Binary or Matrix MLM Compensation Plan?
Which one do you prefer for your MLM Business?
Like two sides of a coin, both binary, and matrix MLM compensation plans have their own pros and cons. MLM compensation plans determine the benefits that a network marketing company provides to its customers.
When it comes to network marketing success, the choice between a binary or matrix MLM compensation plan holds significant importance.
So, What are the fundamentals of binary and matrix plans? What type of users can benefit from these plans? We will discuss in detail these popular plans, their benefits, and much more in this blog.
Understanding In-Depth About Binary MLM Plan & Forced Matrix MLM Plan
Binary and matrix are the most basic and commonly used compensation structures in the world of network marketing. When it comes to Binary compensation, its simplicity shines through. It allows us to add just two individuals beneath a sponsor’s downline. On the other hand, the Matrix compensation plan breaks free from such restrictions, allowing for a more expansive network. The plans have many similarities and differences like this. Let’s take a detailed look at both these plans.
#1. Binary MLM Compensation Plan
The primary function of a compensation plan in an MLM network is to deliver a portion (which can differ according to the network marketing company you work for) of the profit or sales made to its distributors or executives.
There are multiple compensation plans used by companies today including Binary, Matrix, Unilevel, Board Plan, Hybrid MLM Plan, and many more.
Calculation of payouts or other bonuses to members differs as the compensation plan varies. It all had to be done manually earlier. But installing efficient MLM software might help you in fixing such issues!
Oops! We actually got deviated a little bit from the topic. Let’s come back to the Binary MLM plan now.
A Binary MLM Plan consists of two legs: a Left leg and a Right leg.A sponsor can only have an immediate downline of only two people below them. Every new member will be placed under the sponsor’s left or right leg depending on the availability of the space.
So what happens if a sponsor recruits a new third member?
Well, they will be placed under the next available position in the left leg or the power leg. And this concept is called spillover.
Bonuses in Binary MLM Compensation Plan
a. Matching Bonus
The distributor receives a certain percentage of the commission from their downlines.
If A sponsors B and C as the direct downlines and B sponsors D and E and earns a commission of $10 then a certain percentage of $10 is earned by A since distributor A is the sponsor of B.v
b. Custom Bonus
Many MLM companies create their own custom bonus to encourage their distributors and attract more distributors to join their binary network.
c. Return Of Investment
This bonus can be achieved as a fixed bonus or a certain percentage of the investment made by the distributors in the business.
If distributor X joined the binary network by investing $10,000, then X will receive a certain fixed percentage of the investment i.e, return of investment.
Benefits of Binary MLM Plan
- You can make returns from the success of your upline.
- There is no payout limit.
- The sponsors will be actively involved in the growth of their downlines.
- The uplines will help build the weaker leg.
Binary MLM plans are often utilized by companies in various industries such as health and wellness, personal care and beauty, financial services, and technology and telecommunications.
#2. Matrix MLM Compensation Plan
A Matrix MLM Plan has basically two parameters, it’s the width and the depth. Generally, It is represented in the form “m x n” Where “m” is the width of the matrix and “n” is the depth of the matrix. The most common Matrix Plans are of the order 3×7, 4×7, 5×7, 3×9, and 2×12.
Consider a 4×7 Matrix Plan as an example. You can add only 4 members as immediate downlines, and the level can go up to 7 levels, which the compensation will be provided for. This plan provides you with more earning possibilities compared to the Binary MLM Plan.
Bonuses In Matrix MLM Plan
a. Sponsor bonus
The commissions gained by adding downline members to the front line is called the Sponsor bonus.
b. Level Commissions
Level commissions are the compensation earned by upline members when a new joiner is placed on their downline. The upline levels up to which Level commission can be earned varies according to the compensation schemes of the MLM.
c. Matching Bonus
A matching bonus is a commission that sponsors receive depending on the profits of downline distributors they have sponsored.
d. Forced Matrix Bonus
All the members of a Matrix Genealogy tree will be eligible for a Forced Matrix Bonus when the matrix is complete.
Benefits of Matrix MLM Plan
- It provides higher money earning opportunities.
- Allows you to grow unlimitedly and rapidly, which mostly the other compensation plans do not allow.
- The income you earn will also increase as the number of members grows.
- Once you have filled your frontline distributors, then you can shift your focus to other areas like developing your front line executives into the posts of higher priority like leaders.
- The matrix plan follows the “width X depth” structure.
- It is also known as the Forced Matrix Plan.
- Width indicates the fixed number of downlines recruited at the frontline of the distributor.
- Depth indicates the fixed numbers of levels up to which the distributor can recruit the members.
It offers sponsor, matching, position, level bonuses.
Nutrition and supplements, Travel and vacation packages, Household and personal care products, are some industries that use matrix MLM plans.
Binary Vs Matrix MLM Compensation Plan – A Comparison
#1. Pay: Matrix MLM Plan pays more in comparison to binary MLM plan.
#2. Implementation: Since the Binary MLM plan involves the bilevel distribution of members, implementation is quite easier than the matrix plan.
#3. Downline expansion: Downline expansion is easier in the case of a binary MLM plan due to the binary layout.
#4. Downline structure: The downline structure of the binary MLM plan is different from that of the matrix MLM plan.
#5. Multiple legs: Matrix MLM plan consists of multiple legs in which members are placed according to the parameters (width and height).
#6. Downline Matching: Downline matching is not essential in the case of binary MLM plan whereas it is essential in the case of the matrix MLM plan.
#7. Downline recruitment: In a binary MLM plan, sponsors cannot influence downline recruitment because of the concept. Since the matrix MLM plan has the concept of spillover, sponsors can influence downline recruitment to an extent.
#8. Teamwork: Matrix MLM Plan is dependent on the teamwork of the entire network while this does not influence the Binary MLM Plan.
|BINARY PLAN||MATRIX PLAN|
|Easier implementation||Pays more|
|Easier downline expansion||More dependant on teamwork|
|EA member can only recruit two downlines||There is a fixed length and depth|
|Sponsors cannot influence downline recruitment||Sponsors can influence downline recruitment to an extent|
|No limit on how deep a network can be||Depth is only flexible up to a certain level.|
|Possibility of fast expansion||Option of having more than a sponsor|
|No complex payouts||Recruiting is easier|
|Spillover encourages better teamwork||Your downlines can grow faster|
|Companies can set conditions like, both legs should be balanced for payout||Many companies offer low investment Matrix plans to start and remain active.|
|Could become difficult to develop your weak leg||A significant number of people are required to fill a Matrix Plan|
Hybrid MLM Plan
Now, what if these two plans combined together to work together? This is possible through a hybrid MLM plan.
To combine these two MLM structures, you can incorporate a binary structure as the primary structure and introduce matrix structures within specific legs or levels. For instance, you could have a binary structure as the main structure, with distributors building their power and profit legs, and within each leg, you can implement a matrix structure. This allows distributors to recruit more than two frontline distributors within the matrix, while still maintaining the overall binary structure.
Combining binary and matrix structures requires careful consideration of compensation plan design, including commission calculations, qualification criteria, and payout structures. It’s important to ensure that the combined MLM structure is transparent, fair, and provides adequate incentives for distributors to build their organizations effectively.
Infinite MLM Software as a Helping Hand
Today, organizations have access to both binary MLM software and matrix MLM software, each equipped with a range of tools and features to facilitate a smooth business process.
Infinite MLM software provides both these softwares to streamline MLM operations. It provides a robust platform for organizations to implement and manage both compensation plans. A demo of MLM software makes it easy to determine which solution best suits your business needs.
When comparing binary and matrix MLM compensation plans, we can see that both plans have their own set of advantages and disadvantages. Choose the one which suits your MLM company better. You can also select the features you like from both plans and come up with your own compensation plan.
By carefully considering the unique needs and objectives of the organization, decision-makers can select the MLM plan that best aligns with their requirements, empowering them to drive success and growth in the dynamic world of network marketing.