The Unilevel Compensation Plan
What does this mean?
Let’s say you recruit 25 people personally. You are said to have sponsored these people and they are in your fist level. If these 25 people together sponsor a total of 7 people, your team size grows to 32 people with 7 of them on your second level. This theoretically can go infinitely wide and deep.
A simple plan would typically pay 5% per level, 7 levels deep. This means that any sales that take place within the first 7 levels of your network will earn you 5%. Any sales that take place in level 8 and deeper will generate no income at all.
Break even
The unilevel plan is usually associated with subscription based structured payment sales and the network member is usually required to be one of the subscribers.
On the surface this seems like a simple and effective plan but if you start doing the math you realise that there is an intrinsic and I believe substantial flaw. The big drawback is that only a small percentage of the membership will be able to break even and an even smaller percentage will be able to make money.
This is easily calculated:
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Take the 100% (being the total month investment made by the sponsor) and divide it by the average percentage payout across all the levels. This gives you the number of members needed to break even.
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100 / 5 = 20
Only 1 in 20 people are breaking even therefore 95% of the network fails.
The unilevel plan does however have a number of strengths that make it almost irresistible to most companies.
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It is very simple to explain.
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It drives recruiting as there is no other way for a network member to make any money.
I don’t recommend using a unilevel plan by itself. It can, however, be very effective as part of a larger plan. Many companies use the unilevel concept as the core of their plan and build mechanisms that reduce the impact of its weaknesses.
Compensation Plan example
In the following example we will use the unilevel as the core of the plan and build a number of mechanisms to reduce its negative impact.
Let’s start with the core:
The first aspect of the plan that need to be developed is the unilevel core. The following is an example of what that could look like:
Adding Breakage
Next we need to build in some breakage. To do this we add qualification requirements. As a persons rank status increases, the compensation plan will pay on additional levels deep. The converse is also true. As the rank status decreases, the compensation plan will pay out less.
Group volume bonus
To encourage leaders to develop leaders we will could ad a Group volume bonus. This type of bonus is also known as an infinity bonus. It pays on every person in your team that is at your rank or below and it pays infinitely deep. In the table you will notice that a Double Diamond (DD) will ear from someone of a Diamond and a DD but not from anyone who has a rank above DD. This is an additional form of breakage.
Next we will add a once off promotion bonus. This bonus is paid out the first time the member reaches a rank. If they fall back to a lower rank and are promoted again they will not receive a bonus.
NB! All the above commissions are calculated on the wholesale value of the sale.
Lastly we need to ensure that everyone is also focused on sales. We therefore ad a sales discount of 25% and a volume based personal sales volume bonus of 5% if the member personally sells over a certain volume.
This compensation plan will pay out a maximum of 54% in commissions and 25% in discounts. The reality is that after breakage, the company will pay out an average of 38% in commissions.
This plan provides the member with the ability to earn 30% on personal sales. There is therefore no excuse for not making money. If they are team builders, they can earn from the activities of their team and if they are that rare bread of individuals that can reach stratospheric levels through recruiting and motivating huge teams, they will earn on their entire producing team via the infinity bonuses.
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