Here’s what a gal told me last night. She works a binary.
1. To get paid, Lydia needs to order $60 herself per month. This requirement can’t be met by getting customers. She has to order $60 of product each month herself.
2. On her friend Lulu’s $60 product order, she earns $3 on the repeat order (five percent), and a one time $10 fast start bonus.
3. To earn more on such an order, Lydia needs to order $120/mo herself, and then, she’s eligible for the “cycle bonus”…if 3 people purchase $60 on one side and 6 purchase $60 on the other side, on that same $60 original order, Lydia earns an additional $20. If she doesn’t do that, she’s back to her $3 on the repeat orders (consistency bonus, it’s called.)
Is this any way to encourage people to go after repeat customers?
Kim, I am SO glad you’ve opened this discussion! Right now I’m looking into the possibility of joining a company with a ‘hybrid’ comp plan — binary AND unilevel. I am not familiar with either plan, so I am doing my best to wrap my brain around it. I’ve been doing some online research about these 2 types of plans, but that was my main concern: will I get paid enough for building a customer base?
With my present company, Immunotec, I definitely am fairly compensated (20% commission on the price the customer pays for each product). This new company I’m looking into offers some products that Immunotec does not, and if I’m going to use them and tell others about them then I might as well consider making money at it. But if it’s not worth my investment and time, then I might just become a customer instead of a distributor.
So to shorten this long story, any info you or fellow NWMers can provide about a hybrid plan in regards to a customer base, I would be grateful for your observation and advice!
Karen
http://www.pioneeringhealth.com
I have NEVER understood how a binary helped anyone but the company!
If I am doing business in two legs, and only getting paid a portion of the lesser leg, seems to me that a LOT of MY money is being left on the table!
I like unilevel best, hybrid if possible so you can build the way you want to!
I work with a hybrid binary. We make $20.00 on each retail sale. We are required to purchase $69.00 monthly but I can sell that retail if I don’t want it. Since I am sold on the company’s products I use that much easily. The monthly requirement does not vary.
I think with every company you have to research it, and you have to be comfortable with their integrity.
Hi Karen
I am working a binary right now also with a hybrid plan. This binary is a great because your customer purchases qualify you to receive commissions. In other words if I forget to place an autoship order for myself but have 2 or 3 customers I still qualify to receive full commissions. Our Hybrid Plan is geared towards our matching commissions on our personally sponsored people – and that includes their group volume, their personal volume and their customer volume – this can be very lucrative. Check the pay plan of the one you are looking at. To us it was extremely important to get paid on our full volume – we chose a company that allows all extra volume over your qualifying amount to drop into your “lesser volume” leg thus allowing you to get paid out on everything. Hope you find the answers you are looking for to make your decisions.
My opinion of most binary plans is that they have created much of the hype in the industry.
I have a good friend that has 3/4 of a major juice company under him and his monthly check is around $400 because he is not balanced. Talk about a runaway leg.
I talk to people who tell me about the thousands they have under them in a binary program, and yet they are making almost nothing. And, I’m not talking about the ones who are kicking back andnot doing anything. I am talking about the part time person who is consistent, but has not been able to catch up.
Their own growth curve is unable to match what is happening to the “runaway” leg.
One other Obstacle I have with this type of plan is that you are always working against your strongest people.
What I mean is – you must place people in one of two legs, so you are always helping someone out when you sponsor others.
If Suzy, your best friend comes in and is a builder, creating a massive organization for you, and you sponsor someone, you will not place that person under Suzy, thus rewarding her for all of her efforts because that will further throw you out of balance.
So, Suzy works hard, and you work hard, and everyone on the other side of Suzy get the reward. Not Suzy.
Binary’s create quick money for BUILDERS, that is for sure. But not for the part timer’s and I’ve not really seen any that offer a viable retail program either.
Now, maybe I am wrong there. Maybe there are some products in a binary that have true retail value and are not a super high wholesale mark up.
Good food for thought, Kim.
EXPECT Success!
Jackie Ulmer
MLM Training BLOG
The biggest thing to look for is this – can you sell your products – one at a time or on monthly autoship and still make money. With a binary comp plan, you have to sign everyone up into one leg or the other – they count as distributors and you get paid accordingly. You, in addition, must “balance” legs and if you are not lucky enough to have an upline building your “strong leg” you will have a long, hard road making any money.
The company that Lydia is referencing is a very hard binary to work. I know because I was in it.
If your company wants you to “up your autoship” to get paid commissions, that’s a big red flag.
Sad to say, I’ve never seen a binary comp plan where you can actually retail your products if someone doesn’t want to commit to a standing monthly order.
I have quite a few people who order every few months. You better believe I wouldn’t want to lose those people by insisting they go on a monthly “autoship”. I’m happy to allow them to purchase what and when they want.
In order to make $10,000/mo. in the company Lydia is in, she would need approximately 1,200 people on a $120 monthly order and over 2,500 people on a $60 monthly order. Either way you look at it, that’s a lot of people. I need less than 400 on a $120 – $150 monthly order. Then you have to make sure they are balanced out properly or the numbers go higher.
Karen,
What a hybrid plan means is that it does not follow conventional comp plan structures. There are a lot of hybrids out there. It sounds like you are talking about a binary with a unilevel beside it that customers are placed into. That way, you can have occasional customers, where you really can’t in a binary.
For example, my company has a hybrid comp plan that combines the best aspects of a binary (weekly pay), an Aussie 2 up (3 upline members get paid on the first 100 bp of every member), a stairstep breakaway (we still get paid a percentage on volume that would “break away” in a stairstep breakaway), and a unilevel (we get paid unlimited width and depth on volume) and a matrix (we can place people under people and build deep – a matrix is limited in width and depth).
Roxanne Green
Oh dear, I think I recognise this exact plan as I’m in it. I absolutely love the “anyhing else is just juice” product and it’s done wonders for my health (and my family’s). I’ll take it until the day I die BUT I can’t make any money with the program. There’s even a weird thing whereby we lose money if the customer goes on autoship. We LOSE money if we get regular business for the company? Who thought of that one?
There comes a time when you love the company to bits but we are in business, after all. We’re in it to make money for ourselves, not the company.
Karen, I think a hybrid plan can be anything the company wants it to be. Can you start off as a customer and see how it goes then upgrade to distributor?
Kim, not all binaries are created equal.
I have to purchase 200 SVP per month to keep my business centers going. This can come from personal use or sales to customers. I make 10% on volume which is balanced on my right and left sides according to a graduated scale from 250 to 5000 SVP. Since I have 7 business centers, I can actually leverage a $60.00 sale, signle or repeat, to pay out on 4 different business centers, meaning that over time, my sales are earning me between 10 and 40%. It’s simple, clean and it works very well for me, to the tune of about 2-3K per month at this point. (3 years of working my business part time).
If I didn’t have my current company and had to start from scratch, I’d still look for the simplest and fairest binary plan I can find. I’ve studied them all, and the forced-matrix or stairstep breakaway plans, or even hybrids, seem too weighted in favor of the “early joiners” or the company itself at the expense of the bulk of distributors.
Roxanne,
You hit it right on the head!
I love how you articulated everything!
Best,
Scott
Man after reading all of these comments on comp plans It makes me never want to do any other network marketing company again. I have been in several over the years and never really made any money. I have to say though since I joined ITV Ventures finding customers is no longer a task as well as people wanting to join the business since our new business opportunity show is airing across the country on major cable stations, and the forced 4×7 matrix with spillover solves all of the problems of legs breaking a way and all that stuff.
There are Binaries and there are Binaries. I’m currently participating in a Binary Plan company, it’s a service, and I joined mostly for the service. It’s NOT my primary company. Any income generated will be a welcome perk. This is a newer plan than the Binaries I once knew. There is no time frame … we never lose anything because we haven’t accomplished x, y, z within a 30-day period. The money is always there for us. We are paid for customers and distributors, more for distributors. The pay plan seems great, especially since I am under one of the company’s biggest builders!
Having said this, in general, do many of the companies out there with Binary Pay Plans depend on people failing in order for the company to be profitable? If everyone could ‘flush’ every cycle, would the company go bankrupt?
And no, it doesn’t seem that for many of these companies, like the one you’ve described, Kim, building a loyal customer base is going to be a viable way to earn long term income.
Anonymous,
With ITV, don’t you have to buy the leads from the company?
Walter
Every time I read discussions about binary plans I’m always amazed. The next thing you know, in order to get paid, you’re going to have to throw salt over your left shoulder. Good luck with binary plans
Wow. That’s a lotta math going on there. What ever happened to making a % on your personal customer orders and a % on the customers of those in your downline, period? I work in a forced matrix. Spillover helps fill the groups, residuals go to unlimited depths. That’s about all the calculations I can handle!
Edie Elting
Nussentials
As usual, much pertinent information is left out. Probably not on purpose, but because Lydia isn’t fully aware of all the details. First, the fact that this company will offset your second autoship purchase every month if you’ve sponsored 2 people on on auto ship on each leg (customers or members) is what I would call incentive. Second, my wife and I have built a decent income in less than a year (over $1500/mo.) after attending one of your seminars Kim and using your customer models. We have no other real builders in our business. The reason it works is that the product works, this isn’t hype.
Lastly, I find it ironic that this company is a competitor of Kim’s new start up.
Conflict of interest? I think so…
I find it ironic that this company is a competitor of Kim’s new start up.
Well . . . most companies will be a competitor of Kim’s. 🙂
But regardless . . . there are some really bad comp plans out there. It’s a good thing to discuss. People need to understand why they might be spinning their wheels.
I did an analysis of a really bad comp plan in this still-unpublished video clip. It is amazingly bad . . .
Walter Reade (from Wisconsin)
Stan
About Me
In our binary plan in our company, which I think is the fairest I have seen, it would take around 600 people buying 100 dollars a month to earn 9000 a month—or it could be done with fewer people without going into details here. More importantly because this pays to unlimited levels it has a higher chance of stability–it goes deep, and deep is stable. I have seen binary’s that pay much less. The issue in any comp plan is “how is the money distributed?” Some companies have a small group of very rich and a small middle class. Others have a very large “middle class” allowing the average part timer to be able to make money—that is OUR company. And the customers are not distributors—their purchases happen whenever they want and simply add into the overall income.
Stan Lang
Hi Kim:
Wow! “I love the product and I love the company BUT I can’t make any money!” ???
How can you love a company that doesn’t reward it’s distributors for the work they do?
JMF says, Retail, Recruit, Retail, Recruit……
With this particular binary why would anybody stay with that company? You’d definetly have to have masochistic tendencies for sure.
My advice, find another company quick. You’ll thank me later. You’ll bank will thank me later too.
Much success
Craig Davis, RN
http://www.thegojinurse.com
My thanks to EVERYONE that responded with their input regarding hybrid pay plans! Not only here, but SEVEN of Kim’s readers emailed me personally with their advice and observations. I really appreciate the amount of support all of us supply to one another. It’s good to know we are not alone.
My task now is to mull over the info everyone provided so that I feel a bit more sure of my next step. I’ve got my work cut out for me!
Thanks again everyone…Karen
Terrific topic!
Walter – I love your video clip!
I don’t know too much about other comp plans but I do know that one other company had gotten involved with some years ago had a Binary Plan – UGH, I hated it! I vowed to never get involed with a company that had that kind of plan again.
Little did I know at the time, I was buying, loving and using the products of another company that I am today working as a business. Thank god, it’s not binary! If it were, I wouldn’t even consider doing this business.
Because I don’t know much about how other plans work I found Wlaters video to be rather enlightening… I was relieved when it got to slide #10. Relieved because that’s where my company comp plan fits in.
What I liked about the video clip is that it spells everything out clearly and honestly. Good job Walter!
I am currently working with a binary compensation plan and in my 20 years in this industry, this is the first time I have experienced measurable success. So I can’t agree that all binary comp. plans are created equal. I am constantly bringing in new people and many of my team members are doing so also, so we are continually adding new dealers pretty much daily. I would say a binary comp. plan is not a good fit for people who don’t want to actually work.
Re Annonymous’s comment – I joined ITV a few months ago. It seems like a piece of cake compared to what all these people are going through. If I hadn’t found this I would be out of the industry by now – where is the incentive – All these companies are making themselves rich, and a few top distributors. The rest is nothing more than carrot dangling. Sad that people put themselves through as much as they do before the wake up. Juliette Gray http://www.itvsuccessline.com
I had a guy pitch me on a company with a binary plan. I can see how someone who is naive to comp plans might be attracted to the concept.
The pitch was basically this — you sponsor two people, and then sit back while others above you sponsor people in your organization. No downside, he said, expect that you might get lazy while other people build your downline.
Sounds great, doesn’t it?
Of course, as has been noted above, you’re not going to get paid if someone builds down one side of your leg if you can’t balance it out. But a neophyte won’t be able to figure that out.
Walter Reade (from Wisconsin)
http://www.NetworkingTechTips.com
I just did a training call last night on evaluating companies and specifically comp plans.
When someone is new, it is so easy and tempting to get caught up in the hype of “matching bonuses” and someone else doing all or at least half of the work for you.
But, the most important thing is to FULLY understand what will be required of YOU (not your upline or the top gun) to qualify to get paid on all volume and all aspects of your pay plan.
Do your personal volume requirements go up as your team grows? Do your sponsoring and team building requirements go up as your team grows?
What does it REALLY take to get those matching bonuses and how much do those really amount to for the part timer in the business?
Full disclosure and fully understanding is critical. Otehrwise, we have one more person out there touting the negative side of MLM.
Holy cow. My head starts spinning trying to understand some of these comp plans. No wonder Kim harps on whether you can explain it in one or two sentences. And no wonder people resort to saying ridiculous things like “sit back and watch someone else build your business” … because they probably can’t understand the pay plan either. Or can’t explain it. Or don’t want to because it wouldn’t sound so great after all.
Edie asked what ever happened to making a % on your personal customer orders. Our company does pay us a straight percentage on our cusomer sales; it is based on the same model every other travel agency uses. There is no minimum pv, gv, lmnop. Doesn’t matter if you have a downline either. If you have customers, you get paid. Period. It doesn’t matter if you have one customer or 1000.
If you choose to recruit, you are paid a minimum of $50 for each personally sponsored plus a 50% commission match on their recruiting efforts.
This is an over-simplified version(Ala Kim Klaver!) of our copyrighted, protected comp plan. It does not include bonuses, residuals, or overrides on travel commissions. There are no time limits and no quotas. If you do the work, you get paid; be it getting customers or recruiting or both.
Gayle Wheeler
Travel Consultant
YTB Travel Network
http://www.SweetDreamsTravel.com
http://www.DreamTravelPayday.com
I am a distributor in the same company as Chris DeSantis (or if not, we have the EXACT same comp plan 😉 ). It is a binary, and here is why I love the concept: in many companies, if you sponsor just ONE person, and that person goes on to be successful, you can sit back and do nothing and get paid a relatively good income (when I was looking at 50+ companies to pick one, many of the companies bragged on this concept). To me, however, while I don’t want a “lazy” person to earn a lot of money (b/c effort and income should go hand in hand, at least in the beginning), it is also a consequence of our freedom to build teams as we see fit. Having personally sponsored two friends from my high school days, and being able to place them in the same team together (instead of them both being frontline to me and being competitors to each other), is worth having to get two customers or distributors to get paid.
Bottom line, for me, a binary is VERY fair to a part-timer. If I had a runaway leg, as has been described, I would pour everything I had into the other one and know that I would get paid for every single sale! And guess what, if I can’t build that leg and I was only successful because I sponsored a strong person, OR, one was placed under me by my upline, do I really deserve a large income?
Hi Kim,
I am a long time follower of yours & appreciate everything that you do for all of us!
As for Binary? Our company is in pre-launch until Sept 14, 2009.
We are being paid 90 cents on every dollar.. AND.. NO FLUSHES ! I wasn't sure if we are allowed to give out sites out, so if you give me permission to post it or someone would care to speak with me, I would enjoy sharing this exciting news!
thanks again. Susan