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How Can You Reduce Commission Overpayment in Binary MLM?

There are many factors that decide the success of network marketing companies. The compensation plan is a major one. It is the structure based on which MLM and direct selling companies reward their members. It determines how much commission and bonuses are paid to the sales representatives for their contributions to the organization

Binary MLM is a simple and powerful compensation plan. There are many ways that administrators and distributors can benefit from this plan. As the compensation plan offers quick growth, more distributors and entrepreneurs are attracted to the plan. This is very impactful for the industry as a whole. Still, there are various aspects of a binary MLM plan that you need to be aware of, prior to investing in it. Commission overpayment is an issue that some MLM companies might face, if not taken care of. Let us understand some ways to reduce the overpayment of commissions in binary MLM.

Flushing and commission capping can reduce overpayment to an extent. But there are more ways you can prevent this situation.

  • Instead of paying bonuses as a percentage of all weaker sales, pay by weaker leg volumes in cycles. This gives you time to gradually recover the commission payout.
  • Set a specific value of sales volume for stronger legs, and flush out the excess sales volume.
  • Certain binary commissions can cause overpayment of commissions within the systems. Identify these and apply capping plans appropriately.
  • Identify inactive distributors and stop paying them commissions for their downline sales or previous sales, after a specific period of time.
  • Customize your binary MLM compensation plan by analyzing the total commission for each sales cycle.

Bear these points in mind as they would help you build a sustainable business with binary MLM. MLM business has been around for a long time and there are many different models that can be successful. Binary MLM plan is one of the most popular compensation plans in network marketing. The concept is simple and easy to understand. This type of plan is very powerful and effective for network marketers, as it rewards them sufficiently for their efforts. It also empowers teamwork among distributors, thereby increasing their productivity.

This article was published on 06.03.2022 by Noufal P Bava
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