% standard commission for Level 1 distributors, but 10-15% commission on the first 60 days for new recruits.
- Binaries and Hybrid Uni-levels start out at the 5% earnings line, and if you’ve got fast start money, then commissions rise above this line.
- The big difference between a Hybrid Uni-level, Breakaway, and Binary Compensation Plan is the determination of where the plus dollars of the 5% Plus Theory go. All the plans are based on the standard 5% commission. [See 5% Plus Commission Theory section for each plan in previous parts of this series.] If distributors do a good job of balancing their organizations, they're going to make 5% on their overall volume. Then, they’re going to make plus money based on the type(s) of commission add-ons the compensation plan includes.
- One of the challenges of the Breakaway Plan is its image of complexity. However, in the end, most Hybrid Uni-levels are as complex as Breakaways; it’s just they hide the fact better.
- With a Uni-level Plan, you can put a lot of people on your first level and you can build a number of legs . With a Binary Plan, you are limited to two legs.
- Breakaway Compensation Plans have been implemented since 1975. Hybrid Uni-level Plans came on the scene in 1985. Therefore, Breakaway Plans had a ten year head start on Hybrid Uni-levels.
Summary
Every network marketing company that’s ever reached a billion dollars in annual sales has been a Breakaway Plan of some sort. There has never been a Uni-level or Binary Plan that has reached this level of success. And, these billion dollar companies are still growing with their Breakaway Compensation Plans! However, this scenario may be a result of the fact that Hybrid Uni-levels and Binaries haven’t been around as long as Breakaways.
The bottom line is Breakaway, Hybrid Uni-level, and Binary compensation plans are all great plans that can be the vehicle to landslide success, but are fundamentally very different mindsets. They represent three totally different ball games with their own specific rules and regulations.
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The preceding parts of this series include:
- Part 4: The Binary MLM Compensation Plan
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