Binary MLM Plan is one of the most commonly used compensation plans by the majority of network marketing companies.
Do you know why?
The primary reason is that it’s very much easy to use compared to the other ones and also it’s beneficial for both the users as well as the plan owners equally!
Hence, this blog intends to explain the workings of the Binary MLM Plan easily, so that it will be useful for many who are very much interested in the network marketing sector.
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What is Binary MLM Plan?
According to the dictionary definition of the term ‘binary’, it is something that denotes a system that uses a base of 2.
Hence, in Binary MLM Plan, the distributors are divided or expanded in the form of a binary tree. A sponsor can only have two distributors or an independent business owner under his direct downline.
Explore More to Know The Working Of Binary MLM Compensation PlanThe persons coming directly under a sponsor are called his/her frontline distributors.
Consider the above figure, for a more detailed description of the Binary MLM Plan. We can see that persons B and C are the direct distributors coming under sponsor A.
B and C are called the frontline distributors of A, and the persons coming under B like C, D, E, F, G, etc are called the Downline distributors of A.
Remember, as we have mentioned above, a person can only have two members under him directly. This process can go as such to infinity levels and are sometimes known as 2-by-infinity matrix plan.
Also, there may be times where the two people sponsor recruits may always be placed on the same level.
It may occur in situations like when a person in your upline recruits new or more than two executives as a part of building the sales of the network marketing company they are working for!
This process is called SpillOver and will be discussed in the next section.
Keep reading!
SpillOver
For explaining the term SpillOver, consider the figure given above. Here, you can see that B, C, and D are the ones recruited by A.
But A can only place two people in his frontline. So the next or third member he recruited is placed under B.
So such situations arise when a sponsor deploys more than two members and this process is called SpillOver.
Moreover, there will also be times when your upline sponsors recruit more than two persons, then the additionally recruited people will be placed under your frontline!
SpillOver can be cited as an advantage of the Binary MLM Plan. Well, we will see why later.
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Basic Structure of Binary MLM Plan
In a binary MLM structure, there will be two subtrees(as you all know by now!). One subtree or leg is called the Power Leg and the second one is known as the Profit Leg.
Power Leg
Power Leg is the branch where the new distributors will be automatically placed when they join the MLM organization. The binary tree generally grows in respect to the growth of the Power Leg.
If the places are already occupied, then the additionally recruited persons will be placed under the Sponsor’s Power Leg. This is called SpillOver as we discussed above.
Profit Leg
The major difference between the Power Leg and Profit Leg is that Profit Leg does not promote SpillOver. Each and every distributor placed in the Profit Leg will be directly sponsored by their respective immediate distributors.
Just imagine a case where more new members join the MLM firm. What would it be then?
The new distributors then will be automatically placed under the Sponsor’s Power Leg.
Or, in other words, a binary structure will be complete when a person is added in the Profit Leg and the members become eligible for getting compensation!
Guess what, hence the name Profit Leg...
Some Advantages of Binary MLM Plan
- SpillOver
- Infinite Depth Level
- Quick Growth Rate in terms of money as well as position.
- Volume Driven Plan
- Allows to create multiple Business Centres
Profit Sharing Ratio In Binary MLM Plan
Binary MLM Plan follows a 2:1 or 1:1 profit sharing ratio. So that’s how normally the members in the Binary MLM Plan structure receives profit.
Also, this gives the MLM companies the right to decide on matters like profit sharing according to their policies.
Hope you guys got some basic information regarding the working of a Binary MLM Plan!
There are also a lot of other compensation plans like Matrix MLM Plan, Unilevel MLM Plan, Stair Step MLM plan, etc.