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 it serves.

MarketPowerPRO can be configured 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. Over the last 25 years, we have set up thousands of compensation plans.

Beyond the base compensation structure, the system also 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 ready to be 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 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 placed throughout the genealogy, a binary compensation model will always have only two legs. Binary plans were first introduced in the mid to late 1980s by various Multi-Level Marketing and Network Marketing Companies. Because it’s width is restricted to only two distributors, they’re referred to as a 2-wide or sometimes inaccurately as a 2x Infinity Matrix. However, a Binary is a separate model entirely. The way the Balanced Volume calculates payout, it guarantees every member in the up-line 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. New distributors are placed beneath their recruiter and usually in the next available level of the strong leg. The weak leg is typically populated with members directly sponsored by their immediate ‘parent’ distributor. The “balanced volume” concept designates the leg making the least amount of money the “pay leg”. Members of both legs are paid a percentage of the pay leg’s growth regardless of how much growth that person is responsible for, or in which leg they’re placed. A process called “flushing” causes the difference between the strong and weak leg not to be paid. A major benefit 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, users can create multiple business centers. Additionally, If an existing member recruits more than two people, the new distributor is added to the next available level in the strong leg and, regardless of who recruited the new member, profits are shared between all ancestors in the strong leg. This is known as “Spillover” and it encourages collaboration and team effort.
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 are also known as a “Forced Matrix” or “Ladder”. A Matrix Compensation model specifies a certain width and depth in Network Marketing. Unlike some other compensation plans, a matrix limits 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.
Once you have filled the spots that a distributor can sponsor, any new distributors sponsored are positioned under one of your existing frontline distributors. This process is what is commonly known as “Spillover”. While Spillover does occur in the Matrix compensation plans, it happens most frequently and more commonly associated with Binary models. The fixed structure of Business Center distributors promotes and encourages teamwork and collaboration. When distributors with full frontline levels sponsor new people, they must 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 grow 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 infinite depth and infinite width. This means you can sponsor only one level of distributors, but every new distributor recruited is on your frontline. As a result, 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.  However, recruitment becomes very important because the only way to build your frontline is through your own effort. The disadvantage of building too wide is that support to new recruits thins out more quickly as sponsors divert their focus to the newest 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). It functions exactly the same in each instance. A retail wholesale bonus pays the difference between the wholesale prices and retail prices invoiced to customers. 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 distributor’s direct sponsor.

The retail / wholesale bonus also works for the preferred customer discount programs we offer. For example, when a customer signs up for an Autoship, you may want to give them a discount. This 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 the commissionable value (CV).  When configured, it can be applied to customers or to distributors, or both. For example, one client may want to offer 20% of CV while another may instead prefer to offer a specific dollar amount.

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

Only the binary bonus and the matching bonus are under the cap umbrella by default. However, we do have the flag here that if you wanted the fast start bonus to be under the cap it could be. 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 in Binary systems.)

Since fast start bonuses function as motivation to sell the product, most companies will not want to cap those bonuses. Additionally, fast start bonuses can be applied to recruitment. However, as the industry has shifted more and more to 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 as 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 offers the flexibility to allow different product lines or SKUs to have different Fast Start Bonuses associated with them.

A client use-case had a line of customer SKUs they wanted to pay out and trigger a particular way.  In addition, they had a set of reseller SKUs that they wanted to commission 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 to prevent any interference from the separate bonus structures.

In many cases, client 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. It is basically an expanded version of the standard fast start bonus. A typical fast start bonus is limited to two levels, while a multi-tier fast start bonus can be unlimited. You decide how many tiers (unlimited) you want to enable. This bonus type is 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 on an enrolling sponsorship lineage. In binary, unilevel, matrix, it functions exactly the same. The multi-tier bonus is meant to reward sponsorship enrollment efforts. In a binary, where you have spillover, you have people that you didn’t necessarily enroll. You will never receive a multi-tier or fast start bonus from anybody for whom you’re just a placement sponsor.

We also have some new functionalities here. In our international systems, you can offer different SKUs by country and you can pay out different fast start bonuses for those SKUs. This is useful because you could technically have the same SKU in two countries. However, because country-specific markets and economies differ, we don’t always want to pay out the same bonus amounts as in areas that have higher ticket prices. This allows us to set up separate bonuses by country, technically for the same SKU.

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 gives you the ability to set a specific dollars amount to be paid for every month in which 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 will 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 uni-level based compensation plan types. In a matching bonus, the sponsoring distributor receives a commission based on the bonus earnings of distributors they have sponsored. A matching bonus typically applies to a level or rank bonus in uni-level or matrix commission plans and any retail/wholesale bonuses the sponsored distributor may have earned. The matching bonus can be configured to any number of levels and independent of rank.

Consider an example of a 10% matching bonus where distributor A sponsors distributor B. When distributor B earns a rank/level bonus, retail/wholesale, or any other applicable bonus or commission, distributor A would receive 10% of that bonus as the sponsoring distributor.

In a binary, when it pays a “match out”, it’s going to pay on the binary earnings of the personally sponsored distributor 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 from somebody you didn’t sponsor, because the system builds the levels that you’re paid on. The good news about a system like our Unilevel and Matrix is that it rewards bonuses based on enrolling sponsorships and you can change a placement sponsor and never lose the enrollment.

Additional Matching Bonus
Generational Bonus

Most bonuses are 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 blue diamond rank. The downline extending past that distributor would be paid to him as his 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. If 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 different opinions about the meaning of generations and what they consist of.

Customer Acquisition Bonus (CAB)

The Customer Acquisition or CAB bonus is only payable on your retail customers. You do not receive commissions on your own order for this particular bonus. When you sign up a retail customer, we can configure the system to pay either a percentage or an amount. That would be a flat dollar amount every time you get a customer order. Some people have customer acquiring bonuses. We can use this for something like that. Unless you want to do it by percentage, we set a flat dollar amount and, for every customer order received you’ll get that flat dollar amount.

There are two ways to calculate this. It can pay on the commissionable value assigned on the order, and it doesn’t matter if it is binary, unilevel, or matrix. All three allow defining the commissionable value applicable in those systems. If you decide it’s going to be on CV, then it’s going to calculate and pay off of that. If you decide on retail value, however, it will pay on the retail value the customer paid less any preferred customer discounts. If they received a discount, you’re will not be paid on the full retail price 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 as 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 this bonus is 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. Some customization is available. For example, you can 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 is flexible and can be configured in different ways. A standard differential bonus is built by rank around SKUs. In a differential bonus, a company can pay different commission amounts to distributors of different levels or ranks and, in turn, pay differential commissions to upline distributors.

To explain, 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 level is 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 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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