Matrix Compensation Plan is one of the primary plans in Multi Level Marketing business which is popular due to the high earning potential and the simplicity with which the business expands.
It is a pyramid structured plan in which the members are arranged in such a manner that it limits the width and number of members which in turn helps the Company to mature to its full potential within a short period of time.
Matrix Plan is also called Forced Matrix plan as the number of members each distributor can have in their first level is limited. Further addition of the members results in placing the members deeper down the organization and under another distributor which motivates the already existing members to recruit more members in the lower levels in order to increase their earnings. The general formula on which the Matrix Compensation Plan works is [width * depth] where the width is the number of members that each level can have and depth is the overall level of the plan. The most commonly used Matrix MLM plans are 2*2, 3*7, 5*7, 3*9 and 2*12. For example, if we take 3*7 matrix plan, then the organization have 3 members at each level and can have a depth of 7 level. So the first level has 3 members, the second level has 9 members, the third level has 27 members and so on.
In Matrix Plan, there are different type of compensation that can be used effectively to increase the stability and the productivity of the Matrix Plan and to make the team more active.