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PART V: The Unilevel MLM Comp Plan

By Daren C. Falter

The Unilevel

The unilevel was developed as the answer to the breakaway plan. In fact, at first glance, the unilevel structure looks similar to the breakaway, but it is actually very different. The unilevel is one of the simplest forms of network marketing compensation structures, and one of the best. Unlimited width, limited depth, and monthly payouts characterize this pay plan. Traditional unilevel plans pay out about 30–50 percent of the company’s net profits. Most unilevels pay five to seven levels, with seven being the most common depth. Most have roll-ups, compression, and/or infinity bonuses (all of these terms refer to the process of product volume rolling to the next qualified distributor when distributors don’t qualify to earn it), allowing top distributors to be paid temporarily on deeper levels until downline distributors catch up. Volume

accumulates through the end of the month, and checks arrive in the distributor’s mailbox around the twentieth of the following month. Over 37 percent of the plans I reviewed were unilevel plans, but over 70 percent of the companies started in the last ten years are now using the unilevel. This percentage is growing.

The unilevel plan allows unlimited sponsoring on the first level. This creates unlimited income potential. Unilevel plans are fair to everyone, based on generally low group volume quotas and no breakaways. Unilevels are also characterized by lower personal volume requirements than breakaway plans. This makes it easy for most distributors to stay active. The unilevel doesn’t give as much incentive to front-end load or stockpile product.

Unilevel: The bad

In the 1990s, the unilevel was called the part-timer’s plan because of easy volume requirements and no breakaways. It has also been called the vanilla plan because it’s a plain-Jane structure.

In the 1990s, part-time distributors found it more appealing because they could increase their chances for success by surviving in the plan for a longer period of time without being forced out by heavy volume requirements, like those associated with breakaways. However, this part-time philosophy did not go over well with the breakaway crowd. For this reason, the unilevel usually repelled the big guns. They simply couldn’t make money as fast as they could in the breakaway, nor could they make as much. However, in recent years, due to improved rules and enhancements to the basic unilevel structure, these weaknesses no longer apply.

To overcome this part-time stigma, some top unilevel plans now offer lucrative infinity bonuses and other forms of compression to bring the big money into the plan. These bonuses are designed to allow top producers to draw upon commissions generated from deeper in the compensation plan. It’s working. Now some of the largest checks are being generated with unilevel plans. The unilevel plan is considered by many to be the most stable and lucrative plan in network marketing today.

Overcoming the average

To get rid of the plain vanilla stigma, pay plan innovators have enhanced the unilevel in recent years by offering several powerful incentives. First of all, distributors complained about not being able to earn money quickly, so now nearly every unilevel plan has a front end fast- start bonus, paying a special bonus on the first orders of new customers and distributors. Top MLM leaders complained that they could not earn the same kind of checks that the breakaway distributors earned. So the pay plan developers went to the drawing board and developed a couple of tools to help.

One of the most powerful enhancements to some unilevel plans is a structural rule called dynamic compression. Compression allows you to earn commission beyond the last level of your pay plan if that leg is still in the process of moving up the ladder of success. Commission not earned by downline members roll up to distributor leaders instead of becoming breakage (profits by default) to the company. Dynamic compression is only present in a handful of companies. Where dynamic compression is not present, it’s common to find some kind of infinity bonus. The infinity bonus is a misnomer, since no company could really afford to pay a bonus to infinity. However, it does help distributors temporarily dip down to deeper levels to capture profits. Whatever you call it, dynamic compression is one of the most important features in a network marketing plan. It overcomes many of the compensation plan functions and features that can discourage distributors. It pulls volume produced by leaders in depth up to those leaders who deserve to be paid on it. For example, a distributor who recruits ten leaders and produces $20,000 in monthly sales volume may be paid on generations deeper than someone who recruits two distributors and produces $2,000 in monthly sales volume.

In addition to these enhancements, top leaders expect some kind of powerful leadership bonus designed to reward top leaders. Leadership bonuses generally consist of taking a very small percentage (usually 1–3 percent) of the company’s overall monthly sales and dividing it equitably between the leaders. These bonuses can eventually pay out more than the standard monthly unilevel plan.

Front-end heavy or compressed plans

Even if you haven’t seen one of these, you’re likely to run into what we call front-end heavy plans, or compressed unilevel compensation plans. These plans cycle in popularity; they come and go, and then they’re back again. Compressed unilevels look excellent on paper and typically pay 15–45 percent on the first few levels of the plan, but leave very little for the backend. Developers of this plan contend that distributors can’t make money fast enough to feel encouraged to stay in the business. So they pay a lot of commissions up front. However, when you pay up front, you leave nothing for the full-time or professional distributors who want to make the big bucks.

Compressed plans are easy to spot since 70–90 percent of the promotion is focused strictly on the compensation plan. I’ve been in sales presentations where the products were treated like some technicality that had to be thrown in to make the plan legal. These programs resemble direct sales organizations that only pay on one to several generations of commission and have not been proven to be contenders among today’s compensation plans as of yet. Programs that encourage all width and no depth can sometimes unintentionally alienate distributors too soon. When distributors are taught to go wide, they can forget about the needs of their downline distributors, who are several generations removed. Also, the heavy-hitters can become discouraged by how long it takes to reach the big money that almost every good pay plan offers to those with extraordinary abilities.

House of Cards

One of the biggest complaints I here often about unilevel plans it related to maintaining monthly qualifications in companies that are no longer experiencing significant momentum. When the sales in the company you’re building start to flatten out, or if you choose to take your foot off the gas at some point in your career, there is always going to still be some maintenance you need to do in any compensation plan to maintain your check. However, some people feel that many of the modern unilevels can be a house of cards setting people up to lose their qualifications, and thus their income. Like having a tiny chip in your windshield, if measures are not taken fast, it can become a tiny crack, then a large crack, and then you lose the entire windshield.

Let’s say you have five different levels in your plan, namely: beginner, builder, leader, pro, and superstar (generally there are many more than five, but let’s use five for this illustration). If you want to maintain your monthly qualifications to be paid as a leader, you must rely on a certain number of builders under you, and a certain number of beginners under them, to qualify each month at their respective levels for you to qualify at your level. Likewise, a superstar relies on his or her pros, leaders, builders, and beginners to all maintain certain volume and sponsorship requirements to keep their status. If a single beginner located on the superstar’s 27th generation fails to qualify, unless the superstar or some other distributor in between the two fixes that structure before the end of the qualification month, the superstar and everyone else relying on that beginner’s qualifications does not qualify for their level, causing substantial overnight drops in everyone’s commissions.

Here are the cure’s I will recommend in this situation. First, be sure you totally understand all of the qualifications necessary to achieve the level you’re aspiring to reach in the compensation plan before you join. Ask around the industry and find out what others are saying about the ease of qualifications before you get started. It’s easier to say no to a comp plan before you start than it is to say no after you’ve referred two dozen friends into the company. Second, be sure to make “over qualification” a habit in your business. If your current level requires five legs on your front line doing $1000 in product volume per month and five active distributors in each of your front line distributor’s legs, make sure you commit to sponsoring seven to ten distributors who are doing $1,500 to $2,000 per leg each month. Then you must teach this philosophy to your downline as you build your business. If you’re always over-qualifying by a large margin, you’ll never have to worry about cracks in your windshield.

One of the factors that makes maintenance requirements hard in some unilevel plans is a lack of qualification divisions from the top of the plan to the bottom. For example, one comapny may have seven different “pin” levels in their comp plan (named for the recognition pin you wear on your lapel at each level). These seven pin levels represent everyone from the beginner to the triple diamond elite superstar. Another company have fifteen division.

Think of a compensation plan like a large hill. Let’s say you’re at the park and you’re trying to climb a steep hill with all of your family members. It’s much more difficult to climb a staircase of 10 three-foot-high steps than it is to climb a staircase of 30 one-foot-high steps. So it is with building and maintaining compensation plan qualifications. When there are more qualification levels, it’s easier to maintain your existing level over time since there are not hug jumps to the next level, or huge drops back to the previous level. Look for a plan with at least 15-20 different divisions of qualification, or maybe even more.

Unilevel: Overall evaluation

The unilevel is a fantastic alternative to traditional breakaway plans. The unilevel does not have the fast income potential of some of the front-heavy plans and plans that encourage front-end loading (buying lots of inventory up front), but it also does not have the high attrition rate (distributor fall-out rate). You’re not going to hear any of the horror stories that are sometimes associated with other plans. Although there are many variations, the basic unilevel plan can be a very fair and lucrative plan.

Avoid unilevel plans that are plain vanilla, and look for the enhancements I described. Try to avoid any unilevel gimmicks like two level (front-heavy) plans and plans that pay different percentages on every level. Compressed plans are ideal for affiliate programs but are not yet proven as mainstream compensation plans. In time we will see if the compressed plans will ever remain popular instead of continuing to come and go.

Avoid unilevel plans that have extreme qualifications or not enough steps in between qualifications. Ask around the industry and find out if the plan is known for its ease or difficulty in building and maintaining qualifications.

The unilevel is one network marketing payout structure that is here to stay. Governmental regulators in North America generally prefer the unilevel plan to other plans. Dedicated distributors who follow a proven system for a two-to-four-year period of time can have substantial results with this plan. With the right unilevel plan, top distributors can earn incomes that can definitely contend with the breakaway plans. Try to find a unilevel with at least 15-20 level divisions or even more. The unilevel can be a great choice for many distributors.

About the Author

Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.

Daren recently launched a new network marketing company, Yoli, Inc., near Salt Lake City, Utah. Daren and his four partners are excited to introduced the worlds most nutritious beverage using patented BlastCap™ Technology. For more information about Blast Cap Technology, Blast Caps, or Yoli, visit Yoli at www.prelaunchinsider.com.

Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED

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