"I am not sure about QNET. After looking at the business plan, i am worried that it resembles a pyramid scheme" is just one of the statements I encounter on a daily basis as i market QNET. It is quite understandable to get the two confused. QNET utilizes a binary compensation plan, which may look like a pyramid when it is filled up, but the similarity ends right there. Let me explain.
A binary plan is a compensation plan which allows distributors to have only two front-line distributors. The people joining such a compensation plan join to market a legitimate product or service, which they bought and own, to the market and not for the purpose of recruiting for payment. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributors front-line. This ‘spillover’ is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. The primary limitation is that distributors must ‘balance’ their two down-line legs to receive commissions as illustrated below.
QNET has countered this limitation by adopting a uni-level plan. A Unilevel plan only enables a sponsor one line of distributors, therefore everyone you sponsor is on your frontline. There are no width limitations to this plan (ie there is no limit to the amount of people you can sponsor in your frontline) and it's primary limitation is that commissions are normally paid out on a limited depth and in the case of QNET, the limit depth is 3 levels ie: your direct referrals, their referrals and their referral's referrals.
According to widely accepted statistics the average distributor sponsors 2.7 people. Clearly this fact alone has huge significance. In essence; it means the difference between success and failure for the majority of people who venture into this industry! In the Binary, you just build 2 legs or teams as the term “binary” means two. If distributors can just bring in two and teach those two to do the same, they can achieve success.
Another advantage to the Binary plan is the additional placements made by those who sponsor more than 2 distributors. After I’ve sponsored my first 2 distributors – all additional distributors I sponsor fall below my original 2 distributors – which in turn adds to their volume!
In the Binary plan there is a fairer dispersion of income. Since successful up-line distributors place new distributors in their down-line, Sales Volume is distributed to entire lines of people. This means that the commissions being paid on volume end up being spread out more evenly among entire groups of distributors.
A lot of other compensation plans require that you develop up to 5 or more team legs wide in order to earn from sales 5, 6 or 7 levels in depth. Most people would admit that building five teams requires significantly more work because you must splinter your focus, time, & energy among many teams rather than just two teams.
The Binary compensation plan is not Multi-Level Marketing. That's because MLM plans usually pay based on a limited number of levels (typically 5-10). A Binary plan does not pay you on levels; it pays you on total sales volume of everyone in your two teams up to a predetermined cap set by the company. Levels don’t matter, only sales volume does.
Another thing to note about a binary plan is that all the sales volume that is generated through any organization/team remains intact until you qualify to receive it. This is like money in the bank! This is a world different than every Multi-Level company I'm aware of which flushes that volume away at the end of each month.
Binary plans are great for fostering teamwork in an organization. It is beneficial for your up-line to assist your success, their success benefits you, and your down-lines success benefits everyone. This tends to build team unity and cooperative energy.
However some people believe that binary programs are just "money games" that don't last long. Others believe such plans are all about making money fast.
A mistake often made by some distributors is that after signing up, they sit back and expect their down-lines to be built through spillover from up-line. They believe (or have been told) that their down-line will grow by the recruiting efforts of their up-line. If you’re up-line is active, this is possible. But there is a problem...you are not the only person on your up-line's down-line.
As i mentioned above, you are in competition for the spillover with other distributors in your up-line's down-line. You’re up-line has more choices as to where to place new distributors. The tendency is for the up-line to place new distributors where they see some activity as a form of encouragement to the active down-line member.
Also with the binary plan, spillover always flows through to the outside leg - the power leg. Picture a glass full of water. If you keep pouring more water into the glass, any excess water will flow, or spill over to the outside of the glass. It will never flow to the inside. This means that you are 100% responsible for building you’re inside leg.
Binary plans also have an upper limit payout caps called a payout cap. Each business center has a limited earning potential which maxes out to ensure that both distributors and the company earn a profit. Some distributors don’t realize this.
Which perspective is really true about binary compensation plan?
It’s important to note that not all binary plans are created equal. However, all binary compensation plans have all of the above characteristics, good and bad, to some degree. Some of the above characteristics are very desirable. It is also important to note that although there may be disadvantages to this kind of compensation plan, to the right person with the proper mindset, these disadvantages can be viewed as an opportunity. I for one have figured out how to use the same disadvantages to benefit me in my business and if you really want to be successful in your business, I bet you will too. You can't just join, sit back, relax and expect the big buck checks to come rolling in just because of your up-line's efforts because the bottom line is this, you have to work the plan, get people to join with you, place them on the appropriate side of your business organization, and get them recruiting, duplicating, and generating sales volume.
In the end, it’s your business so you have to work to make it successful. QNET has been around for the last twelve years so they must have figured out how to make this plan work for their two million plus distributors. And if it can work for them, surly it can work for you too.
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