If you are already involved in, or are contemplating a business using network marketing or multi-level marketing (MLM) as your marketing strategy, the better you understand it, the wiser and more successful you will be.
Network marketing companies select a certain type of compensation plan for different reasons. In this article I want to give an overview of the matrix.
What distinguishes the matrix compensation plan from other plans? It is a limited width plan. The width generally ranges from 2 to 5 people on the distributors first level. As more people enroll, they go under those first level people. If, for example, there were 3 first-level people, there could be 9 people on the second level, and 27 people on the third level, etc. Thus, an organization could conceivably grow into hundreds, or even thousands of people. The company promoting the products or services will determine how many levels deep they will pay. The company will pay you a certain percentage of the product purchases for each person in your downline. If you have a downline of only a few people, your bonus check will not be very big. If you grow into hundreds or thousands of people under you, then you will be paid a lot more.
A matrix plan allows for spillover. Spillover occurs when someone not enrolled by you is placed in your downline, and thus, has spilled over. This can be a neat, exciting thing to happen to a new distributor. It should never be counted on as the primary means to build a downline. In fact, probably the majority of people in a matix plan will never receive spillover from their upline. To be a beneficiary of spillover you have to be in the right place, under an upline member who is doing quite a bit of recruiting. However, it can be a very helpful thing to someone who is serious about building an organization.
The biggest drawback to a matrix plan and spillover is that often it attracts the lazy type of person who doesnt want to work. So, you have a bunch of people joining just looking for their spillover.
While the matrix compensation plan is used by only about 9% of MLM companies, it generally is very attractive to people who can just work their MLM business on a part-time basis. The low monthly volume usually required helps it to be a workable plan for both part-timers and the non-sales types. Thus, in spite of some disadvantages to the matrix, people who are willing to do some work are likely to find that success is truly within their reach!