In this post on Understanding MLM Compensation we will be looking at the advantages and disadvantages of a matrix plan. As discussed previously a matrix sets strict boundaries on width and depth of the MLM downline.
Advantages of the matrix plan
The first advantage of a matrix compensation plan is the concept of spillover. Because there is a limited number of front line spots, generally 2 or 3, any recruits above that number “spillover” onto the second generational level. This creates a compounding effect within the organization, as your spillover not only fills up your generational levels, but it also fills the levels of distributors beneath you.
A matrix plan is also easy to oversee. Because your frontline distributors will never be more than 2 or 3 people, it is much easier to invest yourself into your front line. This more personalized attention should in theory lead to greater reproduction of successful principles throughout your team.
Most matrix plans are very simple and straight forward. Things such as breakaways and legs do not apply to this type of MLM compensation. This type of network marketing pay plan is generally the easiest to explain to a prospective downline distributor.
Disadvantages of the matrix plan
Poor work ethic is a common byproduct of matrix compensation plans. People are often drawn to these plans by the promise of spillover and the idea that someone else will build your downline for you. Although this may draw large numbers of distributors, often these distributors are ineffective and unproductive.
Matrix plans ted to have a “Robin Hood” element to them. Those who are high achievers find that more of their commission earnings end up in the pockets of people who are not working hard, but simply benefiting from the efforts of the strong producer. The principle of spillover creates a mindset of allowing others to do your work for you.
Another disadvantage to the matrix plan is the strict limitations on the size of your team. A team is limited by the potential spaces in the matrix. For example in a 3 x 3 matrix, a downline team will never contain any more than 39 people. In some instances companies will allow an individual to create multiple teams for the purpose of overcoming this strict limitation.
As with any network marketing compensation plan, a matrix plan can be very profitable if you know the fundamentals of building an MLM business. The long term potential of this type of plan is very rewarding for those who have made the commitment to their business and refuse to give up.