Why Binary Creep Kills Companies ? Binary Compensation Plan or House of Cards?

I've joined companies with binary pay plans before. At the time, I had no idea what the difference is between a binary, a matrix, a unilevel and a stair-step breakaway.

It all looked the same to me. The company website had all the bells and whistles ''necessary'' for me to succeed. All they had to tell me was that they had ''the absolute best compensation plan in the industry along with the greatest product'' . I was in! I mean, what else would I need?
The company was the best. How did I know for sure? Because the guy that recruited me told me so.
And then I went to the website... WOW! Such pretty colors. And look at that beautiful million dollar home in the corner...oh... look at the happy family in front of it... look at the Mercedes they got. I can get that too but ONLY if I join today!  Why today? Because the guy said I must get in NOW!

Now let me tell you a little story. I hope this will help you become a critical thinker early on.
Become a critical thinker before you've spent years building a house of cards and before the big ''CEO'' does a simple ''Puffffffffff?..!!!!!''... and it's ALL gone!

I have a good friend that was the highest income earner in a well known company with a binary pay plan. His check replaced his income early on, he put in 14 hour days... he earned more and more money. After over 5 years with the company, with a downline of almost 250000 people his check started getting smaller and smaller.

Hmmmm. Binary creep anyone?
What is a binary creep? Now it starts making sense. The company is paying out too much money. They are in financial trouble.
They did not know ANYTHING about compensation plans when they designed the pay plan . They need money now because the company is falling part.
Where are they going to take money from? They'll take it from top income earners of course?.And some from the little guy that just started. He won't notice...he's too excited that he just made his first $30 this month. He was pretty sure the check will be $40, but $30 will do just fine for now. No big deal, there must be some problems in the downline and there is no way to tell.
You know how that goes...how can you keep track of everything that's going on in your downline? You can't! But that's OK because the owner is so so so honest, he cares so much about you, he would not take a $10 bill away from you...Or would he?

Rod Cook has a great explanation for the binary creep and what the binaries do eventually to distributors.
Read this excerpt from his article:

Binary Creep Kills Companies:

No Customer excess sales volume - No Binary stabilization. Binary Creep - After 20,000 or more people join a Binary pay plan it begins to start pay out too much, if no Binary experts joined the company. If a large number of Binary experts join early excessive payouts start earlier. The company sees the fluctuations in payouts go over the amount they can afford to pay. This is called ''Binary Creep.'' There is not a Binary of any age or size that has not gone through this. At 60,000 people (without a lot of Binary experts) it becomes critical and the one or all of the following has to take place:

1. The high earners at the top of the Binary have to have ''Caps'' put on the amount of cycles they can collect or the amount paid on their top end earning cycles have to be diminished by a variable formula. Top earners are not happy about this, they leave!

2. Everybody in the Binary has to be penalized by ''Pooling.'' That means that the total allowable % of payout is put into a pool and the number of distributors generating matching commission pay points are divided into it. That drops the amount of everybody's checks and usually starts the decline of the company.

3. The products or services sold in the Binary have to have a CV (commissionable volume) reduction put on them. Other wise if a product sold for $20 in a new Binary that amount would be put into the Binary for payouts. After CV (sometimes called BV or Bonus Volume) the product still sells for $20 put only $15 goes into the Binary for pay purposes.

To learn more about the Binary Creep and what can happen to a business with a binary comp plan listen to this recorded call HERE.

Well, now I know why my friends check went from $130/day to $10/day in a matter of weeks.
How about your check? Are you willing to put 6 years into a business that can fall down like a house of cards ?

To save years of failure and frustration read this free report today! If not today, you might remember about it in 6 years when you are back to square one.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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