- Worldventures uses a binary compensation structure.
- Paycation and Surge365 use a unilevel compensation structure.
- What does your MLM Travel use?
At the heart of any evaluation of an MLM travel opportunity is the compensation plan. At the heart of any compensation plan is the foundational structure chosen.
It Makes A Difference In Your Bank Account
Did you know it is possible to sell or enlist members at the same rate and you are paid significantly different at the end of the day based on which foundational structure in which you are operating?
You can work just as hard at sales and enlistment, and some one else can be paid more than you, having accomplished the very same goals you have accomplished.
There are at least four major compensation plan structures you need to know.
Basically, each recruit recruits his/her own recruits. Said a different way, the person who recruits you is the only person you relate to upline. The person you recruit only relates to you. It keeps happening like that for every one. Recruiters are given a variety of titles (sponsor, enlister, recruiter, affiliate, advisor, upline, etc.). Recruits never move above or beyond the one who has brought them into the organization.
Advantage: Easily explained to recruits; easy to administer
Disadvantage: The number of recruits remains thin for the recruiter; Every person recruited becomes a competitor, not a teammate.
Outcome: Most uni-level organizations in time will convert to a stairstep breakaway structure to try to retain producers.
Stairstep or Stairstep Breakaway Structure
The breakaway occurs when a recruiter moves away from a set of recruits that he/she has personally recruited, keeping a percentage override of the entire sales of those recruits that have moved away. This allows the recruiter to start afresh with building new personally recruited members.
Advantage: Keeps high producers incentivized to stay with organization; easy to modify; drives a growing increase of sales; among the most consistent for longevity of the organization.
Disadvantage: Can become complex and difficult to describe to potential recruits; can lead to inflated purchases/low scrutiny of recruits due to high minimum monthly quotas.
Outcome: Most stairstep breakaway organizations will stand the test of time.
The Matrix Structure
Basically, each recruiter is limited to a prearranged number of recruits before resetting at a new stage. The prearranged number of recruits is most commonly announced by a ratio. For instance, a level occurs when a recruit recruits a recruit. (Recruiter Red enlists a new member Blue. Blue is on Recruiter Red’s level one. When Blue enlists a new member Yellow, then Yellow is on Blue’s level one and on Red’s level two.)
A 3 x 5 matrix announces the ratio will remain three recruits per recruiter to the fifth level. Recruiter Red will recruit Blue, White, Beige at Level 1 for three new members. Then each of them will recruit three apiece and that makes Red’s Level 2 with nine people. Here’s the process:
Level 1 has 3 people and no more
Level 2 has nine people enlisted by Level 1 three people or by Recruiter Red.
Level 3 has twenty-seven people enlisted by Levels 1and 2 or Red.
Level 4 has eighty-one people enlisted by Level 1 through 3 or Red.
Level 5 has two hundred and forty-three people enlisted by Level 1 to 4 or Red.
When Recruiter Red recruits a fourth new member, Red must insert the fourth new member into one of the downline levels. Red cannot retain a fourth position in Level 1, only a maximum of three. The same for everyone else, as well.
A matrix can be set at whatever prearranged ratio the organization cares to set. It remains the same foundational structure throughout the experience of the organization.
Advantage: The potential of upline supplying new recruits with new members is encouraging to the new recruits; when organizational products or services are sold primarily to organizational members, this seems to work well.
Disadvantage: Placement by upline recruited members can be incompatible with existing members; some new members may depend too heavily on having new member placed under them and thus not personally recruit others.
Outcome: Can be easily misdirected toward exchange of membership tuition (initial buy in or monthly fees) as the primary money source rather than selling of retail products or services.
In a Binary structure two sides are always maintained. Fundamentally, there will be a side to the left of the initial recruiter and a side to the right. In application, each side is referred to as a “leg.” There will always be two legs, and one leg will be strong (meaning more sales and/or more members) and one leg will be weak (meaning the lesser of the two legs with less sales and/or members). Most binary structures will pay on the lesser of the two legs, rather than some sort of ratio between the two. The strong leg is many times referred to as the power leg and the weaker side is referred to as the pay leg.
Each member recruits two members, one on one leg and the other on the second leg. Once placed on a leg, there is no changing from that position with that set of members.
A third enlistee is placed by the recruiter into one of the two legs created. This is commonly called “spillage.” Upline will therefore be engaged in the placement of personally enlisted members into and under other downline recruited legs.
A set criteria (usually sales or enlisted memberships) identifies a cycle. When this criteria is reached, then a cycle has occurred. Usually, this cycle must be accomplished on each of the two legs in order to be registered.
For instance, a cycle has occurred when four new members join on the left leg and four new members join on the right leg. In total, the organizational left leg has enlisted 36 new members and the right leg has enlisted 28 new members. Dividing the smaller number (28) by 4, then there are 7 cycles earned. Usually, that means the overage (8 on the left and 0 on the right) is carried into the next period of measurement.
A business center is the initiation of another set of members, still retaining the two sided structure, but creating another set of recruits from which to generate sales or membership enlistment.
In order to retain producers (those who sell or enlist strongly) the binary structure usually allows a member to be in more than one “business center.”
Lineage is the directly traceable enlistment flow from one initial recruiter. For instance, recruiter Red personally enlists twenty new members. These members must be placed in specific legs, but all twenty are recruiter Red’s lineage.
Advantages: The sense of team is created immediately; the reentry of initial recruiters into business centers incentivizes the strong producers.
Disadvantage: It can be very complicated and difficult to explain; it fosters a complacency if upline inserts recruits not having been enlisted by the downline (spillage); reinsertion into multiple cycles or business centers can easily be mishandled; lineage of enlistment may be very difficult to trace due to spillage; highly susceptible to pyramid scheme or Ponzi challenges
Outcome: This is currently among the more popular mlm travel structures, yet such organizations are constantly defending themselves against legalities and challenges.
Consider The Compensation Plan
At the vary least, consider which of these structures plays to your strengths and avoids your concerns. Each MLM Travel Agency, MLM Travel Club, MLM Vacation Club, or MLM Networking Travel group will identify in one of these four basic structures.
Simply ask the question, “What basic structure is used for your compensation plan?”
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