Tuesday, January 25, 2011

Binary versus Unilevel Comp Plans

I have been an MLM professional for two decades. Because of MLM being a "career move" for me I have taken the time to look at the different ways of being paid in MLM



As I have said in many of my emails, the vast majority of distributors in MLM (over 80%) will not build a business where their monthly compensation will outweigh the cost of their monthly purchase plan. It's not because MLM doesn't work; it's simply that the average MLMer will not CONSISTENTLY do the work.


This is no different from any other endeavor in life, which takes time to get good at. How many of you have ever signed up for dance lessons, yoga, a personal trainer, a real estate class, night courses, went on a diet....the list can go on for light years...the vast majority of people will not become successful in anything because of one main reason....Lack of Consistency.


MLM team building requires consistent recruiting over time. Like in all things in life (hey if you go to a gym right now...look around...about 80% of the people there are not in good shape and if you stick around you are going to notice that most of them won't be there 1 or 2 years from now. However, go ask the ones who are in shape and you will find they are consistent in their workout schedule and plan to do it forever)


So, getting back to making money in MLM...for most people in this industry the KEY to success is in finding out how much money you can make when you retail the products!


Two reasons...when you retail the products for a good profit it's easy to tell others about the program. I mean, if you are buying $100 worth of products and selling them for $200 you just made $100 and you can tell your friends about it!


If you can do this, you can also find that you can recruit them to make that kind of money also.


So for the vast majority of people a retail profit is key to success in MLM. Looking at our program and comparing it to most others (I have found no company paying out the kind of retail profit that Scent-Sations gives out on our standard suggested retail pricing...And our retail prices are not crazy in the market place...I mean, our candle stacks up against anything out there and most of the gourmet candles being sold are either priced exactly the same as ours or higher!)


Now we get to the 20% who are team builders. They know they must stay consistent and continue to talk to people each and every week they are in business. Over time, due to their consistency, this becomes easier to do, so they continue doing the "numbers" needed to add members to their teams.


We are a unilevel compensation plan. For me this is the best plan out there because it typically gives the "middle class" distributor more opportunity to make some money and without the stress of many other plans. The unilevel plan was the hottest plan of the 90s and in the 2000s, the binary plan became the hottest plan.


Why? Because the heavy hitters are able to make a fortune with them.


One of the things that a binary company does is offer free positions in their pre launch. So everyone jumps in to become a top gun. When the company opens officially, everyone buys their starter kit. (The company has a huge first month because everyone thinks they have just positioned themselves at the top of a huge downline.


What the binary is counting on is your ignorance of the plan.


Very few of those who jumped into their free spot are going to make money, because they are not a part of the 20%...and they just won't be able to do what a binary demands of them. Next time someone emails you about a hot new company giving out free positions ask yourself the age-old question..."Is there really such a thing as a free lunch?"


Here is a quote from an MLM professional who CAN make money in binary plans...see what even he says about them:


"Commentary:  In a binary plan company that had over 40,000 distributors, I set a record with the fasting growing team, top recruiter and fastest to diamond in the company history. So I know how to build a Binary plan. The problem was not my income; the problem was the income of the several thousand people on my team. It was laughable.


The smoke and mirrors of a binary plan is that in some cases, you have people on your team. Sometimes hundreds of people, yet those people rarely equate to actual income. This provides a new person with a false sense of success. The newest person sees people coming into their team, but no financial gain from those people. Companies are able to create momentum because of distributors getting a false hope by seeing one team grow even though they are not making any money.


Some companies also have a high product purchase requirement (up to $250) that many times leads to bottles stacking up in the garage as they hope for the future.


The good thing about the binary is the ability to create momentum and excitement over a short period of time. The bad thing about the binary is the reality of so many people losing money each month with a false sense of success.


Binary plans are also very back end weighted. They pay a handful of people really well and leave the vast majority of the distributors starving."