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I’m a big fan of games. From live sports to board and card games, I just really like to play games. CORRECTION: I like to WIN games! There are some people who play games just for the enjoyment of playing them-that’s not me. I’m a hyper competitive person, that’s just the way it is, and it applies to just about everything. However, if you don’t know the rules of the game, it makes it next to impossible for you to have a fair chance at winning against someone who knows all the rules.

Network marketing is no different-ever since the first time I saw a marketing plan in our industry, I’ve wanted to be the guy at the “top of the pyramid,” so to speak. Not only wanted to, but believed with all my heart that I can be the guy at the top. I’ve been involved with a few different businesses throughout the years, but for some reason, I didn’t make it to the top of the mountain. I showed the plan, I spun the circles, I cast the dream, and still no 7 figure, walk away income. What’s wrong with me?

If you’ve ever felt this way, then you’ve come to the right place. this post will be the first in a series designed to make you aware that there are rules to the game that you just may not have been made aware of, that have impacted your ability to achieve the success you dreamed of in network marketing.

The first secret is about compensation plans. Did you know that in network marketing, there is more than one type of compensation plan? If you did know that, you are far ahead of where I was, but I can almost guarantee that you don’t know part II of my question. Did you know that those compensation plans are set up to attract people with certain skill sets and personality types, and aren’t just designed for any and everybody? Here’s the interesting part-most people select business opportunities based on the personality type of the person sponsoring them, rather than their own. Why didn’t your upline teach you this? Well, in most cases I think it is just a matter of them not knowing that there are other compensation plans available. Most network marketers seek education and training specific only to their company, and so they never come across the information I’m giving you today.

We’re going to operate under the assumption that you were taught to build a network marketing business the same way that I was: build a huge list of names of all your friends, family and associates, stalk people in the mall, and buy business opportunity leads(don’t worry, I’ll deal with this in Part II). There are four main types of compensation plans in network marketing:

Unilevel-The plan most people are familiar with, as many of the larger companies use this plan, or it’s other variation, the StairStep Breakaway plan. In the Unilevel plan, the distributor can sponsor as many personal distributors as they want (width). Commissions are generally paid out on a limited number of levels below your business (depth). Unilevel plans are typically easier to earn commissions in-the companies set the volume levels lower, on average, than other compensation plans. However, the commissions earned are usually lower than other compensation plans, due to the limited depth payouts. Additionally, each distributor you sponsor becomes instant competition for your other frontline distributors, which creates serious challenges for recruiting friends and family into your business. Add into this mix the fact that you are responsible for training and management of your personally sponsored distributors, and it is easy to see that a certain skill set and temperament is required for this type of business. Particularly, this compensation model is geared towards experienced network marketers, or those who are very confident in their ability to recruit a large number of frontline distributors(the average network marketer sponsors 2-3 distributors IN THEIR CAREER).

Stairstep Breakaway-The one main difference between the Unilevel plan and the Stairstep Breakaway is the fact that in this plan, once you achieve a certain measure of business success, your business team breaks away from your upline’s business. Whereas before, that person was considered the leader of your business, now you are. In most cases, your upline will still receive an override bonus from your group, but it will be significantly less than the bonus they received when you were at a lower level. on the positive side, your commission levels increase dramatically as a result. The same challenges that exist in the Unilevel plan exist in the Stairstep Breakaway plan (frontline competition, heavy recruiting emphasis), with the added breakaway/override phenomenon. Again, if you are skilled at recruiting and managing your frontline distributors, this is a plan where you can make a significant walkaway income.

Matrix-Also known as the Forced Matrix plan, this plan has limits placed on both width and depth sponsoring, which obviously places a limit on commissionable dollars as well. This plan, however, eliminates crossline competition, by the process of spillover. If your frontline is full when you sponsor your next distributor, that new person goes under the next distributor in your matrix. This creates an incentive for cooperation and teamwork between the distributors on your team, as well as limits the amount of time your upline has to spend in sponsoring personal distributors, allowing them to spend more time assisting you in building your team. One of the largest drawbacks to matrix plans is that their commission plans are often variable by level, meaning that there is a greater emphasis placed on assisting one level of your team build their business versus another. Because of this, these plans are often hard to explain. This type of plan can work well for experienced MLMers or newcomers, but it is very important to make sure that you have a strong understanding of the compensation plan, and where your time should be focused.

Binary-The new kid on the block, the binary plan was first introduced in the 1990s. This compensation plan is the only one which appeals to network marketers at all levels, from those who are new to the industry, to part-timers, average networkers, and experienced network marketers. As the name implies, each distributor will have a maximum frontline of 2 distributors. Any additional distributors sponsored will spillover into one of the two downline legs, eliminating almost all crossline competition, and creating a very supportive environment for all distributors to succeed in. Commissions are typically unlimited by the depth of the group, and are based primarily upon the volume going through the group versus other plans which may focus on the level achieved. The downside? Binary plans are typically limited by the amount of income they can generate, very similar to a salary cap. Otherwise, distributors would be able to earn unlimited commissions, and bankrupt the company. However, most binary plans will allow top distributors to open additional business centers once they reach a certain point, thus opening their opportunity to generate additional income. In most circles, this compensation plan is the one recommended for new and experienced network marketers the most.

Is this the only factor to consider in choosing a business opportunity? Of course not, but this is one of the rules of the game that many network marketers never learn. They beat themselves up, thinking that they just stink at playing the game, when in fact they may have been playing a game they weren’t set up to win.

In part II I’m going to talk about lead generation, and how what your upline taught you about about that probably isn’t accurate either :) I would love to know your thoughts about this topic, so please post your comments below!

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