In this installment of the series on Understanding MLM Compensation we will look at the advantages and disadvantages of unilevel compensation plans. As discussed earlier, unilevel plans closely resemble a stairstep/breakaway plan without having the breakaway component. Unilevel plans generally set a limit to the number of generation levels from which commissions can be earned, without a limitation on width of those levels. Advancement to higher compensation levels is accomplished by meeting monthly sales goals.
Advantages of unilevel plans
Unilevel MLM plans are very simple in structure and function. The simplicity of this type of plan makes it simple to explain to new distributors, because it lacks complicated concepts like breakaways.
Unlike matrix plans , a unilevel plan places no restrictions on the width of a distributor’s frontline. The opportunity for an infinitely wide frontline allows for a great deal of downline building potential.
Many unilevel pay plans are using a spillover concept in their compensation structure. This concept generally takes place by placing a higher commission rate on the third level. This gives a distributor a reason to build their organization deep and not just wide. This strategy helps others in the downline build their frontlines, since the third level of the organization is the frontline for another generational level.
Since there are no breakaways to contend with, all sales volume goes towards your monthly production goals. This synergy makes it easier for a distributor to advance to higher compensation levels.
Disadvantages of unilevel pay plans
When compared to their stairstep/breakaway counterparts, teams built through unilevel plans tend to be smaller and generate smaller commission levels. In a stairstep/breakaway plan, a distributor can draw commissions from deeper levels through breakaways. Breakaways also allow the workload of training and overseeing the team to be spread out amongst a larger number of leaders. In a unilevel plan the burden for oversight falls to the distributor. The larger the organization grows, the more difficult this task becomes.
Another disadvantage of unilevel mlm plans is the preferred customer mentality. This type of plan tends to attract people who join an organization so they can buy product at wholesale. This can be a turn off for a serious network marketing professional, because the organization may lack ambition for financial achievement.
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.
