Inside Compensation Plans: The Binary Plan explained… by Morgan McArthur

Morgan McArthurAn explanation of the binary pay plan from a leader experiencing success! Binaries are NOT easy to understand for some. But this network marketing pay plan WORKS for those with proper knowledge and insights.

Binaries are one of the most exciting of all network marketing pay plans.

Why? Because of the potential huge payout; although there is no other distributor compensation plan that has been the subject of so many myths or misconceptions than the binary plan. You may have heard a negative comment about the binary plans, like “I don’t like binaries.” Myths play a significant role in the personal and corporate life of each culture; they serve a wide range of psychological and social functions. The myths in Network Marketing are no different. Before you believe myths (or stories) about the binary compensation plan, you should investigate their origins, and you will find that they are rooted in prejudice, superstition, or hearsay.  NULL The purpose of this article is to help skeptical networkers emerge from ignorance of the network marketing Binary Plan and free their minds of wrong concepts. When you open up your mind and learn to understand the binary, you will see why it works so well. I’ll explain in a bit. But first I’d like to detail some aspects of binary Network Marketing pay plans that you may not be aware of.

In case you didn’t already know, binary network marketing pay plans are called binaries because they work with two’s.

Two people on your front line; Get two who get two; two sides. And so on, in other words a binary plan allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributors front-line. This “spillover” is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. Binary network marketing pay plans really look like a pyramid when they’re filled out. (But this isn’t where the pyramid scheme stuff started from.) This compensation plan model is relatively new to network marketing. It has only been around perhaps the last couple of decades, to the best of my understanding. The binary had its unfortunate origins in the early 1990s in fraudulent gold coin programs, and its use later for other questionable products did not help. Those subsequent products were generally high-ticket one-time purchases such as consumer service or travel memberships, travel certificates or overpriced prepaid phone cards. By the end of the 1990s, and after many legal challenges, the binary was not held in great favour. Critics charged that the implementation of binary plans brought on legal and business problems. Companies and distributors tended to promote the plan rather than the product, creating accusations of a “money game.” Often plans had a one-time sale requirement which created a something-for-nothing atmosphere and appearance of payment for headhunting recruitment. This is where the binary plan got its bad reputation. Today this is different, just make sure though, that when you join a company with a binary plan that it is a company that promotes the twelve important characteristics to look out for when choosing a compensation plan. These characteristics will be covered a little later in this article.

But this bad rep doesn’t make binary network marketing pay plans any less lucrative for those who work them correctly.

I’ll explain. A binary MLM pay plan has two sides because a person is only allowed to have two people on their first level beneath them. And this is the same for their two people and those people’s people. And so on. The primary limitation is that distributors must “balance” their two downline legs to receive commissions. Balancing legs typically requires that the number of sales from one downline leg constitute no more than a specified percentage of the distributor’s total sales. Since you can only sign two people directly under yourself, you end up with a structure that has two “legs” — two spots that in turn have all the other spots under them. In any given pay period, the two legs will likely be unequal (one will have generated more sales than the other). A binary system pays based on the volume of the weaker of the two legs. There is usually some mechanism to carry the unused volume of the stronger leg forward to the next pay period. Even though this structure encourages spillover (that is, you will likely have people placed under you by your upline), those people generally end up in one leg, and you must balance that volume with recruits of your own (in your other leg) in order to benefit from that spillover. Don’t be fooled by “spillover”. Although there is more potential for this to occur with a binary, it only really happens when you fully understand where you are being placed, and demand to be placed in the “power leg” or “outside leg”. Another aspect of binary Network Marketing pay plans is this concept of every binary having what’s called a ‘powerleg’ in it. This powerleg is the very outside downward line of distributors making up each of the many pyramid shapes in one’s organization. Let me give you an example… Say you are in the left powerleg of the company’s biggest binary group. You have 168 people in your group so they’re all beneath you and your first two people. Some are on your left side with the remainder on your right side. They are positioned throughout your organization in a varied layered approach but no matter what — you have every position in your outer two sides filled. Why?

Because this is just the nature of the binary network marketing pay plan. The outside two ‘legs’ are filled up automatically no matter what.

You have two people on your first level, four on your second, eight on your third, and so on… So the two on your first level, the outside two on your second level and the outside two on your third level, and so on, make up your powerlegs — which, in this example, your left powerleg is part of the binary network marketing pay plan company’s biggest binary group’s powerleg. So what happens then? This… Every person in the left outside side of your pyramid shaped organization benefits from having all the other left outside powerleg people above them. And why is this? Because all those people above them in this shared outside leg most likely have their two first positions filled on their frontline level so they’re automatically forced, by the company, to put their next person on their outside left or right leg. And when they are forced to put a person on their left powerleg, which is shared with you, that person is placed beneath you and everyone in your left side organization leg. This placement of people beneath you in your powerleg, shared with those above you, is called… ‘Spillover’.

The most hidden, overlooked, or never revealed aspect of binary network marketing pay plans is that spillover only occurs into powerlegs and NOWHERE ELSE

At least I haven’t heard of it occurring elsewhere. So all these heavy hitters above you are only having their new recruits being placed in your left powerleg that is shared with them. Not in your left side outside of your powerleg. Not in your right powerleg. Not in your right side outside of your powerleg. Nowhere else. And they have no control over this because it is all usually done automatically by the company and special software they have to figure out this powerleg placement. So, since these new recruits most likely aren’t getting placed in the right side of your organization how does this right side get built?

By you!

You can’t join, sit back, relax and expect the big buck checks to come rolling in because your binary network marketing pay plan has ‘spillover’. You have to actually get people to join with you and then place them on the right
side of your binary. In most cases you’ll only get asked by the company “left side or right side” when you call them to sign up that new distributor. And you would say “right side placement please”. So, what would it matter that you have this spillover occurring if you are not able to recruit anybody into your network marketing organization? You wouldn’t make any money because you need organizational balance. You don’t benefit anything without that. You’d eventually quit. And that’s what most people do. They get entranced with this binary network marketing pay plans concept of spillover. They imagine themselves as having found the easy way to network marketing riches. They join. They talk to a few people they know and maybe get a couple of small paychecks. And then it all cools down as far as the growth goes.

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