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Comparing the Binary and Matrix Compensation Plans

MLM compensation plan

A compensation MLM plan defines a direct selling business. It helps distributors understand how the team grows, and how they are incentivized. Compensation MLM plans define the scope of any direct selling business. Some compensation plans encourage individual performance, whereas some others enhance group sales. Compensation plans differ in their spillover systems, the extent of downlines, commission structure, etc. Binary, Unilevel, and Matrix are three major compensation plans. Administrators must understand the unique characteristics of each compensation plan before adopting it for their direct selling business. Let us compare the popular compensation plans: Binary and Matrix.

  • The depth of downlines is a major difference between the binary and matrix compensation plans. Matrix MLM plans come with a limited depth whereas the binary MLM plan is known for its unlimited depth of downlines. This has a considerable impact on prospects.
  • The width of frontlines is always limited to two, in a binary MLM plan. However, in a matrix plan, the width can be configured.
  • Commissions in binary MLM plan can be paid up to unlimited depths. This ensures more engagement and activity from the distributors. The commission calculation in a matrix MLM plan is limited to specific depths. However, this can encourage group sales within the team.
  • Existing distributors can rejoin in new positions or centers, in a matrix MLM plan. This provides multiple opportunities for them to grow and expand their business. In a binary MLM plan, rejoining is not possible.
  • Sales volume cannot be carried forward, in a matrix MLM plan. This can be frustrating as the extra sales could be nullified in the next sales cycle. In a binary MLM plan, extra sales volume can be carried forward to the next commission cycle, saving the efforts of distributors.

Understand the compensation plan in-depth, and choose them wisely for the growth and productivity of your MLM business. The direct selling industry can grow only when its distributors are enthusiastic and active. Thus, it is important to support them by choosing the right MLM compensation plan for their productive direct sales business career. 

This article was published on 08.03.2022 by Noufal P Bava
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