Understanding a Matrix Compensation Plan
What is a Matrix Compensation Plan?
The Matrix Compensation plan, or as sometimes referred to as the Forced Matrix Compensation plan, is based around a compensation plan that has a set width and depth. It is by this width and depth that distributors / associates are paid. There are many variations to the Matrix Compensation plan and this page is intended to give you a general understanding of the compensation plan concept.
How Does the Matrix Compensation Plan Work?
The basic structure of the Matrix compensation plan is identified by the width and depth of the matrix. For this a simple equation is best used to distinguish the width and depth of the compensation plan. An example of this would be a (3 x 5) matrix. What this mean is that you are required to sponsor 3 frontline distributors / associates and you will get paid down to 5 levels deep in your organization.
As there is a fixed number of frontline distributors / associates that you can sponsor in a Matrix compensation plan, once you have achieved that number, any new distributors / associates that you sponsor will be positioned under one of your existing frontline distributors / associates. This process is what is commonly known as "spill over". While "spill over" does occur in the Matrix compensation plans structure, it happens most in the Binary compensation plan structure.
The fixed structure of the frontline distributors / associates for any one Business Center, does promote a culture of teamwork and support. As distributors / associates with full frontline distributor / associates sponsor new people, they are forced to place them below existing distributors / associates. Then in turn they support and help those new people to do the same to increase business.
Advantages and Improvements to Matrix Compensation Plans
One of the major advantages of the Matrix compensation plan over Unilevel or Breakaway Compensation plans is that once you have filled your frontline distributors / associates, you can then shift your focus to developing your frontline distributors / associates into leaders. By teaching and encouraging them you duplicate your successes and foster leadership within your organization.
When first developed the Matrix Compensation plans were very rigid and did not offer the member the ability to personally place new distributors / associates where they wanted to in their organizations. This has since been changed and now members have the flexibility to balance their organizations the way they set fit.
Disadvantages to the Matrix Compensation Plan
One common disadvantage to the Matrix Compensation plan is that variable pay scale that is established based on the levels of the matrix. This variation in pay can cause members to assist those distributors / associates in the higher pay scale more than those in a lesser level.
In conjunction with the variable pay scale, some Matrix Compensation plans can be quite wide, having to sponsor 6 or more frontline distributors / associates on your frontline. This increased width hinders support with downline members as members are focused on filling their frontline distributors / associates first.
Another potential drawback to the Matrix Compensation plan is explaining the compensation plan to prospects looking at the business opportunity. The width and depth of the plan coupled with the variable pay scale can leave many prospects confused and in turn saying no to the opportunity.
What to Watch for in Matrix Compensation Plans
There are many variations to the Matrix Compensation plan. First and foremost is the structure of the plan and which structure is more conducive to support. The narrower and deeper the Matrix Compensation plan is the better. For instance and structure that is (2 X 12) will have a much higher level of support than a (6 X 4) structure. Notice too that (2 X 12) is very similar to a Binary Compensation plan.
Many studied have been done in the Network Marketing industry to understand many measurables. One of the most talked about ones of course is the average number of distributors / associates sponsored. That is average is 2 - 3. Thus understand that if the Matrix Compensation plan you are looking at is a (6 X 4), it could be difficult for the average member to fill their frontline distributors / associates.
Matrix Compensation Plan Bonuses
To make Matrix Compensation plans more attractive, many companies who employ them have what are called "Infinity" and "Roll-up" Bonuses. While these are valid and real, you need to understand exactly what is required to achieve them. There are many cases that these bonuses are only available or possible for a select few. With countless variations of these types of bonuses, you must take it upon yourself to truly understand what they can mean to you and your income.
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