Yoli Founder Daren Falter warns “Beware of Timing Hype!”

 

When to Join an MLM Company, work from home business opportunity.

By Daren C. Falter, Author of How to Select a Network Marketing Company

Don’t Be Fooled By These!

Here are three of the most common statements you’ll hear from people regarding the timing of their opportunity.

Statement: We’re just entering the momentum phase!

Truth: Every company claims to be entering the momentum phase, no matter if they’re brand-new or forty years old. They’re either lying about their momentum, stretching the truth, or don’t really know what the momentum phase is. Don’t take anyone’s word for it. If you want to review the true nature of momentum, go back to the beginning of this chapter and study it carefully.

Statement: Our company is ground floor.

Truth: This statement is so overused, and so often misused, that it no longer has any meaning. Just keep in mind that most companies that claim to be ground floor will leave you for dead in the basement. I advise my clients to wait at least two to four years before joining a company, if not longer. If a company is a great company this year, it will still be a great company next year. Sometimes it takes longer to determine if they’ll be successful long-term. Joining a start-up is usually the kiss of death. Once you’ve gained some experience, and built significant relationships in the industry, you can gain the experience necessary to join scrutinize and select a start-up company, but don’t just take the start-up hype at face value. Find out with whom you’re locking arms before its too late.

Statement: Our company is in pre-launch, which is even better than ground floor!

Truth: Sometimes a company will do what is called a pre-launch and start signing on distributors and sending out product. One purpose for doing this is to test the company’s systems with real-time activity. There’s nothing wrong with this if everyone participating in pre-launch is well aware of the potential dangers. However, there are other reasons for pre-launch that can be major red flags. Sometimes companies can’t afford to launch officially with their own financing, so they get assistance from their own distributors. They’ll use money from sign-up fees or initial investments in large quantities of product to finance the start-up of the company. Other companies use this as a gimmick to make their numbers look better. They stay in pre-launch for their first two years of business. Then, when they officially launch, they say, “We generated one million dollars in revenue in our first month of business,” when in fact they’ve already been in business for twenty-four months. It’s a classic example of the smoke and mirrors tactics that low-integrity people use to try to compete with the larger companies. My advice is this, unless you totally understand what you’re getting into, never join a pre- launch company. Having read this book, if you join a pre-launch company and your company goes out of business, you’ll have no one to blame but yourself.

Now a “pre-enrollment” phase is different. Pre-enrollment is simply a period of a few weeks or a few months where you can place people into the system in a pre-signup situation. No credit cards are drafted and no commission checks are cut. It’s just a time to fill the matrix with a few hundred or a few thousands eager beavers. If a company opens up a pre-enrollment phase, they must be capable of dealing with the potential explosion of product sales, or the potential lack there of.

Conclusion

Experts agree that selecting a company in any start-up phase is risky. Although there are some terrific rewards associated with being one of the first distributors in a network marketing company, the risks seem to outweigh the rewards. Leave the start-up phase to professional network marketers, risk taking entrepreneurs, and those who have nothing to lose. Selecting a company in the momentum phase can bring the same exciting growth, but at this point the risk is significantly reduced. Regardless of when you join, an entrepreneur’s primary concern is selecting a company that has long-term stability, not short-term, flash-in-the-pan profits.

Selecting a company in the stability phase is a much more inviting option than it once was as we proceed further into the twenty-first century. More companies and distributors understand the principles of dynamic marketing and can generally maintain healthy growth for decades. Once a company has been established in a country for twenty years or more, it may be more difficult to recruit new distributors in that country based on everyone’s familiarity with the program, but it’s still a viable opportunity. I’ve seen many distributors become top leaders in a mature company within twenty-four months. If you choose the right program, building during the stability phase can be effective, but there is still no better time to build a network marketing business than during the hyper-growth momentum phase.

And finally, the most important momentum in your company is the momentum you make. I’ve known hundreds of people whose companies experienced incredible momentum growth, yet these individuals didn’t take advantage of that growth and missed out on the opportunity of a lifetime. I’ve also known people who have joined companies in the advanced stages of stability or maturity that have created their own momentum within their company and have launched themselves to the top of their pay plan. Ultimately, the most important momentum is the momentum that you create yourself as an independent distributor. To achieve this, all you need is a stable company, and the heart of a lion, and you’re on your way to the top.

Special note on timing

Please remember the only timing factors I have discussed in this chapter relate to timing in selecting a company during a specific growth phase. I also briefly mentioned industry timing and indicated that the MLM industry is currently entering the momentum phase. Another important consideration includes the timing of the product industry with which you are associated. This topic was thoroughly covered in the previous chapter and should not be overlooked. Is your product industry on an upswing? Do current events, news, word-of-mouth opinion, and popular culture indicate a long-term increase in sales? Is the industry you are marketing in its momentum phase? How about timing in your own life? You may be convinced that network marketing is your destiny. However, if the timing in your life is wrong, you may be setting yourself up for a struggle that has nothing to do with the viability of the MLM industry or the company you choose. Many people end up blaming their chosen company, product, compensation plan, or they even blame MLM for their failures when, in fact, their woes are all a consequence of making the decision to join a company at a time in their lives that did not make sense. There are many timing issues to think about. Consider them all before making your ultimate choice.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter has launched a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter gives “Excellent Timing Tips”

8 Keys to Selecting an MLM at the right TIME,

Work from Home Business Opportunity

By Daren C. Falter

What does it take to Select the BEST MLM at the RIGHT TIME? Here are 8 tips you should consider before making your choice.

1.         The key to exponential profits in network marketing is not location, but timing, timing, and timing! Although timing could not be better for network marketing as an industry, every network marketing company in existence has its own time line, or its own wave. Although it may be an excellent time to associate with the network marketing industry, it may or may not be a good time to join a particular company.

2.         Most companies that claim to be ground floor will leave you for dead in the basement. I advise my clients who are new to MLM to wait at least two to four years before joining a company if not longer. If a company is a great company this year, it will still be a great company next year, and the year after. Joining a start-up is a high risk option and I only advise doing so if you’re a professional network marketer with advanced experience.

3.         If and when a company reaches around $50–200 million in annual sales, the company usually experiences a phenomenon known as critical mass. This critical mass marks the beginning of the company’s pre-momentum or momentum growth phase. During momentum growth, if the company’s foundation is built to last, a company can go from obscurity to renown in five to twenty years. Some companies have been know to launch with momentum and ride that wave for years. However, this is rare.

4.         The last stage of a company’s growth is the stability or maturity phase. This is a great time to have a large downline but a tough time to build one. The company is so well-known, distributors must be more skilled at handing objections, and many prospects will have already been approached several times. Growth in the stability phase is significant, but slower.

5.         Nearly all company spokespersons claim their company is entering the momentum phase whether they’re brand-new or even forty years old. These people are either lying about their momentum, stretching the truth to the extreme, or they don’t really know what momentum phase means. Don’t take anyone’s word for it. Do your own research or ask an objective, reliable authority.

6.         There are many reasons why a company will do a pre-launch, and they’re all bad. This is the worst time to join a company. If the company is great, they’ll still be great for years to come. Avoid the pre-launch phase unless you’re a professional network marketer and you’ve done advance scrutiny on the company and its founders.

7.         As a consultant, I recommend only major league companies to clients looking for the best network marketing companies. These are companies that have billion dollar potential and a proven track record.

8.         Some modern companies with experienced management, solid financing, and an undying focus on branding have literally skipped the start-up phase and gone straight into momentum. These companies are rare and worth investigating with diligence. Join my mailing list at  www.networkmarketingbook.com for tips on how to spot a true winner early.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter has launched a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter article “MLM Comp Plans Explained.”

Network Marketing Comp Plans – Work from Home Business Opportunity

How to Scrutinize an MLM Pay Plan

PART I: What is an MLM Compensation Plan?

By Daren C. Falter

As I write content for the network marketing industry, I often forget that a large percentage of my readers do not have any experience with or knowledge of the network marketing model. For clarification, I want to review the basics of network marketing compensation plans and how they work. Network marketing incorporates a system of paying independent distributors not as employees of a company, but as independent sales agents. All MLM distributors are paid commissions on the products they personally sell, and on the products their sales force (or downline) sells. The formula for paying distributors is commonly referred to as a network marketing compensation plan or pay plan.

Distributors earn commissions when they purchase product wholesale and sell it retail. They also earn commissions on any products purchased by or sold by distributors they “sponsor” into the business. These are called bonuses. To sponsor a new distributor simply means that you’re the one responsible for introducing that person to the distributorship. There are usually special bonuses and recognition associated with the sponsorship of new distributors. As you accumulate more distributors, generally you will produce a larger “group sales volume” and with that comes a larger commission check. Ultimately you are paid not just on your own personally sponsored distributors, but on the distributors they sponsor, and on the distributors they sponsor, and so on for multiple generations. The number of generations paid and the percentages paid on each of those generations are determined by the company’s compensation plan.

The word upline refers to distributors positioned in the compensation above you including your sponsor, and their sponsor, and so on. The word downline refers to everyone below your or your sales force. Retailing simply refers to the process of selling the company’s products or services at a retail price.

As I progress through these articles, I’ll be getting into some of deeper concepts that may confuse those new to network marketing. I apologize for this in advance. I wanted to cater some of this chapter to veteran network marketers who are trying to sort out the different nuances of MLM compensation plans. I’m happy to provide training on these ideas to my readers.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter article “Comp Plans, The Good, The Bad, The Ugly”

Network Marketing Comp Plans – Work from Home Business Opportunity

PART II: MLM Compensation Plans:

The Good, The Bad, and the Ugly

By Daren C. Falter

Compensation Plans: the Good, the Bad, and the Ugly

When I began investigating networking companies, I found more hype associated with a company’s compensation plans than with any other criterion, including product hype (and we all know how out-of-hand product hype can get). The purpose of the following comp plan articles is to first identify the various compensation plans used in network marketing today and then share with you the pros and cons of each plan. Now, many of my readers may not agree with everything I have to say in these articles, especially if they’re already involved with a network marketing company with a compensation plan that has some of the unsavory characteristics. But I can assure you that most network marketing consultants and trainers do agree with what I’m reporting. My comments and conclusions are based on years of careful and objective research, not on which company I’m earning money from at the time of my review.

Which Compensation Plan is the Best?

The four most commonly used pay plans in the network marketing industry are the breakaway, the unilevel, the matrix, and the binary. You may also hear about a hybrid plan from time to time, which is basically a combination of any two or more of the most common plans. We’ll also touch briefly on a few of the gimmick plans such as the two-up plan and the single-line downline plan.

Your job here is to review the following plans and choose the one you feel is the best. But remember, when someone is introducing their pay plan to you, they will say anything to make their plan look better. Many distributors feel their compensation plan is the best, regardless of whether or not they have compared it to other plans. Picking the right compensation plan can make the difference between success and failure in network marketing. Learn to look past the hype and the rumors, and concentrate on the facts. I decided to look at all of the plans on the market and then choose the best compensation plan. Here’s your opportunity to do the same.

In his masterpiece, Understanding Multilevel Commission, Mark Rawlins, a twenty-six-year veteran of the MLM compensation-plan-building business and proprietor of MLM.com, explains that a compensation plan must meet the following three goals: it must generate enthusiasm among distributors, it must encourage distributors to sell product and recruit distributors, and it must retain distributors. Let’s take a close look at the most common network marketing compensation structures and we’ll find out how we’re doing.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter explains “The Matrix Compensation Plan.”

Work from Home Business Opportunity

How to Scrutinize an MLM Pay Plan

PART III: The Matrix MLM Comp Plan

By Daren C. Falter

The Matrix

The matrix compensation plan started in the 1980s as an answer to some of the traditional compensation plans that were being used at that time. The matrix is everything its name implies. You start with a prearranged numerical matrix similar to an organizational chart for a large corporation. Most compensation plans are designed to allow you to sponsor unlimited numbers of distributors on your first level. With the matrix plan, you can only sponsor a certain number of people on your front line. Also, your front line distributors can only sponsor that same designated number of distributors on their front line. Distributors generally cannot sponsor outside the matrix, and there is a limit to depth. For example, in a 2 x 9 matrix, you sponsor two on your first level, four on your second, eight on your third, sixteen on your fourth, thirty-two on your fifth, sixty-four on your sixth, 128 on your seventh, 256 on your eighth, and 512 on the ninth level (or last level).

Common matrix configurations include:

2 wide x 12 deep

3 wide x 9 deep

4 wide x 7 deep

5 wide x 7 deep

7 wide x 2 deep

In most matrix plans, distributors do not earn commissions past the last pay level in the plan. Most matrix plans pay monthly, with commission checks being mailed around the twentieth of the month following the month in which they earned the commission check. The matrix sometimes incorporates fast-start bonuses, which are special bonuses paid to distributors to give incentive for them to immediately sponsor distributors and retail product. The matrix plan is used by about 4 percent of the companies I reviewed.

Let’s take a look at some of the good features of the matrix. In theory, distributors can receive spillover, which means they can have distributors who are sponsored by their upline fall into their downline. This benefits both the sponsor and the respective downline.

Because of this spillover theory, the matrix plan looks great on paper and can be exciting to present to prospects. Also, the matrix plan is easier to learn and teach to others. Matrix plans tend to be suited to buying clubs, service companies, Internet affiliate programs, and subscription sales companies that have predetermined monthly costs for the product or service because these programs are generally designed to pay out part-time commissions on fewer levels.

In a matrix plan, distributors typically know how many active distributors they will have to recruit in order to make “x” amount of monthly income. It is also easier to predict income potential on each level with the matrix. For example, a particular matrix plan may claim to pay $5 per person, per level. If you add up all of the possible positions that can be filled in the matrix, you will know exactly how much you can make. For example, in a 2 x 12 matrix, there are exactly 8,190 positions that can be filled. If each position is worth a $5 commission to the distributor, the plan can pay a maximum potential of $40,950 per month.

Now let’s look at the bad aspects of the matrix. On paper, compensation plans can look glorious. However, upon reviewing matrix plans in great detail, I discovered that most matrix organizations pay on about 15–20 percent of their “hypothetical” potential at best because not all of the positions in the matrix fill up in real life. Once a matrix is about 20% full, almost all of the new sponsoring activity occurs beyond the distributor’s pay levels. Even though his/her organization is growing by leaps and bounds, the distributor receives no compensation on distributors below the maximum pay level.

The forced matrix is a concept that seems to answer the above problem. In a forced matrix, each position on every level must be filled before distributors spill down to the next level. Theoretically, this would allow the distributor to eventually fill every position in the matrix. Unfortunately, due to the nature of the forced matrix plan, the distributor is left to sponsor most of their downline by themselves. In other plans, building a downline is more of a group effort and more emphasis is placed on creating synergy and teamwork. The forced matrix is one of the only plans that reward lazy distributors if they sign up under a dedicated distributor. Since all of the downline positions must be filled, a lazy distributor can essentially sit back and watch his or her downline fill up. If the distributors can succeed without doing anything … they won’t do anything. As resentment and animosity build in the downline, the organization eventually breaks down and everyone ends up losing.

If you establish a successful business and fill up much of your matrix, you will inevitably sponsor a hot distributor on your fifteenth, twentieth, or even fiftieth level and beyond. In the matrix, you can miss out on commissions that should be yours but aren’t since this hot distributor is beyond your payout levels, making someone else money.

People who promote matrix plans will always try to lure you in with the enticement of spillover. They’ll tell you, “If you get in now, you will have hundreds of people spilling into your downline, people you were not responsible for prospecting or recruiting.” However, the only time spillover will actually occur is when a dud signs up under a superstar distributor, remains active, but doesn’t recruit any distributors. The dud gets all the spillover while the superstar distributor, who works hard, is only rewarded for his or her personal efforts. Don’t be fooled by the spillover myth. With limitations on payout levels, it is mathematically impossible to create spillover for more than just a few people among your entire distributor force.

In some non-forced matrix plans, the payout levels are radically different from level to level. For example, a matrix plan might have a heavy payout level (like 30–40 percent) on the third level but a 5 percent payout level on every other level. Distributors might stack other distributors on the first and second level in order to get to this large third level payout sooner than it would naturally occur. This pushes volume and downline past the heavy payout levels and beyond the last payout levels so quickly that potential compensation is jeopardized. Matrix programs with level limitations that encourage any form of stacking should be avoided.

Matrix: Overall evaluation

The matrix plan can be a good plan for certain types of products and services. As a whole, it has not been accepted as a mainstream plan and is commonly utilized by smaller service and support MLMs, like sales lead generation programs and other support MLMs. Also, matrix plans are often being utilized for a new breed of MLM programs, called affiliate programs, which can be found frequently on the Internet. Affiliate programs are simply direct sales programs the pay one or two generations of commissions, not several generations like in network marketing. For some affiliate programs, a shallow matrix plans (two to three levels deep) seems to be an appropriate alternative to a more traditional MLM plan.

There is one matrix plan that has a better track record than the traditional matrix plans. This is the 5 x 7 matrix. This matrix plan and others like it behave more like a unilevel compensation plan because of adequate width and depth. If you are considering a matrix compensation plan for your main MLM program, make sure the compensation structure has a width of five to eight people and a depth of at least seven levels. The other plans, especially the 2x, 3x, and 4x plans, have proven to lack stability.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter explains “The Break Away Compensation Plan.”

Work from Home Business Opportunity

How to Scrutinize an MLM Pay Plan

PART IV: The Breakaway MLM Comp Plan

By Daren C. Falter

The Breakaway

The breakaway plan is historically the most widely used plan in network marketing. It offers the new distributor many options and carries with it some distinctive characteristics. The breakaway plan pays monthly and is characterized by high quotas and high commissions. The breakaway has been called the full-timer’s plan. In a breakaway, sales volume is accumulated through the end of the month, and checks arrive in the distributor’s mailbox around the third week of the following month. The breakaway plan makes up over 39 percent of the companies I reviewed, but most of these programs are fifteen years old or older. There were no other choices in former years.

Breakaway: The good

Unlike the matrix, the breakaway plan allows distributors to sponsor an unlimited number of people on their front line. This fosters a sense of unlimited, quick growth potential.

The Stairstep

In most breakaway plans, there is a preliminary compensation structure tacked onto the front of the plan, called the stairstep. As you and your new distributors purchase product volume, you systematically progress to higher and higher commission levels. If you’re doing a significant amount of retailing and are sponsoring people who retail the product, you have a chance to make substantial part-time income in the stairstep right from the start.

When you get to the top of the stairstep, you can’t progress any further on your own. Your incentive is to promote those below you to your level. As the distributors below you progress up the stairstep, those distributors will progressively make more commissions from their group product volume, and you make less until you’re making a typical 3–8 percent, with 5 percent being the most common. The purpose in paying more in the front of the stairstep and less in the back is giving incentive for distributors to constantly sponsor new distributors every month. As your commissions decrease in the stairstep, the product volume you’re being paid on drastically increases making up for the lost percentages.

Once these distributors reach your level, they go through a process known as breaking away, where they become independent from you, their sponsor. You can still earn commissions on your breakaways, but in order to earn significant commissions you must have a significant number of breakaway distributors on your first level. The more first generation breakaways you have, the deeper your payout.

Some of the more traditional pay plans, and some party plan companies, have a unilevel (we’ll explain this soon) type structure in place of the stairstep, but it behaves similar to the stairstep in purpose and in function.

Breakaway: The bad

Here’s the sticky part! In order to earn a percentage on your breakaway’s group volume (GV), you must fulfill a group volume requirement or GVR (a fancy name for a group sales-volume quota). This quota is made up of the product volume that you personally purchase and all of the product volume that your distributors purchase. However, once an individual in your downline breaks away from your organization, his or her entire downline volume no longer helps you qualify for your group volume quota. If you do not fulfill this quota each and every month with your non-breakaway legs, you don’t get a check on your breakaway legs (which incidentally makes up most of your income at higher levels). Some companies have even greater penalties associated with not making the numbers, like losing all of your breakaway legs to your upline! Watching your distributor breakaway is a mixed blessing. You’re excited for their success, but at the same time you are disappointed since the compensation plan instantly penalizes you. It’s kind of like watching your mother-in-law drive over a cliff in your new Mercedes.

GVRs range anywhere from $300 per month to over $7,500 per month, depending on the company. My research has shown that companies with group volume requirements of $500–1,500 or more per month can develop a significant attrition problem (or distributor fall-out). Companies with volume requirements of $2,000–5,000 or more per month encourage front-end loading, stock piling or garage qualification, and other unethical and unnecessary practices. Front-end loading refers to the action of loading brand new distributors up with more product inventory than they can generally sell within a month’s time. When someone becomes “garage qualified” this means they purchased inventory they did not need or could not reasonably retail in one month so they could reach a certain qualification level for increased commissions and recognition. Usually this inventory collects in the garage.

Imagine the number of distributors who join a program expecting to gradually build a tremendous group of thousands of distributors, only to be beaten and discouraged by constantly missing their qualifications for their paycheck. Rod Nichols, author of Successful Network Marketing for the 21st Century, states, “I know dozens of people who have gone deeply into debt buying products they don’t need, just to fulfill their group volume requirements to get a commission check. This is one reason you find people who have garages full of products. In the industry, we call this ‘garage qualified.’ The end of the month arrives and you are $2000 short on your group volume requirement. You call around to all your active distributors begging them to place an order, but they’ve already placed their end of the month orders. So, you break the credit card out and place the order yourself —another $2000 worth of products you don’t need.”12

Because of these characteristics, the breakaway plan has become known as the sponsor monster plan. Distributors must constantly bring on new distributors or risk losing their downline. Salesmanship and an aggressive sponsoring and duplication strategy are essential in a breakaway. Using the shotgun approach to recruiting in a breakaway is considered unethical by many network marketing authorities. In other words, many would not be as opposed to this plan if the recruiters using the breakaway plan were more selective in who they approached. Distributors using the breakaway plan should be up-front by letting potential distributors know what to expect. This plan is not for the part-timer, and it is not for anyone with a meek or mild personality. It is designed for the affluent, the highly connected, the extremely ambitious, the charismatic, and the sponsor monsters. These folks can make a bundle!

To be fair, many companies have realized the difficulties associated with breakaway plans and have acted accordingly to make the group volume requirements and other rules easier to deal with. Many plans have changed to become more user friendly, behaving similar to a unilevel plan.

Home Party Plan Compensation

Nearly every direct sales/network marketing company that promotes their product and opportunity through home party plans utilizes the breakaway compensation plan. However, party plan companies reward distributors with different payout percentages. Where a traditional network marketing company will generally pay out half of its commissions to those making the retail sales and the other half to the distributor leaders in the form of bonuses, party plan companies will pay out as much as 60–75 percent to the retailers while only retaining 25–40 percent for the leadership teams. This type of plan seems to work best for the party plan model, though it really comes down to the actual rules and quotas associated with each plan. Not all breakaway plans are created equal, so you must check out the rules, quotas, and penalties associated with each plan.

Breakaway: Overall Evaluation

The breakaway is still the most widely used plan in network marketing, because twenty years ago there really were no other choices. The breakaway is considered the old- school plan. It’s a full-timer’s plan, designed for well-connected, charismatic, heavy recruiters. For this type of person, the breakaway can be the most lucrative plan in network marketing. Many of the traditional breakaway companies are still recruiting new distributors heavily, especially in foreign markets where there are few other choices. However, the breakaway is more difficult for part-timers and newcomers. Over the last ten years, virtually no top performing programs have selected the breakaway plan. The breakaway plan is a dinosaur, and if it does survive over the next twenty years, it will be to serve the home party plan industry almost exclusively.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter explains “The Unilevel Compensation Plan.”

Work from Home Business Opportunity

PART V: The Unilevel MLM Comp Plan -

By Daren C. Falter

The Unilevel

The unilevel was developed as the answer to the breakaway plan. In fact, at first glance, the unilevel structure looks similar to the breakaway, but it is actually very different. The unilevel is one of the simplest forms of network marketing compensation structures, and one of the best. Unlimited width, limited depth, and monthly payouts characterize this pay plan. Traditional unilevel plans pay out about 30–50 percent of the company’s net profits. Most unilevels pay five to seven levels, with seven being the most common depth. Most have roll-ups, compression, and/or infinity bonuses (all of these terms refer to the process of product volume rolling to the next qualified distributor when distributors don’t qualify to earn it), allowing top distributors to be paid temporarily on deeper levels until downline distributors catch up. Volume

accumulates through the end of the month, and checks arrive in the distributor’s mailbox around the twentieth of the following month. Over 37 percent of the plans I reviewed were unilevel plans, but over 70 percent of the companies started in the last ten years are now using the unilevel. This percentage is growing.

The unilevel plan allows unlimited sponsoring on the first level. This creates unlimited income potential. Unilevel plans are fair to everyone, based on generally low group volume quotas and no breakaways. Unilevels are also characterized by lower personal volume requirements than breakaway plans. This makes it easy for most distributors to stay active. The unilevel doesn’t give as much incentive to front-end load or stockpile product.

Unilevel: The bad

In the 1990s, the unilevel was called the part-timer’s plan because of easy volume requirements and no breakaways. It has also been called the vanilla plan because it’s a plain-Jane structure.

In the 1990s, part-time distributors found it more appealing because they could increase their chances for success by surviving in the plan for a longer period of time without being forced out by heavy volume requirements, like those associated with breakaways. However, this part-time philosophy did not go over well with the breakaway crowd. For this reason, the unilevel usually repelled the big guns. They simply couldn’t make money as fast as they could in the breakaway, nor could they make as much. However, in recent years, due to improved rules and enhancements to the basic unilevel structure, these weaknesses no longer apply.

To overcome this part-time stigma, some top unilevel plans now offer lucrative infinity bonuses and other forms of compression to bring the big money into the plan. These bonuses are designed to allow top producers to draw upon commissions generated from deeper in the compensation plan. It’s working. Now some of the largest checks are being generated with unilevel plans. The unilevel plan is considered by many to be the most stable and lucrative plan in network marketing today.

Overcoming the average

To get rid of the plain vanilla stigma, pay plan innovators have enhanced the unilevel in recent years by offering several powerful incentives. First of all, distributors complained about not being able to earn money quickly, so now nearly every unilevel plan has a front end fast- start bonus, paying a special bonus on the first orders of new customers and distributors. Top MLM leaders complained that they could not earn the same kind of checks that the breakaway distributors earned. So the pay plan developers went to the drawing board and developed a couple of tools to help.

One of the most powerful enhancements to some unilevel plans is a structural rule called dynamic compression. Compression allows you to earn commission beyond the last level of your pay plan if that leg is still in the process of moving up the ladder of success. Commission not earned by downline members roll up to distributor leaders instead of becoming breakage (profits by default) to the company. Dynamic compression is only present in a handful of companies. Where dynamic compression is not present, it’s common to find some kind of infinity bonus. The infinity bonus is a misnomer, since no company could really afford to pay a bonus to infinity. However, it does help distributors temporarily dip down to deeper levels to capture profits. Whatever you call it, dynamic compression is one of the most important features in a network marketing plan. It overcomes many of the compensation plan functions and features that can discourage distributors. It pulls volume produced by leaders in depth up to those leaders who deserve to be paid on it. For example, a distributor who recruits ten leaders and produces $20,000 in monthly sales volume may be paid on generations deeper than someone who recruits two distributors and produces $2,000 in monthly sales volume.

In addition to these enhancements, top leaders expect some kind of powerful leadership bonus designed to reward top leaders. Leadership bonuses generally consist of taking a very small percentage (usually 1–3 percent) of the company’s overall monthly sales and dividing it equitably between the leaders. These bonuses can eventually pay out more than the standard monthly unilevel plan.

Front-end heavy or compressed plans

Even if you haven’t seen one of these, you’re likely to run into what we call front-end heavy plans, or compressed unilevel compensation plans. These plans cycle in popularity; they come and go, and then they’re back again. Compressed unilevels look excellent on paper and typically pay 15–45 percent on the first few levels of the plan, but leave very little for the backend. Developers of this plan contend that distributors can’t make money fast enough to feel encouraged to stay in the business. So they pay a lot of commissions up front. However, when you pay up front, you leave nothing for the full-time or professional distributors who want to make the big bucks.

Compressed plans are easy to spot since 70–90 percent of the promotion is focused strictly on the compensation plan. I’ve been in sales presentations where the products were treated like some technicality that had to be thrown in to make the plan legal. These programs resemble direct sales organizations that only pay on one to several generations of commission and have not been proven to be contenders among today’s compensation plans as of yet. Programs that encourage all width and no depth can sometimes unintentionally alienate distributors too soon. When distributors are taught to go wide, they can forget about the needs of their downline distributors, who are several generations removed. Also, the heavy-hitters can become discouraged by how long it takes to reach the big money that almost every good pay plan offers to those with extraordinary abilities.

House of Cards

One of the biggest complaints I here often about unilevel plans it related to maintaining monthly qualifications in companies that are no longer experiencing significant momentum. When the sales in the company you’re building start to flatten out, or if you choose to take your foot off the gas at some point in your career, there is always going to still be some maintenance you need to do in any compensation plan to maintain your check. However, some people feel that many of the modern unilevels can be a house of cards setting people up to lose their qualifications, and thus their income. Like having a tiny chip in your windshield, if measures are not taken fast, it can become a tiny crack, then a large crack, and then you lose the entire windshield.

Let’s say you have five different levels in your plan, namely: beginner, builder, leader, pro, and superstar (generally there are many more than five, but let’s use five for this illustration). If you want to maintain your monthly qualifications to be paid as a leader, you must rely on a certain number of builders under you, and a certain number of beginners under them, to qualify each month at their respective levels for you to qualify at your level. Likewise, a superstar relies on his or her pros, leaders, builders, and beginners to all maintain certain volume and sponsorship requirements to keep their status. If a single beginner located on the superstar’s 27th generation fails to qualify, unless the superstar or some other distributor in between the two fixes that structure before the end of the qualification month, the superstar and everyone else relying on that beginner’s qualifications does not qualify for their level, causing substantial overnight drops in everyone’s commissions.

Here are the cure’s I will recommend in this situation. First, be sure you totally understand all of the qualifications necessary to achieve the level you’re aspiring to reach in the compensation plan before you join. Ask around the industry and find out what others are saying about the ease of qualifications before you get started. It’s easier to say no to a comp plan before you start than it is to say no after you’ve referred two dozen friends into the company. Second, be sure to make “over qualification” a habit in your business. If your current level requires five legs on your front line doing $1000 in product volume per month and five active distributors in each of your front line distributor’s legs, make sure you commit to sponsoring seven to ten distributors who are doing $1,500 to $2,000 per leg each month. Then you must teach this philosophy to your downline as you build your business. If you’re always over-qualifying by a large margin, you’ll never have to worry about cracks in your windshield.

One of the factors that makes maintenance requirements hard in some unilevel plans is a lack of qualification divisions from the top of the plan to the bottom. For example, one comapny may have seven different “pin” levels in their comp plan (named for the recognition pin you wear on your lapel at each level). These seven pin levels represent everyone from the beginner to the triple diamond elite superstar. Another company have fifteen division.

Think of a compensation plan like a large hill. Let’s say you’re at the park and you’re trying to climb a steep hill with all of your family members. It’s much more difficult to climb a staircase of 10 three-foot-high steps than it is to climb a staircase of 30 one-foot-high steps. So it is with building and maintaining compensation plan qualifications. When there are more qualification levels, it’s easier to maintain your existing level over time since there are not hug jumps to the next level, or huge drops back to the previous level. Look for a plan with at least 15-20 different divisions of qualification, or maybe even more.

Unilevel: Overall evaluation

The unilevel is a fantastic alternative to traditional breakaway plans. The unilevel does not have the fast income potential of some of the front-heavy plans and plans that encourage front-end loading (buying lots of inventory up front), but it also does not have the high attrition rate (distributor fall-out rate). You’re not going to hear any of the horror stories that are sometimes associated with other plans. Although there are many variations, the basic unilevel plan can be a very fair and lucrative plan.

Avoid unilevel plans that are plain vanilla, and look for the enhancements I described. Try to avoid any unilevel gimmicks like two level (front-heavy) plans and plans that pay different percentages on every level. Compressed plans are ideal for affiliate programs but are not yet proven as mainstream compensation plans. In time we will see if the compressed plans will ever remain popular instead of continuing to come and go.

Avoid unilevel plans that have extreme qualifications or not enough steps in between qualifications. Ask around the industry and find out if the plan is known for its ease or difficulty in building and maintaining qualifications.

The unilevel is one network marketing payout structure that is here to stay. Governmental regulators in North America generally prefer the unilevel plan to other plans. Dedicated distributors who follow a proven system for a two-to-four-year period of time can have substantial results with this plan. With the right unilevel plan, top distributors can earn incomes that can definitely contend with the breakaway plans. Try to find a unilevel with at least 15-20 level divisions or even more. The unilevel can be a great choice for many distributors.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter explains “The NEW Binary Compensation Plan.”

How to Scrutinize an MLM Pay Plan – Work from Home Business Opportunity

PART VII: The NEW Binary Hybrid

The New Binary Hybrid – Best of Both Worlds?

By Daren C. Falter

A hybrid plan is simply a combination of two or more of the above plans. The most popular combination plan today is the binary/unilevel. At the moment, some might say that compensation plan designers have cracked the code on modern day compensation plans with the invention of the “new binary” with a unilevel matching or executive leadership bonus. This plan seems to offer the best of both worlds – all the benefits of the binary and unilevel plans without the drawbacks. Some feel the new binary is a radical plan and the math does not add up. Or in other words, what you see on paper and what you’re actually getting are two different animals. Let’s take an objective look at the new binary to see what we can learn.

How does the new binary work?

First of all, let’s break down the new binary to see how it works. Thought it might seem more complicated than the binary or unilevel by themselves, most people can get the basic concept with a basic whiteboard demonstration. If you want to view the binary diagram and the unilevel diagram from the previous section, this might be helpful to visualize this plan.

Like other plans, the new binary generally has retail commission incentives, one or more fast start bonuses, and leadership bonuses which sometimes include car incentives and the like. The structures that make this plan unique are what I call the enrollment bonus or the binary, and the matching bonus or the unilevel. In the enrollment bonus, new recruits are placed into a binary. Generally this binary is not the three business center stack that you see in most of the classic binaries, but you usually start out with one business center and you’re responsible for a left and right leg. Although some of the new binaries do a 1/3–2/3 split, most of the new plans do a 50/50 split meaning you earn commission on the match of the right and left legs. To simplify this process, trainers now refer to the two legs as the greater and lesser legs and they explain that you earn around 10% commission on the lesser leg. Before, we would say you earned 5% on the balance of the left and right leg. Both mean the same thing.

Unlike the classic binary, new binary compensation plans explain on paper that their plan can pay up to $10,000 per center per week. Some plans claim much higher payouts such as $12,500 per center per week, and sometimes even $25,000 and $50,000. We’ll comment on this claim in a moment, but first I’ll finish explaining the structure of the plan. Distributors build a right leg and a left leg and try to keep their volume in each leg as even as possible. When one leg takes off, we call this the “runaway leg” and all efforts are put into attempting to build the lesser leg to match the runaway leg.

In the binary side of the pay plan, everyone you sponsor and everyone your team sponsors are stacked vertically in long rows, distributor after distributor. If you want to understand how the unilevel portion of the plan pays, simply disregard the binary for a moment and take all of the distributors you personally sponsored and place them on your front line in a unilevel structure. If you personally sponsored two, place two on your front line. If you personally sponsored fifty, place all of these distributors on your front line. This is your matching bonus structure. Any distributors sponsored by your front line distributors are placed on your second level and so on. Based on sophisticated software technology, the computer can first calculate your bonuses based on how you placed people in the binary, then it will recalculate bonus commission based on the number of people you sponsored front line in the unilevel, plus all of their downlines. Those who recruit the most still earn the most, but they’re able to assist downline members by initially stacking that volume under newcomers.

Unilevel commissions are generally paid in a matching bonus meaning that you earn a percentage match on the commissions generated by distributors you personally sponsor, and a bonus on the distributors that your distributors sponsor up to several  generations. The matching bonus is generally paid on 4-8 generations. If you take all the volume designated to be paid in the matching bonus portion of the plan, generally payouts can range from 8-25% per level with the average being about 5-13% of the entire pool paid on 7 generations.

Remember, it can’t add up to more than 100% of the matching pool. Or you could say the average payout per level is about 5-20% on the entire payplan if you’re not calculating based on 100% of the pool. If you would like a great breakdown of how these plans work, you can generally find examples at  www.youtube.com or other video sites online. However, I’ll caution you. Some of the trainers who are explaining these plans don’t understand them so you might get some top distributor leaders misrepresenting their own compensation plan.

New Binary Hybrid: The good

You can’t argue with results. As you can tell, I’m a very results oriented coach. If I see a system, strategy, or structure that is getting results with another company or leader, I like to jump on the idea and break it down to see why it is so effective. The new binary is such a beast. It’s hard to be critical of a compensation plan that newer companies have used to break all time industry growth records. One young company has accomplished approximately $900 million gross sales in their fourth year using this plan. Is this kind of growth healthy? Time will tell. We could see a major leveling off and a struggle for survival, or we could see the company go on to break more records as they move into the “big boys club”. Other companies have achieved $100-$400 million in annual sales using a form of the new binary over the last several years. Why the success? I’ve spent that last six months breaking it down in detail and here are my findings.

At first glance, the new binary plan seems to compensate for the weaknesses of both the binary and the unilevel. For instance, the new binary solves the volume capping issues of the old binary by allowing distributors to earn matching bonuses or leadership bonuses. They can now continue building their income even while they’re hitting the wall with their earning in the binary portion of the plan. Most companies have set up check matching bonuses or some sort of sponsorship bonuses in the unilevel portion of the plan, thus giving distributors more incentive to continue to sponsor and recruit. This follows along the generally accepted philosophy among compensation plan designers of “reward the activities you want to see in your distributors.”

Although it is still debatable whether these numbers even work long term, it does seem that these compensation structures allow new distributors to get into profit faster than other plans. This phenomenon is not generated by a higher payout which some new binary endorses tout. In fact, new binary commission recipients may actually be earning less per distributor than the more classic binary plans. However, with the excitement of the matching bonus to motivate them, and with the inherent benefit of stacking distributors in long vertical lines to create synergy, this plan tends to attract new distributors faster than other plans, thus making in volume what can be lost initially in lower percentages.

New Binary Hybrid: The Bad

I have yet to see a binary hybrid breakdown on paper/internet that did not have major discrepancies, faulty mathematics, and outright deceptions. In most cases I feel the companies promoting these plans are simply not aware of these problems. At the very least, they were unaware of the discrepancies when they launched their pay plan, and now they’re adjusting commissions, cutting payout percentages and volumes, and capping paychecks more and more every month as they begin to realize their mistakes.

I’ve literally attended company conventions where corporate representatives are touting the virtues of their amazing and unique comp plan that pays more than anycomp plan. The next week I’m on the phone with the same corporate officers who are in a panic because the CFO told them they have to cut volumes on the leaders checks because they’re earning too much while at the same time new distributors are complaining about not earning enough. It’s a constant battle to try to balance these plans without paying out too much or too little. When developing a plan, companies need professionals experienced in compensation plan development, mathematics and accounting, and you also need input from top leaders who are experienced field distributors so you can make good choices in developing the plan.

Most new binary hybrids that are less than 4 years old have adjusted volumes, commission percentages, and qualifications in significant ways as many as five to twenty five times. Distributors may never find out about these adjustments. Many of my friends in new binary hybrids only know the changes, limitations, and volume caps based on their commission check reports.

In many of the new binary hybrid plans, the numbers flat out don’t work. One company can say they pay out $1,000 per business center per week and the company pays 38% of their revenue to the field. Another company pays as much as 48% to the field, yet they claim a $10,000 cap per business center per week. Some plans boast $25,000 to $50,000 in potential commissions per center per week. It becomes blatantly obvious that, although companies have different qualification rules, there’s a fair amount of smoke and mirrors being perpetuated in the MLM industry.

The rules associated with each plan are keys to actually determining the ultimate payout of each plan. The explanation you see on paper or on a website is generally not detailed enough to teach you every nuance of how the math works. If you’re an aspiring MLM professional and you want to make the best choice in comp plans, it would not bea waste of money to hire an objective comp plan expert to evaluate the plans you’re looking at to determine if the math works. If I were trying to pick a comp plan, I’d first start by researching the backgrounds of the individuals who actually put the plan together.

Binary Creep

Binary creep is a term often used among industry insiders, top distributors, and corporate officers, yet it is rarely understood fully by any of these parties. Binary creep refers to a phenomenon that has plagued binary pay plans for years. As a binary plan matures, in order to maintain the same payout distributors received during the first few years of launch, a company must pay an ever increasing percentage of the companies income to the distributor force. Most insiders assumed that binary creep was based on the fact that distributors over time will learn how to balance their binary organization, thus generating a higher percentage of commission and sending less breakage to the company, however this is not really the issue. Binary creep is caused when a large power leg is established and then the recruiting at the bottom of that power leg stops. Now you have thousands of distributors sitting on a large chunk of volume on one side of their binary organization and all they have to do is balance out the other side and they can cash substantial checks. When a significant number of distributors balance out the volume in a large, dead leg, this can create the phenomenon of binary creep. The company continues to payout banked volume over time, creating less and less breakage to the company.

Though most top MLM’s have not applied this solutions to their programs, there’s an easy fix to binary creep that will take care of this potentially serious problem. I’d rather not share this solution here since it has taken me half my career to get to the bottom of this serious issue. However I will offer this advice freely to anyone willing to contact me personally for the answers. Think of this as your reward for actually reading this far in my book, and for having enough interest in understanding compensation plans and enough initiative and courage to take action. You should be very proud of yourself. I’m looking forward to our meeting.

New Binary Hybrid: Overall Evaluation

The reason compensation plan designers combined the binary and the unilevel into one plan was to take advantage of the strengths of both. The binary is a great plan for rapid recruiting and for creating massive team synergy while the unilevel works better for rewarding distributors on their personal recruiting, duplicating, and leadership skills. Overall it’s a great plan.

Some might argue that it is more complicated to explain a hybrid plan, and it certainly can be. Others might say the written plans are inaccurate at best, openly deceptive at worse. Unlike some of the classic binaries of the ‘90s, the hybrids have safety valves designed to cut off leader’s commissions so they can’t earn too much for fear of bankrupting the plan.

Time will tell if the new hybrid binary will become the new compensation plan of choice, however, currently it has become the most popular choice in network marketing in recent years. In separate interviews with three of the industries most prominent

comp plan consultants, I asked which plan they would use if they were to launch a new network marketing company. All three preferred the new binary hybrid. Although I still recommend the unilevel, binary, and breakaway to clients for different purposes, currently I prefer the binary hybrid as my #1 choice.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter explains “Other Hybrids Compensation Plans.”

How to Scrutinize an MLM Pay Plan – Work from Home Business Opportunity

MLM Comp Plans PART VIII:

More Hybrid Comp Plans

By Daren C. Falter

Other Hybrids

Another popular hybrid is the unilevel/breakaway. Very traditional and proven companies like NuSkin, Herbalife, Shaklee, and other top programs use a form of unilevel bonus on the front of their breakaway plans. I usually don’t classify these as hybrid plans. Rather, I simply refer to them as a standard breakaway, or a breakaway with a fast start unilevel bonus, similar to the stairstep bonus we described earlier.

Some hybrid plans are far from proven and generally cause tremendous confusion among the distributors who are using them. The unilevel/matrix, for instance, is a completely unproven plan. My advice it to avoid any hybrid that does not have a track record.

Many hybrid are so complicated that they confuse the distributors who attempt to explain them to others. If you can’t understand the compensation plan your own company is using, you won’t be able to effectively explain it. I remember being a spectator in a network marketing meeting back in the late ‘90s. The person giving the compensation plan demonstration became flustered as he began to explain the complicated compensation structure of his hybrid plan. I asked if I could assist and proceeded to diagram the plan for the audience. I could tell even some of the leaders had not understood their own compensation plan until that moment. Compensation plans can sometimes be too complicated to explain. If you can’t explain it, you can’t duplicate your knowledge of the plan to your downline and to prospects. And if you can’t duplicate, you’re dead. Be sure to compare any hybrid plan you’re investigating to other plans in current use that are proven in the marketplace.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com

Yoli Founder Daren Falter explains “The Australian Two-Up Compensation Plan.”

How to Scrutinize an MLM Pay Plan – Work from Home Business Opportunity

MLM Comp Plans PART IX:

The Australian Two-Up

By Daren C. Falter

The Australian 2-Up

The poor Australians are taking a  beating for this when, in fact, it was us darn Yanks who introduced the 2-up plan in the United States in the mid-1980s. The 2-up, like the matrix, looks fantastic on paper, but when you put it into practice, it’s a disaster. The Australian 2-up is considered a gimmick compensation plan for reasons that are quite obvious to intelligent network marketers; no company has ever survived this plan. For this reason, we will not spend any time on this plan other than to describe what it looks like so you can avoid it. Only 2 percent of the companies I researched use the 2-up plan. The most common form of this plan is the 2-up, but there are also variations called the 1-up and the 3-up. All of these basically behave in a similar manor.

The 2-up works like this: you sacrifice your first two recruits to your upline sponsor. Then you start earning commissions on anyone sponsored after the first two. Since your first two recruits go to your sponsor, it stands to reason that the first two distributors sponsored by your first two distributors go to you. The Australian 2-up is famous for looking great on paper. It lures in thousands of suckers every year. However, even Australian network marketers can tell you that no one in their right mind would join a 2-up today.

Some consultant claim that the 2-ups go out of business because they pay too much up front instead of rewarding distributors in the long run. Others claim it’s because you have to give away your first two sales to your sponsor and most distributors will never recruit their third distributor, thus, they never get paid. Still other consultants argue that it’s not the plan itself but the type of products that are usually associated with 2-ups. Travel companies, financial training programs, tax reduction and avoidance training programs, and seminar MLM companies all with steep start-up expenses (usually $1000 and up) are famous for using the 2-up. They’re also famous for being here today and gone tomorrow. One of the most common models that has tried and failed at least a dozen times involves the purchase of a $1,200 audio series that teaches you how to avoid debt and invest your money offshore to avoid taxes. More and more travel companies are popping up every year utilizing the 2-up. If you encounter these programs, flee with your family to safety.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at  www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

ATTENTION: Breaking News!

Daren Falter will be launching a new company called Yoli. We will be introducing an incredible new wellness company. The founders of Yoli are Robby Fender, Daren Falter,  Corey Citron, Bobby Jones and Michael Prichard. To find out more about Yoli Better Body System @ go2.goyoli.com

Peter Kroesche is excited and full of confidence to be invited as a hand selected leader to work with these inspirational people again. Join our incredibly talented team as we share Yoli with new markets  at the very beginning of this great network marketing adventure! Yoli USA and Yoli Malaysia are open with Yoli Australia (not for retail). More countries soon, contact me.

Do you want to be your own boss and work from home, this is the home business opportunity that you deserve.

QUESTIONS ABOUT YOLI and The Better Body Company?  Email 1@goyoli.com