Compensation Plans

Compensation plans are often a reflection of a company’s personality!

Compensation Plans

Compensation plans are often a reflection of a company’s personality!

Compensation plans are often a reflection of a company’s personality. We understand that not everyone wants to utilize the same type of compensation plan – you want a plan that fits your philosophies and business model. MarketPowerPRO was built on the premise that a compensation plan must fit the company that it serves.

MarketPowerPRO can be setup with an array of different compensation plan types: Binary (50/50 or 1/3 – 2/3), Weak-Side Binary, Strong-Side Binary, Matrix, Unilevel, Stair-Step, Hybrid, etc. We have an extensive amount of experience with compensation plans – we have literally setup thousands of compensation plans over the last 25 years.

Beyond the base compensation structure, the system also clearly recognizes that bonuses are critically important to the overall payment concept. A number of bonuses, from Fast Starts to Generational, are available in our bonus library and ready to be seamlessly integrated into your system.

Compensation Plan Types

BINARY

 

Binary Compensation Plans

  • Power-Left Left Spilling
  • Power-Leg Right Spilling
  • Weak-Side Spilling
  • Auto-Balance Spilling
  • 50 – 50 Binary
  • 1/3 Binary
  • 2/3 Binary
  • Stair Step Binary
  • Weak-Side Binary
  • Strong-Side Binary
Binary Compensation plans can be easily described as two wide with infinite depth. While there are many varieties in terms of the organization of the two legs and where new distributors will be arranged throughout the genealogy a binary compensation model will always have only two legs. Binary plans were first introduced in the mid to late 1980’s by various Multi Level Marketing and Network Marketing Companies. Because it’s width is restricted to only two distributors, sometimes they’re referred to as a 2-wide or 2x Infinity Matrix, however, a Binary is, in fact, a separate model entirely. Due to the way that the Balanced Volume calculates payout, every member in the up-line is guaranteed to get some profit for a successful sale. In any Binary, there is an outside leg, known as a Power Leg or Strong Leg and an inside leg, known as a Weak Leg. When new distributors are recruited they are placed underneath their recruiter and usually in the next available level of the strong leg. The weak leg is typically filled with members who have been directly sponsored by their immediate ‘parent’ distributor. Typically, whichever leg makes the least amount of money is referred to as the “pay leg” due to “balanced volume”. The members of both legs will be paid a percentage of the pay leg’s growth regardless of how much growth that person is responsible for or which leg they’re in. The difference between the strong and weak leg is usually not paid out, in a process called “flushing”. One of the fundamental benefits of a Binary model is that it only requires each member to recruit and sponsor two other people to join the opportunity. This can lead to exponential growth in a relatively short period of time. One of the reasons why Binary Models have become so popular for international organizations is that unlike some other types, it allows for multiple business centers to be created. Additionally, If a recruiter successfully recruits more than two people, the new distributor is added to the next available level in the strong leg and the profits are shared between all ancestors in the strong leg regardless of who recruited them. This is known as “Spillover” and helps to develop a team effort mentality and encourages collaboration.
MATRIX

Matrix Compensation Plans

  • Define By Width
  • Define By Depth
  • Re-Entry Matrix
  • Re-Cycling Matrix
  • Step-Step Levels
  • Grace Period
  • Bonus Pools
  • Spilling Management
  • Total Volume Capping
  • Personal Volume Capping
  • Maximum PV Per Leg
Matrix Plans also known as a “Forced Matrix” or “Ladder”. A Matrix is compensation plan model used in Network Marketing that specifies a certain width and depth. Unlike some other compensation plans, a matrix will limit the number of distributors a recruiter can sponsor on their first level. Most typically, there’s a limit of 5 or less. Some common Matrix models are 2×12, 3×9, 4×7 or 5×7.
As there is a fixed number of frontline distributors that any distributor can sponsor in a Matrix compensation plan, once you have filled those spots, any new distributors that you sponsor will be positioned under one of your existing frontline distributors. This process is what is commonly known as “Spillover”. Spillover does occur in the Matrix compensation plans structure however, it happens most frequently in Binary models. The fixed structure of the frontline distributors for any one Business Center promotes and encourages teamwork and collaboration. As distributors with full frontline levels sponsor new people, they are forced to place them below existing distributors. Then, in turn, they support and help those new Distributors to do the same. While helping each other to build out their own downlines, they’re growing the business as a whole.
UNILEVEL

 

Unilevel Compensation Plans

  • Unlimited Pay Levels
  • Re-Entry Matrix
  • Re-Cycling Matrix
  • Step-Step Levels
  • Grace Period
  • Bonus Pools
  • Spilling Management
  • Total Volume Capping
  • Personal Volume Capping
  • Maximum PV Per Leg
Unilevel Compensation Plans have both an infinite depth and an infinite width. What this means is that while you can sponsor only one level of distributors, every new distributor recruited is on your frontline. The result is that there is no spillover.
A Unilevel model is considered one of the simplest and easily understood compensation plan models because of its lack of multiple levels when it comes to commissions calculations. In a unilevel, recruitment is extremely important because the only way to build your frontline is through your own direct effort. The disadvantage of building too wide is that support to new recruits thins out more quickly as sponsors divert their focus to new recruits. So if you are not a go-getter type of person, joining a company using the unilevel plan may be to your disadvantage. An advantage of this compensation plan is that it is easy for distributors to explain to their prospects.

 

Compensation Plan Types

BINARY

 

Binary Compensation Plans

  • Power-Left Left Spilling
  • Power-Leg Right Spilling
  • Weak-Side Spilling
  • Auto-Balance Spilling
  • 50 – 50 Binary
  • 1/3 Binary
  • 2/3 Binary
  • Stair Step Binary
  • Weak-Side Binary
  • Strong-Side Binary

Binary Compensation plans can be easily described as two wide with infinite depth. While there are many varieties in terms of the organization of the two legs and where new distributors will be arranged throughout the genealogy a binary compensation model will always have only two legs. Binary plans were first introduced in the mid to late 1980’s by various Multi Level Marketing and Network Marketing Companies. Because it’s width is restricted to only two distributors, sometimes they’re referred to as a 2-wide or 2x Infinity Matrix, however, a Binary is, in fact, a separate model entirely. Due to the way that the Balanced Volume calculates payout, every member in the up-line is guaranteed to get some profit for a successful sale.

In any Binary, there is an outside leg, known as a Power Leg or Strong Leg and an inside leg, known as a Weak Leg. When new distributors are recruited they are placed underneath their recruiter and usually in the next available level of the strong leg. The weak leg is typically filled with members who have been directly sponsored by their immediate ‘parent’ distributor. Typically, whichever leg makes the least amount of money is referred to as the “pay leg” due to “balanced volume”. The members of both legs will be paid a percentage of the pay leg’s growth regardless of how much growth that person is responsible for or which leg they’re in. The difference between the strong and weak leg is usually not paid out, in a process called “flushing”.

One of the fundamental benefits of a Binary model is that it only requires each member to recruit and sponsor two other people to join the opportunity. This can lead to exponential growth in a relatively short period of time. One of the reasons why Binary Models have become so popular for international organizations is that unlike some other types, it allows for multiple business centers to be created. Additionally, If a recruiter successfully recruits more than two people, the new distributor is added to the next available level in the strong leg and the profits are shared between all ancestors in the strong leg regardless of who recruited them. This is known as “Spillover” and helps to develop a team effort mentality and encourages collaboration.

MATRIX

Matrix Compensation Plans

  • Define By Width
  • Define By Depth
  • Re-Entry Matrix
  • Re-Cycling Matrix
  • Step-Step Levels
  • Grace Period
  • Bonus Pools
  • Spilling Management
  • Total Volume Capping
  • Personal Volume Capping
  • Maximum PV Per Leg

Matrix Plans also known as a “Forced Matrix” or “Ladder”. A Matrix is compensation plan model used in Network Marketing that specifies a certain width and depth. Unlike some other compensation plans, a matrix will limit the number of distributors a recruiter can sponsor on their first level. Most typically, there’s a limit of 5 or less. Some common Matrix models are 2×12, 3×9, 4×7 or 5×7.

As there is a fixed number of frontline distributors that any distributor can sponsor in a Matrix compensation plan, once you have filled those spots, any new distributors that you sponsor will be positioned under one of your existing frontline distributors. This process is what is commonly known as “Spillover”. Spillover does occur in the Matrix compensation plans structure however, it happens most frequently in Binary models.

The fixed structure of the frontline distributors for any one Business Center promotes and encourages teamwork and collaboration. As distributors with full frontline levels sponsor new people, they are forced to place them below existing distributors. Then, in turn, they support and help those new Distributors to do the same. While helping each other to build out their own downlines, they’re growing the business as a whole.

UNILEVEL

 

Unilevel Compensation Plans

  • Unlimited Pay Levels
  • Re-Entry Matrix
  • Re-Cycling Matrix
  • Step-Step Levels
  • Grace Period
  • Bonus Pools
  • Spilling Management
  • Total Volume Capping
  • Personal Volume Capping
  • Maximum PV Per Leg

Unilevel Compensation Plans have both an infinite depth and an infinite width. What this means is that while you can sponsor only one level of distributors, every new distributor recruited is on your frontline. The result is that there is no spillover.

A Unilevel model is considered one of the simplest and easily understood compensation plan models because of its lack of multiple levels when it comes to commissions calculations. In a unilevel, recruitment is extremely important because the only way to build your frontline is through your own direct effort.

The disadvantage of building too wide is that support to new recruits thins out more quickly as sponsors divert their focus to new recruits. So if you are not a go-getter type of person, joining a company using the unilevel plan may be to your disadvantage. An advantage of this compensation plan is that it is easy for distributors to explain to their prospects.

 

Bonus Library

Retail/Wholesale Bonus

The retail / wholesale bonus is standard to all three of the main compensation plan types (Binary, Unilevel, Matrix) and it functions exactly the same in each instance. A retail wholesale bonus is going to pay the difference between any wholesale and sales prices assessed on the order. For example, the customer would pay the retail price, the distributor pays wholesale, and the retail wholesale bonus would calculate the difference and then pass the specified bonus amount up to the distributors direct sponsor.

The retail / wholesale bonus also works within our preferred customer discount programs that we offer. For example, when a customer signs up for an Autoship, you may want to give them a discount. That discount is calculated into the retail wholesale bonus and the adjusted bonus paid to the sponsor would reflect that discounted amount, rather than a sale at the full retail price.

Fast Start Bonus

The Fast Start Bonus is one of the most commonly used bonuses in many Compensation Plans. This bonus allows you to create bonuses for sales of products or SKU’s. Fast Start bonuses typically apply to a specific product on an initial order or enrollment. These bonuses can be created as specific amounts or as a percentage of CV (commissionable value) and can be configured to only apply to customers or to distributors, or both. For example, one client may want to offer 20% of CV while another may not want to tie anything to CV and instead offer a specific dollar amount.

We also have the flexibility to include this in capping when it comes to the binary system. For example, typically in a binary system, you’re going to sum all of your commissions for the period then determine and set aside a maximum threshold of what you want to pay out in that period. If you’ve set a 60% cap, which means 60% of the CV taken in for that week can be paid back through bonuses.

Typically, the only thing under the cap umbrella is the binary bonus and the matching bonus, but we do have the flag here that if you decided you wanted the fast start bonus to be under the cap, it can also be included under that cap, which means if you then went above your 60% for the week, it would go through and reduce every single paycheck and bonus by that amount that you’re overpaying. (Note: Capping is only available to Binary systems.)

Since fast start bonuses are really built as a method of motivation to sell the product, most companies are not going to want to cap those bonuses. Additionally, fast start bonuses can be applied to recruitment. However, as the industry has shifted more and more on product sales and away from recruitment, we see this far less frequently than we used to.

Fast Start 2-Up Bonus

The Fast Start 2-Up Bonus is typically paired with a Fast Start Bonus and is essentially a duplicate bonus structure with more flexibility. Because a Fast Start bonus is configured by SKU it is limited to a specific product line or SKU. An additional Fast Start Bonus gives us the flexibility to allow different product lines or SKUs to have different Fast Start Bonuses associated with them.

In a client use-case, they had a line of customer SKUs that they wanted to pay out and trigger a particular way, but additionally, they had a set of what we call reseller SKUs that they wanted to be commissioned differently. In this case, we would configure all of the customer SKUs under the regular Fast Start Bonus and the reseller SKUs under the Fast Start 2-Up preventing any interference from the separate bonus structures.

In many cases, client’s Custom Fast Start Bonuses are programmed through a combination of Fast Start and Fast Start 2-Up Bonuses.

Multi-Tier Fast Start Bonus

A very popular and commonly used bonus is the multi-tier fast start bonus. The multi-tier fast start bonus is basically an expanded version of the standard fast start bonus. A typical fast start bonus is limited to two levels, a multi-tier fast start bonus, however, can be unlimited. No matter how many tiers (unlimited) that you want to enable. It’s also configurable by rank, for example; your multi-tier bonus may pay on 2 tiers at Silver, 3 tiers at Gold, etc.

This bonus builds purely off of an enrolling sponsorship lineage. In binary, unilevel, matrix, each exactly the same. The multi-tier bonus is meant to reward enrolling sponsorship efforts. So, in a binary where you have spillover, you have people that you didn’t necessarily enroll. You will never receive a multi-tier or even a fast start bonus off of anybody that you’re just a placement sponsor of.

We also have some new just functionalities here. In our the international systems you can offer different skews by country and you can pay out different fast start bonuses for those skews. This is useful because you could technically have the same skew in both countries. However because markets and economies are different between countries, sometimes we don’t want to pay out the same bonus amounts as in areas that have higher ticket prices. This allows us to set up just completely separate bonuses by country technically for the same skew.

PowerStart Bonus
Super Fast Start Bonus
Jump Start with 3 Bonus
AutoShip Bonus
Active Agent Bonus
Car Bonus

The Car Bonus is another type of rank achievement bonus in the MarketPowerPRO system. This bonus structure enables the ability to set a specific dollars amount to be paid for every month that the distributor qualifies for the specified bonus rank.

The Car Bonus is not meant to be used as a one-time bonus because it pays out every month in which the distributor qualifies. Regardless of whether your organization operates on a weekly, bi-weekly or monthly commission schedule, the Car bonus is configurable allows you to only pay out on a monthly basis.

The Car Bonus is available in Binary, Matrix, and Unilevel based Compensation Plans.

House Bonus
Matrix Infinity Bonus
Unilevel Infinity Bonus
Coded Bonus
Downline Commission Bonus
Matching Bonus

The Matching Bonus is available in all binary, matrix, and unilevel based compensation plan types. In a matching bonus, the sponsoring distributor receives a commission based on the bonus earnings of distributors they’ve sponsored. A matching bonus typically applies to a level or rank bonus in unilevel or matrix commission plans or any retail/wholesale bonuses the sponsored distributor may have earned. The matching bonus is configurable to any number of levels and is independently configurable by rank.

For example, if there’s a 10% matching bonus, and distributor A sponsors distributor B; When distributor B earns a rank/level bonus, retail/wholesale, or any other applicable bonus or commission, distributor A – the sponsoring distributor would receive a 10% match of that.

In a binary, when it pays a match out it’s going to pay on the binary earnings of the personally sponsored and will usually be under any commission or bonus cap in place.

This is also a bonus that only rewards personal enrolling lineage. So, you will never receive a first generation matching bonus off of somebody you didn’t sponsor because when the system goes to build the levels that you’re paid on. Now, the good news about it rewarding off of enrolling sponsorship is in systems like our unilevel and matrix, if you allow people to change a placement sponsor, you never lose the enrollment.

Additional Matching Bonus
Generational Bonus

Most bonuses are defined based on levels and organized by the people a distributor has personally sponsored. The Generational Bonus, however, is defined by generations in that distributor’s downline. Generational bonuses are built on rank and are most typically given to higher ranks. For example; ‘Once you reach Blue Diamond, you’re now qualified to receive a 2% generational bonus on your downline’. You would receive a 2% bonus calculated on your entire downline until it encounters another person at that blue diamond rank. The downline extending past that distributor would be paid to them as their generational bonus.

Generational bonuses can use multiple generations as well. For example, we could specify that a Generational Bonus extends two generations and both Blue Diamond and a Black Diamond ranks receive a Generational Bonus. In this case, let’s assume you’re a Black Diamond, your generational bonus is going to extend through your downline until it hits not the first, but the second Blue or Black diamond ranked distributor in your downline because both blue and black diamond ranks receive a generational bonus. The first Blue or Black Diamond ranked distributor would mark the end of the first generation and the second meeting that rank would be the end of the second generation.

The Generational Bonus is configurable for multiple generations, minimum ranks, and percentages paid. Additionally, what constitutes the end of a generation is configurable because in many cases, different companies will have differences in opinions on what a generation consists of.

Customer Acquisition Bonus (CAB)

The Customer Acquisition or CAB bonus is a bonus that will pay only on your retail customers. I do not receive commissions on my own order at all for this particular bonus. When I go and I sign up a retail customer, we can configure the system to pay either a percentage or an amount. That’d be a flat dollar amount every time you have a customer with an order. Some people have customer acquiring bonuses. We can use this for something like that. We set it to amount, and for every customer, you have that at least has an order, then you’ll get that flat dollar amount per person unless you want to do it by percentage, which is usually the most common.

The two ways we have of calculating this is it can pay on the commissionable value that’s assigned on the order. Doesn’t matter binary, unilevel, matrix. All three allow for defining their own commissionable value in those systems. If you decide it’s going to be on CV, then it’s going to go ahead and calculate and pay off of that. If you decide retail value, however, it will pay on the retail value that they paid. That also accounts for any preferred customer discounts. If they received a discount, you’re not going to get paid on the full retail because they didn’t pay the full retail. The system does adjust for that.

Instant Credit (eWallet)

Our Instant Credit bonus is a type of bonus logic that allows a company to assign a specific amount of credit points to individual SKUs and award that credit directly to the individual making the purchase. This is especially useful to companies that utilize “coins” within their system for product purchases as an alternative to direct cash purchases. The Instant Credit bonus is limited to clients using MarketPowerPRO’s eWallet and can only be used in Binary Compensation Plan based systems.

Achievement Bonus
First Order Bonus

The First Order Bonus allows a company to pay a bonus on a specified percentage of the Commissionable Value (CV) amount of a distributor’s first order. To explain, let’s assume that the product sold sells for $100 and $50 goes into the compensation plan. $50 would be the CV of that order. If that company offers a First Order bonus of 10%, that bonus would be $5 (10% of $50). A First Order bonus is not configurable by rank, meaning that this bonus would be applied equally to everyone regardless of their rank. In the event that you use a two-tier first order bonus, it would be based on a minimum and above since it cannot be based on rank. There is some customization available, for example, you may specify that your First Order Bonus applies to the first order with CV, because in most cases an enrollment or registration fee is not commissionable and does not carry any CV. First Order Bonuses are available in Binary, Unilevel, and Matrix based compensation plans.

Differential Bonus

The differential bonus has a good degree of flexibility and can be configured in a number of different ways. A standard differential bonus is built around SKUs by rank. In a differential bonus, a company has the ability to pay out different commission amounts to distributors of different levels or ranks and in turn, pay differential commissions to upline distributors.

To explain, let’s assume that a higher rank normally receives 2x the commission amount that a lower rank receives for the same qualifying product sale. When a lower level distributor makes qualifying sales, the difference in the full commission paid to the higher level vs the commission amount paid to the distributor of the lower would be paid to the first person in their upline that qualifies for that higher commission value.

Because of this, it allows the company to set aside x dollars in commissions to be paid out to the upline distributor. In the event that there is no upline distributor that qualifies, that amount would go to the company in what is typically referred to as “breakage”.

Differential Bonuses can come in a few variations like Differential with Twist or Differential with Rollup. The Standard Differential Bonus is available in Binary, Unilevel and Matrix Compensation Plans

Life Style Bonus
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