Linear classic marketing plan. What is a binary marketing plan or binary

Network marketing- a method of disseminating goods or services through recommendations from one person to another. Synonyms are the names of multilevel marketing or MLM (from English multilevelmarketing). The main goal is to motivate the client to choose a product, become a regular customer or consultant. In network marketing, as a rule, there is no traditional advertising, it is replaced by personal recommendations.

The history of development

Network business ideas originated in the United States in the first half of the 20th century. The first entrepreneurs appeared who offered to advise products to friends and receive remuneration for this.

It flourished in the last two decades of the 20th century. The range of companies using the direct selling method covered many areas: from cosmetics and underwear to car tires and telephone services.

During the same period, many foreign organizations entered the Russian market. The interest of the inhabitants of our country in the opportunity to quickly earn big money was fueled by the deterioration of the socio-economic situation. Over time, domestic analogues appeared.

A new era in the development of such a direction as network business was opened by the intensive introduction of Internet technologies into everyday life. The worldwide network made it possible to build a sales system not only among the closest circle, but also among the network of on-line contacts.

Advantages

The largest companies that do business on the basis of direct sales, talking about what network marketing is, note the following benefits for customers:

1. The consumer pays for the quality of the product, and not for its promotion and advertising.
2. The possibility of forgery is excluded.
3. Fast delivery process due to well-thought-out logistics, developed warehouse system.

Network organizations are focused on a constant influx of distributors. The following arguments are used as motivating factors:

1. No initial investment required.
2. Flexible schedule, part-time work, combination with the main job.
3. A modern and effective training system is available for employees.
4. High fees, and in the case of attracting followers - passive income.

Types of network marketing

Over the years, network marketing has come a long way. Over time, the structure became more complicated, new forms appeared, the scheme of personnel motivation changed.

Today there are several classifications based on various criteria.

Plan option in network marketing

Classification by marketing plan

People are the main tool of MLM companies. The development of a network business is impossible without the constant involvement of new employees.

Potential distributors are interested, first of all, for what and how they will receive income. The scheme for accruing remuneration and other incentives for distributors is called a marketing plan. Depending on it, the following basic types of network marketing are distinguished.

Linear or single-level marketing plan

The price of goods for all distributors is the same. The employee does not receive additional incentives for personal volume. The sponsor has the opportunity to register 1 line of distributors. The number of people is not limited. The goal is to bring as many people as possible. There is a depth limit, traditionally 3-5 lines.

Advantages:

• Easy to calculate commissions.
• The newcomer is assigned to the sponsor, who will always receive a percentage of the income of the ward.
• There is no conflict between the sponsor and the development of his employees.
• A beginner can start earning income from the first days of joining the network.

Flaws:

• Not the most profitable option for those who are focused on a large personal volume, as it does not provide benefits.
• The number of paid generations is limited.

Matrix marketing plan

The sponsor's group has a limit. Standard matrices 2*2, 3*3, 4*7. The first parameter is the number of people in the first line, the second is the number of lines. They determine the maximum depth and width of a 1 person network. After the matrix is ​​filled, a new one opens. The participant receives a commission if the entire matrix is ​​completed. It can be a fixed bonus or a percentage of turnover. There are matrix plans with additional conditions. For example, soft matrices. The distributor is recruiting more people than is allowed in the matrix. If someone does not fulfill the plan, the result of another seller is taken into account.

Advantages:

• A simple scheme: fill in the matrix - get a bonus.
• A sponsor may receive a gift in the form of an employee from another distributor whose matrix has already been completed.
• The network is growing at a very fast pace.

Flaws:

• Companies are not long-term oriented. Life expectancy is 1 to 3 years.
• There are no reliable links between the sponsor and sellers of the next levels.

Matrix Network Marketing Example

Binary marketing plan

One of the varieties of the matrix. The principal condition is that the distributor has only 2 employees on the first line. However, to make a profit, they must be balanced in terms of sales. To maintain balance, 1 person can re-enter the network, occupy several positions at once.

Advantages:

• Fast structure building.
• An element of the game and the feeling that a person himself influences his income by balancing the structure.

Flaws:

• Most of the income goes to the top distributors.
• Often such a business is short-lived.
• In times of crisis, it is difficult to fill and balance the structure.

Step Marketing Plan

Commissions depend on the rank, which is determined by the sales volume of both personal and distributors. Criteria are set both on a monthly basis (it is necessary to achieve a stable turnover of a certain amount per month) and cumulatively (it is required to sell goods for an approved amount, someone can do it in a week, someone in six months). There are no restrictions on the number of people in a team. Reaching the set bar, the participant begins to enjoy additional benefits, for example, receives travel certificates.

If the seller reaches the same level as his sponsor, the sponsor stops receiving commissions from his sales. However, in some organizations there is an additional option: the sponsor receives a percentage of the total volume of the splinter group. This version of the marketing plan is called stepwise with a branch.

Advantages:

• Good for those who are focused on retail sales. In addition to making a profit from trading, there is income from personal volume due to a personal discount, which increases with increasing rank.
• The plan encourages employee commitment. Having reached a high rank, a person obviously does not want to lose a personal discount, additional benefits.

Flaws:

• It is difficult to earn money in the early stages.
• It is most profitable for sponsors to work with first-level distributors.
• It is necessary to constantly recruit newcomers.

Hybrid marketing plan

As described above, each basic method of accruing rewards has positive and negative sides. The hybrid plan combines elements of others. With this approach, companies try to compensate for shortcomings. Most of the large and well-known players in such a field as network business use a similar concept.

Classification according to the seller's behavior model

The success of the distribution of goods from person to person depends on how the seller establishes contact and develops relationships with potential buyers. Companies pay close attention to this block during employee training.

Depending on the behavior model of the seller, the following are distinguished: types of network marketing:

• Passive. The seller shows minimal activity. He does not seek to talk about the product. Sales are made to regular customers who are familiar with the products.
• Aggressive. The seller is very active, sometimes even intrusive towards customers, ignoring feedback. There is a risk of provoking a negative reaction from a potential consumer instead of establishing a long-term relationship.
• Friendly. The buyer receives the main benefit. The seller is ready to make maximum concessions on the cost, uses a personal discount.
• Effective. Both parties benefit. The customer has a need that the product can satisfy. The consultant helps you choose the best product. With constant cooperation, the discount grows and special offers appear.

Block diagram of network marketing

Structure classification

Depending on the organizational structure and distribution of functional responsibilities, companies operating on the principle of network promotion of goods are conditionally divided into 2 types:

• Layered cake. The structure consists of layers of employees at different levels. Level 1 distributors above them are level 1 managers. Then layer by layer. There is a separation of functions. Vendors sell products. Managers recruit groups and oversee their activities. This approach is found in most well-known companies in the cosmetics business.
• Pyramid. There is a founder, under him there are several distributors, under them there is another row, and so on. That is, the functions of all employees are identical, but the closer they are to the founder, the higher the level of income.

The presence of levels in the structure of network companies often leads to comparison with financial pyramids. In fact, there is one fundamental difference. MLM companies have a product that has useful properties. Whether it's dishwashing detergent or lipstick, the end user can meet a real need with them.

In financial pyramids, a person pays money for the right to enter the structure and receives income from newcomers. There is no trade turnover, or it exists only on paper.

Criticism of network marketing

Despite the very popular claims that network marketing is an opportunity for anyone to become a successful entrepreneur without investment, the reality is not so simple.

Participation in this form of activity can be a source of solid income, but it will require active work.

Most people expect quick and easy income. In such a situation, disappointment naturally comes, and sometimes sharp negativity towards network companies. This results in a stream of criticism, especially on the Internet.

Of the thousands who came, only a few become successful, receive high passive income and additional incentives in the form of travel around the world and valuable gifts.

With the help of a competent approach to network marketing system planning and the right choice of industry, anyone can direct their life-experience potential to further business development.

Entrance to the LMP - purchase of products at a retail price of 1800 rubles (1200 rubles - at a distributor price + 50%).

All those included in the main marketing plan (MPP), buying a set of FSC for 16,100 rubles, automatically get a place in the MMP. At the same time, both those who already have a place in the OMP and those who are new to joining with the purchase of a FSC kit for 16100 have the right (the opportunity, but not the obligation) to make a starting purchase of products at a retail price of 1800 rubles. Such a purchase makes it possible to obtain a new, additional place in the OMP, subject to the conditions (see below).

Buying a set of FSC for 16100 rubles. and (or) receiving a set of FSCs and a place in the WMD - is called a "PARTNER".

Buying a starter kit for 1800 rubles. called "Intern". If the invitee buys a set of FSCs from the “Trainee” before he fulfills the conditions for obtaining a place in the OMO, then the “Trainee” receives an “Unpaid place” in the OMT, from which a new “Partner” is registered.

A Consultant may not receive an MLA fee until their "Unpaid Seat" has been converted to a Paid Seat. This can happen when the conditions for the LMP are met or the FSC set is paid in cash or the accumulated unreceived remuneration for the LMP.

The condition for a one-time receipt of a place in the OMA and a set of FSC for the "Trainee" inviting to the OMA: As soon as 44 "credit" starting purchases are made by new participants under the place "Trainee" in the LMP, he receives a place in the OMA and a set of FSC. His sponsor receives a reward of 1500 rubles. for a personal invitation. No more than 11 starting purchases are counted from each substructure in the LMP.

To receive remuneration in the production month, the participant must make a purchase in the production month at a reduced price (distributor) in the amount of 500 rubles.

In the month in which the participant did not turn in the purchase for 500 rubles, he does not receive a reward - his place becomes “transparent”, that is, it is not taken into account for calculating the reward, and the places of lower-level participants who made the purchase “pop up” - they are pulled up to those participants who made a purchase for 500 rubles (100% compression - compression). This does not deprive the participant who bought it of his place and in any month in which he makes a purchase for 500 rubles, he receives a reward.

Reward payout table

The infinity bonus is received by all participants at the rate of 10%. If there is a participant under the participant who receives an equal% with him, then the superior does not receive. If the lower participant has a lower percentage, then the higher one receives the difference between his own percentage and the percentage of the lower one.

Network marketing is a business based on partnerships. Its other name is MLM or multi-level marketing. The difference between network marketing and traditional business is significant.

Let's take a closer look at what MLM is. Its essence lies in the fact that the company organizes the turnover by creating a network of partners who perform the bulk of the work. In this case, the people involved in the promotion of goods are at the same time the company's customers, since they make purchases at wholesale (distributor) cost. They then resell the product at a higher price. The company spends less on advertising, its customers take care of selling products to customers.

Percentage of sales - not the only plus when working in MLM? This is, first of all, the company's own business of distributors. Network marketing is beneficial to partners in that they receive a good reward for their work. Thus, for attracting new people to the company, active distributors are paid additional remuneration for turnover from their entire team. Such income is called passive, because, having once invited a person, having registered him and trained him, the partner now receives constant deductions from his work. But often the structure of such a leader grows to tens, hundreds, thousands and tens of thousands of people. Income in this case continues to flow to the founder of the structure. Thus, in a few years, any person can secure a comfortable future.

Many people ask the question: “What is an MLM business?” First of all, this is a huge job of promoting products, recruiting new distributors. But the reward for your efforts cannot be equal to the payment for ordinary work. It is in the field of network marketing that a large percentage now concerns not only European countries or America. A huge number of MLM leaders in Russia.

Consider network marketing - what is it, what terms are used in this business? The marketing plan is the rules according to which all accruals to the company's distributors take place. It indicates everything and the conditions under which they are received.

A check is a monetary document with a payment indicated on it. It also indicates the partner to whom the payment is made and other necessary data.

Auto-concept is a term that has become increasingly used in network companies. Particularly active partners have the opportunity to receive a car upon fulfillment of their turnover plan determined by the structure.

What is MLM for most of the Russian population? Many people think that network marketing is a scam whereby particularly sassy people want to put more money in their pocket. In fact, MLM is an opportunity to have a business for people who cannot open their own company. Any network company is absolutely legal. A negative opinion is formed by the fact that distributors promise new partners "mountains of gold". Yes, the opportunity to make money in an MLM company is huge, but people forget that you need to put in a lot of effort first. Moreover, for the first few months, the newcomer will mainly hear refusals, ridicule and unpleasant statements. But if he crosses this line, gains confidence that he will continue on the right path, the opinions of other people will not be important to him. A person will strive for his goal, because he knows that he will succeed in the company. And in the future, people who are now scoffing will simply envy his victories and perseverance.

So what is MLM? This is an opportunity that anyone can take advantage of. Network marketing leads to financial independence, free disposal of your own time. And whether to choose a business in an MLM company or stay in your previous job is the right of every person.

Which is not a business at all 🙂 and is faced with the fact that the network does not have a normal explanation of what a binary marketing plan is. We will close this gap. I will try to put everything on the shelves with numbers and diagrams. In general, I noticed that MLM workers picked up a lot of different smart terms for themselves, and often they take on a completely different meaning than in their original meaning. The same duplication, for example, in biology means the process of duplication of sections in the chromosome. In MLM, this term refers to the principle of structure expansion, which involves the repetition of your actions by your distributors. But back to our sheep binars :-).

Binary marketing plan(binar, bi-marketing, binary) is a network structure in which you build only two branches, and you receive payments from the entire turnover of the structure, regardless of its depth. Usually you need to make 1-2 personal invitations to each of the two branches in order to qualify. And then your invitees will build the next level of 4 people.

If you invite a third person, then he will be considered as your personally invited, but at the same time he will go down through the level below to an empty cell of one of your distributors. The same will happen with those invited from your sponsors, they will become under you. Just some kind of gimmick? Of course, not everything is so simple, and further we will analyze this point in more detail.

To complete the qualification and receive bonuses, your entire structure must fulfill certain conditions for turnover, for example, make 4 sales, two in each branch. It is important to balance the branches, because if you have 4 sales in one and none in the other, then you will not get paid anything. Often this ratio is set not 1:1, but 1:2, this option is easier to work with. For example, in the left branch you need to make sales for at least 1000 rubles, and in the right branch for 500 rubles, in which case you will receive your bonus.

Key Benefits of Binary Marketing

• Only two branches. You only need to maintain two teams, which is easier than working with 5-10 like in linear marketing.
• Easy qualification. Usually you need to make at least 2 invitations. The purchase of goods occurs once, there are no mandatory periodic personal purchases.
• Overflows from sponsors. The people invited by your leaders become under you in your structure. But there is a peculiarity here. Spillover distributors move to a weak branch, so if you are a strong leader, then you may not get help from sponsors.
• Rapid structure growth. I wanted to write about the rapid growth of trade, but the problem is that at the same time, the costs of paying bonuses are growing rapidly.

I've run out of benefits for this type of marketing plan. Some figures name a few more points, but in fact they are not pluses, but minuses.

Disadvantages of Binary Marketing

• Binars attract freeloaders. Many people come to such companies only to "ride on someone else's back." They have completed the minimum qualification and are waiting for their bonuses, which they should be provided by other members of the structure.
• Difficulty balancing branches. An active leader came under you, and your structure was skewed. You need to either become more active yourself, or look for a similar leader to compensate for the growth of the first. Well, if the cycles are cumulative. And if the accounting is only for a certain period, then you will not have time to complete the qualification. You will not be paid bonuses, although your structure will be actively developed. There are empty volumes on which the administration of the company makes good money, and not you.
• Payouts from endless levels. Many take this as a plus, but in fact it is an element of the pyramidal scheme, due to which the collapse of the binary occurs. We will now analyze this point in detail.
• Difficult to understand for beginners. Often under the binaries are hidden the usual fraudulent schemes, which are banal financial pyramids. They often justify their failure by miscalculations. Like, binaries are difficult to calculate. They even talk about the fact that binary plans appeared only in the 90s with the development of computer technology. This is a myth, I will show you the calculation of the binary, which is done without a calculator :-).

Is a binary marketing plan a pyramid scheme?

Yes it is. This is due to the payouts from the infinite levels. But if these levels are limited, then bi-marketing will lose all its advantages over traditional network marketing. In a linear marketing plan, levels are strictly limited, with increasing depth, the payout percentage drops down to zero. For example, in the Oriflane marketing plan, levels are limited to 9, while the payout percentage decreases with increasing depth. You cannot receive more than 30% from personal sales and more than 25% from group sales. This is the main difference between binary marketing and linear marketing.

With binary marketing, up to 100% of the company's profit goes to pay bonuses. Even if the company does not have the cost of producing goods (some sell only intangible business opportunities :-)), at a certain stage of development it will collapse due to accumulated debts. Miracles do not happen in this case.

Many companies that consider themselves serious take some measures to reduce risks and extend the lifetime of the binary:

• Add leader and team bonuses
• Bonuses for people invited personally
• The percentage of bonuses gradually decreases with increasing depth
• Focus on the product and encourage additional purchases by old members (and in fact just reduce their bonuses)

All these measures are ineffective, since they do not affect the reasons for the collapse of the binary (payments from infinite levels). There is only one way out - to limit the number of paid levels, but then all the advantages of binary marketing will disappear. Some companies combine binary and linear marketing. But these are all big words. If the number of paid levels is limited, then this is the most common linear network marketing, if not, then binary, whatever you call them.

Let's make a calculation of a typical binary plan

As an example, let's say that the "coolest product" of our "coolest company" costs $100. (or $100). Inexpensive, beginners will not be difficult to buy it. The minimum entry qualification is to buy one unit of the company's product and personally invite two people. All this is easy to do, for that and the calculation. Further, to receive payments, you need to close bonus cycles: 4 new clients, 2 in each branch. It does not matter who will make these invitations you, your sponsors or the people below you.

For each cycle in your structure at any level, you will be paid $20. or it turns out 5% of the company's income (4 sales of 100 USD each).

Further, for simplicity, we will assume that in your structure each level is completely closed, if this does not happen, then there will be some confusion in the calculations, but the main trend will not change from this. Only empty volumes will appear, the ballast of the system, which will slightly delay the collapse of the binary. But we will assume that active and friendly participants have gathered in your structure, who evenly fill their cells.

1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024 …

This row represents the number of participants in each level from 0 to 10. Each member buys the company's product once. Then the income of funds at each level is calculated by the formula:

Coming: 100 2^n, where n is the number of the last filled level, and ^ - exponentiation. For the 5th level, the company's income will be equal to 3200 USD.

The consumption is calculated from the following considerations. For example, in our structure, level 5 is completely filled, then level 4 participants do not receive their bonuses, since they did not complete the bonus qualification. Payouts start with Level 3 members. We got them 8 people for 20 c.u. 4 participants from the 2nd level will close 2 cycles of 20 USD, 2 from the 1st to 4 cycles, and 1 leader at this stage will close 8 cycles. The total cost of payments will be:

(20 8 + 20 2 4 + 20 4 2 + 20 8 1) = 20 (8+8+8+8)= 640 c.u.

Normally, income is much higher than expenses, as long as everything goes well. To calculate the cost of payments, you can generalize the formula and express it through the number of the last level.

Consumption: 20 n 2^(n-1), where n— number of the last filled level.

Now you need to find n, at which the flow will be equal to the income, for this you need to solve an easy power equation.

20 n 2^(n-1) = 100 2^n,

After obvious and simple transformations, we get that for n \u003d 10 Income \u003d Expense. Thus, when the 10th level is reached, the collapse of the binary is observed. But due to, for example, personal bonuses, this moment may come even earlier.

Of course, it is possible to redistribute income from previous profitable levels, but it makes no sense for the organizers to do this, they already have the money, and the further the structure develops, the greater the debt will be. At the 11th level, 204,800 USD will be received, and you will need to pay bonuses for 204,800 + 20,480 = 225,280 USD.

Let's estimate who and how much will have time to get money before the collapse. 1024 + 512 = 1536 people from the 10th and 9th will not receive anything, they will only invest 100 USD each. For all the time in the structure, 256 people will receive 20 each and they will have a minus of 80 USD, 128 at 60 USD, 64 at 120 USD, 32 at 260 USD, ... The leader will receive as a result, for the entire time of the development of its structure 20+40+80+160+320+640+1280+2560+5120 = 10 240 c.u.

The linear classic marketing plan is the simplest of the existing ones today. In fact, network marketing itself began with its creation. Matrix and other marketing plans appeared much later.

What it is?

The main thing that distinguishes a linear classic marketing plan is its architecture. The number of branches of which it consists is never limited in width, any number of invitees can be in the first line of each participant. Therefore, this marketing is often called "the sun", because. the number of rays is infinite.

In depth, such a compensation plan has limitations, as a rule, no more than ten generations. Much more common is the classic linear marketing plan, where there are three to five lines deep that are rewarded. Thus, the "classic" provides excellent opportunities for building a wide network, but with a depth limit. Due to this, it is profitable to sell and invite people to the business.

Advantages and Disadvantages of Line Marketing

The two main advantages of a linear classic marketing plan are extreme simplicity and absolute break-even. There is nothing easier to understand than a building scheme with an infinite number of branches and a specific percentage for each new level. For companies that are just starting their business, this is the best solution - newcomers do not have to explain anything. Everything is very simple!

Also, a very important circumstance is that, using the "classics", the company will never be able to go into the red. If it is decided, for example, to give 40% of net profit to the network, then exactly that much will go away. And not a penny more. Other types of marketing plans in certain situations may contain risks of "collapse". That is, situations where payments exceed cash receipts. MLM-PRO specialists are ready to advise on all issues of calculating the marketing plan in such a way as to protect customers as much as possible.

However, even with these undeniable advantages, linear marketing also has a drawback. In order for a permanent high passive income to appear, it will take years to build your network. That is, the cash flow will not come immediately, unlike, for example, from a binary. On the other hand, once you reach the desired result, you can start doing something else. Stability is more of a virtue than the other way around.

Who is the linear classic marketing plan for?

Due to its complete "transparency" and break-even, the linear classic marketing plan is used in the vast majority of companies that, at first glance, have nothing to do with MLM. For example, legal consultations or dental clinics. In this case, it is appropriate to say that network marketing is an additional sales channel, and the company itself is non-core in terms of MLM.

Speaking about the MLM companies themselves, the “classic” is used, as a rule, where the product is best sold through direct sales through friends and acquaintances. The most striking example of such a business is the sale of goods for beauty and health.

However, the "classic" is the best solution for starting any business project when there is no significant experience in network marketing. Ease of understanding and the absence of financial risks make it possible to understand the MLM mechanism itself. And then move on if you want.