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The Binary Compensation Plan Explained - What are the benefits of this plan?

This is part one of a two part series on the binary compensation plan. Please click here to read part two.

If you’re new to network marketing, you are probably starting to realize that there are a lot of different compensation plans. One of the newer plans (created in the 1990’s) is the binary compensation plan. In recent years, this has become one of the more popular plans, especially with new companies.

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So, what are the benefits and advantages of the binary plan? One of the best things about the binary is that it is fairly simple to understand. I think this is huge, especially when you explain the plan to MLM newbies. Of course, the plan isn’t quite as simple as it first appears, but on the surface it’s easy to draw out and explain.

It’s extremely synergistic. Big word, what does it mean? Binary plans promote teamwork, and the more a team works together the better the plan works. Since you can only put two people directly underneath you in a binary, when you enroll more than two reps, you are forced to place new reps underneath someone else in your organization. Likewise, those above you may place reps directly in your downline. In other words, you can work together and build teams effectively.

When someone places a person in your downline, this is known as “spillover” and is often touted as another one of the benefits of the binary plan. Most heavy-hitters will build on the outside of their binary, leaving the middle open for their team members to build and “fill in” the center.  This is great for those who are on the outside edges of the binary, as they are going to get all of the spillover from the heavy-hitter in their upline. However, if you happen to get enrolled by someone and placed on an inside leg, you may not see very much spillover, if any at all and this can be discouraging, especially when other people in the team are talking about all of the amazing spillover they’re receiving.

Darren Falter does a great job explaining how the binary plan works, so I’m going to include his presentation here on this page as well. Note that the audio and video are a little out of sync (the video is behind by a few seconds, so at times when he’s highlighting things it’s a little hard to follow. You may need to watch it more than once to really grasp things completely.

What do you think of the binary compensation plan? Please leave me a comment and let me know!

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