What is a Binary MLM Plan?

The compensation plan with two legs—left and right—creates a balanced sales cycle. The bonuses and commissions in the MLM binary plan benefit and balance the distributor earnings on a clearly balanced MLM genealogy tree.

Every distributor can add two distributors under them as their right and left leg. A third or more distributors will be added to the binary tree as ‘spillovers’—a term that refers to a distributor added after the second one. Since binary tree has only two legs the third distributor or the consecutive distributors joining henceforth will be added under the right or left leg.

This process continues till unlimited depths or as specified by the MLM company.

How does Binary MLM Plan work?

This simple-structured plan is also simple in the way it works and this makes joining more people an easier process for distributors. A distributor in the binary model is compensated based on the sales volume in his right or left leg with clearly set criteria by the organization.

Commissions are calculated based on the weaker leg sales contrary to other plans which pay commissions based on sales volume for multiple levels of distributors. The weaker leg is also called the “pay leg” as the commission payment is made based on this leg and the strong leg, “reference leg”. Once the pay leg commission is paid, the amount of the paid sales volume is deducted from both the pay leg and the strong leg.

Advantages of Binary MLM Plan

• Since commissions are based on the weaker leg sales, distributors are motivated to improve their weaker leg sales thus propelling a boost on their productivity.
• The simplicity of the plan helps distributors in understanding the whole compensation which makes it easier for them to join and train new distributors.
• Most companies with binary MLM plan run on weekly commission cycles making it favorable for the distributors to earn for their efforts sooner.
• The binary tree allows members to strategically place their spillovers in places beneficial to them. This improves their benefits and increases their productivity.
• This spillover system in binary plan rewards both its sponsor and its immediate upline making it a favorable feature of the compensation plan.

Disadvantages of Binary MLM Plan

• Some organizations employ a ‘flush out’ concept, that flushes out the extra sales in the stronger leg which otherwise would have been carried over to the next sales cycle.
• Spillover preferences are nullified by certain organizations and the spillovers are automatically placed in the system.
• Commissions paid based on the weaker leg has a hitch. If the weaker leg stays inactive, it would adversely affect all the hard work of the distributors in the highly-productive leg.
• If the balance between the stronger leg and weaker leg is not maintained, that is to say, if the distributors in the weaker leg do not remain active it would eventually result in the distributors in the stronger leg to quit.

Tips to reduce commission overpayment in your Binary MLM Business

The simple yet powerful binary MLM plan if left unattended can cost you profits and your business itself. Commission capping and flushing can minimize it to a certain extent but there are other strategies you can apply to your binary compensation plan to reduce over payouts.

• Pay bonuses by weaker leg volumes in cycles instead of a percentage of all weaker leg sales
• Flush out strong leg sales volume after a specified value
• Identify capping plans to be applied to specific binary commissions that are causing an overpay
• Stop paying inactive distributors for their downline sales or previous sales after a specific time period
• Analyze your total commission for each sales cycle and make necessary customizations to your binary compensation plan

How many top MLM companies use Binary MLM Plan?

Binary plan ranks second to the top MLM plans employed by the top 100 leading MLM companies. Given all the wonders and shortcomings of the plan, many established binary MLM companies have set a proven track record of success in functioning with this plan.

The role of Binary MLM software in Binary MLM business

Binary MLM software automates the whole process of managing an MLM business right from onboarding new distributors to accurate and timely disbursement of commissions. Recently, when data gained tremendous attention in different aspects of businesses, securing them too gained traction. Processing large chunks of customer data without compromising on customer security became the big game for direct selling organizations and competent software played this part of the game well.

Epixel Binary MLM Software is built with these business-critical issues in mind. You can explore the features of binary MLM software, its benefits and the positive impact it can have on your business with an MLM software free trial.

A scalable MLM software mitigates the herculean task of calculating MLM commissions for as many as million distributors quick and simple. An accurate binary MLM calculator lets customizing and configuring binary-specific commissions easy. Organizations can set and manage calculation period, calculation criteria, and capping as and when required. It also detects gaps and flaws in your compensation plan and delivers insights into the future of your MLM business.

Given that the key to succeed in any MLM business is choosing a flawless compensation plan, molding it up perfectly to suit your business needs is achieved through the competency of the software employed.

Binary MLM plan is an amazing plan that stimulates team work letting the distributors. For the exact same reason, leading MLM companies and distributors choose to work with the binary MLM plan. The numerous advantages makes it the most sought after plan among all other compensation plans in the MLM industry.

If you’re on your way to setting up a binary MLM business, then take our word, there’s a lot more to it.