MLM Business Success | How Binary MLM Plans Self-Destruct

Binaries sound great to the inexperienced MLMer because of the promise of upline help in building the downline through "spillover".  The reality is that very little spillover occurs in a manner that will help the downline person expecting it so as to make money as a result of upline efforts.  Most (upline) sponsors employ leg building strategies which may or may not include the downline person; and because of the geometric progression factors, probably won't.

So, the reality is, it is up to the individual MLMer to build his own organization, just as in any other MLM.  The second reality is, it's hard to make money in binaries, just as it's hard with breakaways, most matrices, and most uni-levels.  The reason is that binaries are also "back end" emphasis programs, where most of the money from a sale goes further upline than to the actual person responsible for the sale, and to his immediate upline.  So it takes an organization of at least 10, 12, or 20 people for any one distributor (like you) JUST TO BREAK EVEN, and many more to get into significant profit.

There are basically two kinds of binaries.  One is the "one-time out-of-pocket" purchase type, and the other has monthly purchase requirements just like most other MLMs.

Saturation in "One-Time" Programs
The most notorious of the "one-time" programs were/are the pre-paid phone card programs.  There is a huge market for these, but since making money requires constant recruiting of new distributors, saturation can and has been reached in several of these.  When saturaton is reached, they will shrivel up from the bottom, because no sales at all will be made.  ("Rentry" sales to existing distributors depend on new sales to generate the money for them.)

Because binaries pay to "infinity" they have to have restrictions on who can get paid.  A common requirement is that you have to have two personally sponsored people with qualifying purchases before you can qualify to get paid.

In the "one-time" programs there is usually a further qualification that there has to be a certain number of additional sales, also, before you can get paid.  This is usually 12, sometimes as few as 6 or 9.  But a further qualification is that these sales have to be "balanced" somewhat on each "leg".  Regardless of what the specific numbers are, if you have a perfectly balanced pair of legs, you will find that -- bottom line -- you will make about 8% to 12%, say 10%, on each sale in your downline, if and when you do qualify to receive payment on those sales.

10% is definitely "back end" emphasis.  And, if you sponsor only one, or if you don't hit a "threshhold" sale point, your percentage is ZERO!  And if you have an unbalanced organization -- a very strong or "runaway leg" on one side and a "weak" leg on the other -- you will get much less than 10% because the pay is determined by the weak leg sales, and "excess" sales in the "strong" leg are "zeroed out" without being paid on.  This is called "volume flushing".

(There is, however, at least one binary company that is of the monthly purchase qualification type, which carries over up to $5000 in unpaid volume on the strong leg.  Over $5000 is flushed.  Also, because monthly purchases are required, saturation is rather less likely than with the "one-time" type.  But it and similar companies could run into cash flow problems as I'll outline below.)

As I stated above, the "one-time" programs have a potential saturation problem.  Both types have another potential problem, a major problem, which is trying to pay out more on a sale than what they net on a sale.  Despite the "best efforts" of the binary companies to restrict who gets paid on a sale (by sponsoring, volume, leg balance, and volume flushing requirements), I conjecture that there comes a time when "too many" people upline qualify to get paid on sales downline, regardless of company efforts to limit who gets paid.  When this happens, the company has got to implode!

Here's my thoughts as to why so many of the binaries seem to be going great, then crash and burn.  Especially the "one-time" companies.  When they start out, hardly anyone qualifies to get paid on an individual sale.  The companies love this!  Great for their cash flow!  As the company grows, they have to pay more and more people on a sale.  As the company grows even more, it reaches a point where there are a lot of deep legs with a lot of people qualifying to get paid on a sale.  And, it actually won't take too many qualifying to get paid to put the company in a cash flow crunch.

Take a $100 sale.  Say the company cost and overhead is $30 for it.  That means they can pay $70 out to the field.  Say there's seven people upline from the sale who qualify to get paid on it.  At an average of 10% per sale to the people qualified, they've run out of money.  Or, say there's 14 people upline, but they're unbalanced, so they get an average of only 5% per sale (the other 5% is kept by the company due to flushing).  But still -- 14 people times 5% of $100 is $70.  If 15 people qualify, they're losing money.

The one-shot phone card companies have provided a lot of excitement, but just as in other "back end" emphasis companies, only full-time heavy-hitters, real hypesters, and a few lucky ones made any money.  Until the companies disappeared.

If, in the past, you have tried one or more MLM opportunities, it's likely that you have been been disappointed.  Next time, make sure you get involved with a SUBSTANTIAL MLM opportunity.

My recommendations for your Network Marketing success is that you seek out Network Marketing companies with quality compensation programs and quality products at reasonable prices, as well as first class distributor support.

If MLM companies you are interested in do not meet ALL the requirements as outlined in "How to Evaluate a Network Marketing Opportunity", you will suffer frustration, undeserved loss of self-confidence, and serious loss of time and money.

You can't turn a sow's ear into a silk purse; you can't even turn something "close" into a winner, as I have found through bitter experience.  "Close, but no cigar" doesn't count; it's all or nothing.

To learn how to determine which Network Marketing companies will provide you a good chance of actually making some money, in addition to making available to you many of the products you will require for a long and healthy life, you really need to GET AND READ the VITALLY IMPORTANT book "How to Evaluate a Network Marketing - MLM Opportunity".

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