The type of compensation plan that I like is a combination of Unilevel and global sharing pool with dynamic compression. It may sound complicated but I feel that this type of compensation plan is stable, can reward you short term and long term, can motivate you to focus on the business and build effectively because of global sharing, and you can be strategic because of dynamic compression.
For beginners in Network Marketing, let me explain.. and if you understand it you will say that it is not as complicated.
In a Unilevel plan, your commission is based on a certain percentage per LEVEL. So, for example, the plan pays you up to 10 level deep with 5% on the first 5 level and 3% on the 6th to 10th level. Than means, purchases of the person on the 5th level will earn you 5% and a person on the 10th will earn you 3%.
The best unilevel scheme are the ones that has 2 group sets, one for new distributors that will earn you a bigger percentage on at least the first 3 levels on the first months of the new distributor, and the second one is for the distributors that will have a good volume of sales and are at least 8 levels deep. This type of unilevel scheme can reward you fast on your first month and gives you long term stability as you build and develop leaders that will produce good volume of sales.
A global sharing pool for leaders that will produce a good volume of sales will be a good motivator to those who are serious building a large group of distirbutor.
Now, on good advantage also if the compensation plan is not per LEVEL but by GENERATION. The difference between the two is that when you say per GENERATION, it will be per qualified distributor... so for example, the person in your third level is not qualified (no purchases during the month) but the person he sponsored (on your forth level) is qualified. It will compressed and have the person in your 4th be counted as your third level generation. This ensures that you will get a commission even though there is a lot who are not qualified in your group because it is compressed to those who are qualified or had purchases. This is what is called dynamic compression!
The advantage of this plan:
Don Faila, author of Napkin Presentation in Network Marketing pointed out the advantage of adding one leg and the difference that will make in your group.
I'm not against binary plans but if you look at a 2 leg matrix on 5 levels deep...
1 level 2
2 level 4
3 level 8
4 level 16
5 level 32
If you will sum this up, you will have 62 distributors in your group. If you just add 1 person on your first level and everyone does the same....
here's what the matrix will look like
1 level 3
2 level 9
3 level 27
4 level 81
5 level 243
the total will be 363, a difference of 301 people more in your network! So just imagine if you go down many levels the difference of how many people will that be! And what if you have 5 legs? How do you imagine the difference!
:)