A binary plan is an organizational structure used in multi-level marketing (MLM) organizations. In this structure, new members are introduced into a Binary Tree where each “node” or new member of the organization has a left and right sub-tree.
Considered one of the simplest of the popular marketing compensation plans, binary plans began to be introduced by MLM companies in the late 1980s and became one of the four most commonly used organizational structures by the early 2000s
The Binary Plan as the name suggests is based around the number 2, which represents the maximum number of frontline associates that any business centre can have. Any additional distributors must then be placed under one of your existing frontline members.
This creates a very supportive environment for new members as the easiest way for associates to achieve success is by assisting their new members to build their organizations. This team approach makes the binary plan very attractive as there is a lot of support (both initial and ongoing) as all associates within your organization work towards achieving a common goal.
In each sub-tree of a binary plan, there is an outside leg, also known as a power leg, and an inside leg, known as a profit leg When new distributors are recruited, they are always placed underneath their recruiter, typically in the next available node in the power leg, even if the recruiter does not have any leaf nodes left. This contrasts with the profit leg which is typically filled with members who have been directly sponsored or enrolled by their immediate ancestor.
Another element of a binary plan is that it makes each member only responsible for recruiting and sponsoring two other people to join the plan, which can potentially lead to a rapid expansion of the plan in a short amount of time[with a potentially unlimited number of members.
However, if a recruiter successfully recruits more than two people, the new addition will be added to next available node in the power leg. This allows for the profits from gaining a new member to be shared between all ancestors in the power leg, regardless of who recruited them, which is a process known as spillover. This helps foster a team-like dynamic within the binary plan as it encourages collaboration between different members as they all mutually benefit from adding new members.
Due to the nature of a binary tree being a recursive data structure, a binary plan allows for multiple business centers for the MLM to be created, which cannot be done in the other three commonly used network marketing compensation plans, which allows for a more international group of people to potentially become members of the plan.
When compared with other MLM plans, binary plans have a lot of benefits, such as:
Fostering Teamwork: As both a member without recruits or a “child” and their recruiters both get the same benefits from successfully recruiting new members, the recruiters are more likely to help them to strengthen their sub-trees, allowing for the child to learn about sales and recruitment. Furthermore, due to flushing, a binary plan gives incentive to companies to try to keep all the legs of the operation at a high level, not allowing for certain sectors to lag behind.
Spillover: The profits of gaining a new member are shared between the entire high-line, which encourages everyone to attempt to recruit new members and make the binary plan larger.
Near- Depth: Due to the way that the Balanced Volume (BV) calculates payout, every member in the up-line is guaranteed to get some profit for a successful sale unless if the organization gets large enough that the net payout is negligible.
Rapid Expansion: As each new member only needs to recruit two other
Volume-based pay structure: In a binary plan, distributors who bring orders are guaranteed to be paid more for them which is not true for other major MLM compensation systems.