Top 5 MLM Matrix Pitfalls When Choosing a Compensation Pay Plan

Imagine being told that you can make tons of money by promoting a product or service, then after months of effort, you find out your pay plan is not designed to increase your chances of success. Want to know how to avoid that happening to you? Then read on.

Here are the top 5 MLM Matrix pitfalls in compensation plan designs.

1. Not getting paid on your entire down-line
2. Having To Start A New Group For Higher Bonuses
3. People Getting Left Behind
4. Confusing Commission Structures
5. Commission Pay Outs Too High/Low

In each MLM Matrix type there can be design flaws. When reviewing a pay plan, look for the potential flaws that may exist. Let’s look at the main three most common matrix models to see where those flaws may occur.

• Binary Matrix
• Standard Matrix (unilevel)
• Multiple Matrix (coded bonus)

Binary Matrix
The binary works like this: Your pay plan is split into two down-line groups, you have a left side of team members, and you have a right side of team members. These are called your left leg, and your right leg. In some business models you sponsor only one person per leg, while others let you sponsor 3 or more. But in either case, your business is split into two down-line groups.

One of the primary pitfalls in binary models is something called a “Weak Leg” Pay Plan. In most weak leg pay plans you get paid on less than 50% of all products sold by your team. Here’s how it works. Let’s say your left leg team has generated $18,000 in product revenue, and your right leg has generated $20,000 in product revenue.

In a “Weak Leg” pay plan you do not get paid on the leg that is producing the most sales volume. So the $20,000 in sales, sales by a team you worked hard to build, a down-line that you created, you don’t get paid on any of that! Let’s put that in monetary terms.

If your commission is 5% on that $20,000, you just lost $1000, and not just once, but every single month. Now imagine if your strong leg sales were $200,000 every month. That’s $10,000 a month or $120,000 a year in commissions you’re not getting. YIKES!

Let me ask you this...Would you take a job where you worked 40 hours a week, but they only paid you on 20 of those hours? Heck no, most people wouldn’t. So be sure to look for this when reviewing the pay plans in a Binary program. Getting paid on only half of your down-line's efforts just defies common sense.

Standard Matrix (unilevel)
The standard single matrix, also referred to as a Unilevel. This matrix type can be subject one thing that can happen in all matrices. The commission structure can be too complicated.

Let’s say you have two plans side by side and on the first one, the percentages are consistent at 5% across the entire 8 level pay plan. And in the second one, the percentages increase and decrease several times. 2% on level one, then jump to 15% on level 2, and up to 25% on level 2, then back down to 6% on level 3, then up to 12% on level 4, then down to 3%, and so on.

Remember “A confused person always says NO or quits." So avoid the pitfall of a commission pay plan that is confusing to explain.

Multiple Matrix (coded bonus)
The last pay plan matrix we’ll cover is the Multiple Matrix, you’ll hear it called a coded bonus pay plan. The structure is just what the name implies. It uses more than one of the standard matrix we just finished learning about.

You begin by building a standard matrix. Then as your team builds, you get to start a new matrix and build a second team. Now why would a person want to go start a second team? Why not focus on the people you've already enrolled? What’s the incentive to do this? The incentive is bigger bonuses and higher commissions in the second matrix.

There are two major pitfalls with this structure: The first is that People get left behind. Here’s how that happens. Let’s say a person gets enrolled into the initial matrix a sponsor starts. Now when that sponsor advances to start his/her second matrix to go after the bigger bonuses, where do you think he or she will focus their efforts? Yeah, in the second matrix, and the people in the 1st matrix get left behind. It’s the 1st pitfall byproduct of this business model.

The second pitfall is that every person will have to recruit more people than in a single matrix model. Each person has put in valuable time and effort to build their initial matrix, only to have to go find new people to sponsor in order to build a new matrix to get higher commissions and bonuses. This can be very challenging for the average person.

Be sure to look for all 5 of these pitfalls associated with matrix designs. Make sure you get paid on all the sales in your down-line, make sure the commissions are easy to explain, make sure you don’t have to sponsor more people to start an entirely new matrix, and make sure no one gets left behind. Find a Master Networker who can help you make good choices.