The Pros and Cons Of
Spillover In Network Marketing

The word spillover is an English term denoting an act of flowing over or spilling over. 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.

In network marketing the term is used to describe a situation where, after signing up the maximum number of distributors permitted on your first level, any person you sign after this maximum 'spills over' to the next level. And if the next level is also filled, to the one following it.

Two network marketing compensation plans have the potential for spillover, namely the binary plan and the forced matrix plan. But it is with the binary plan that the concept is expressly mentioned to mlm prospects most often.

How it works

You may have noticed that spillover comes into play only where the compensation plan in use restricts the width of the levels.

Let's say you join an mlm company which uses a 5 x 7 forced matrix compensation plan. As soon as you sign up the first five people, your first level will be full. There will be no vacant position on your first level to place another distributor.

Once you fill your first level, you are 'forced' to place any person you recruit in a position on a level below your first level, i.e. in one of your downline member's group. This is generally seen as a major advantage or benefit of mlm spillover.

Many distributors use this concept as bait to entice prospects to sign up into their organizations, especially those in companies using the binary plan.

Promises such as "get in now, today, and you'll get all these people spilling over into your downline."

But if you ask for clarity, they will almost always tell you that they can't guarantee it.

There is a reason why no one will ever guarantee you will benefit from spillover. Take the example of the 5 x 7 forced matrix mentioned above. You just joined and you expect to see your downline suddenly growing with no effort on your part.

Let's say it does happen that you receive some recruits from your upline. Your first level is filled. You now wait for the second level to grow. How many people to do you need on your second level? Yes, twenty five.

But you are not the only one on your sponsor's first level. There are four others. Suppose all five of you are waiting for new members from upline. How long do you think it will take your upline to build your businesses for you? Scary picture, isn't it.

Here is something you may not be aware of...

The average network marketing distributor recruits only about 2 to 3 people in her entire network marketing career. Assuming your upline is average, where will the new members be coming from?

So it is almost impossible for anyone to guarantee to you that your downline will grow from the recruiting activities of your upline.

Advantages

In my opinion these are merely perceived advantages.

  1. You can use it as a recruiting tool
  2. MLM recruiting is a nightmare for many network marketers. Many don't know where to start. Others have no clue how to do it.

    As a result of this, some people find it desirable to join companies using either the binary plan or the forced matrix plan. Most of the time when they are showing their opportunity to an mlm prospect, they make it a point to explain the benefits of spillover.

  3. Leverage
  4. Your downline can grow from the recruiting efforts of upline. This is leverage. You can leverage your effort on upline.

    For many people, this is the reason why they join companies using the forced matrix or the binary plan.

    The potential is there for your downline to grow from the recruiting efforts of your upline. But this does not always happen.

  5. It fosters teamwork
  6. Network marketing is a people helping people type of business. It is expected that as a sponsor you will need to help those you recruit. Where spillover is part of the compensation plan, the helping part includes placing newcomers into other people's organizations.

Disadvantages

  1. It breeds a welfare mentality among distributors
  2. Perhaps the greatest downside of spillover in network marketing is that it may attract the wrong type of person. People who believe in getting something for nothing are more likely to sign up.

    To build a profitable network marketing business you need people who understand the need to build their own businesses. Not free-riders. People who come in expecting their businesses to be built by others are not the kind of people to rely on in network marketing. Avoid them whenever you can.

    So it is advisable to be careful when showing your opportunity to your prospects.

    If your company's compensation plan is the binary plan or the forced matrix, avoid recruiting using spillover as a reason for someone to join you. That way you are more likely to recruit only serious people.

  3. It closely resembles a scam
  4. If there is anything that creates the idea of a pyramid scheme in network marketing, it is mlm spillover. The only way to present a network marketing compensation plan which involves spillover is through a pyramid shaped figure.

    Unfortunately for many people, this immediately brings in the thought of illegal pyramid schemes.

    Do realize that there is nothing inherently wrong with any pyramid shaped structure, including legitimate network marketing compensation plans. What's important is how people make money from the structure.

    Learn more about pyramid schemes here.

Perhaps the most talked-about benefit of spillover is that, once you sign up, you will benefit from the sponsoring activities of your upline.

But does this really happen in the real world? Can anyone really build a thriving network marketing business just by signing up and waiting for downline to grow from upline's recruiting efforts.?

To answer these questions, let's use the binary plan as an example.

Click here to learn more about the binary compensation plan, but briefly...

The binary plan requires that you put only two distributors on your front-line. The rest of the distributors you personally recruit will be placed in positions below your first level. But any distributor your upline recruits can only be placed on your power leg. You remain 100% responsible for building your profit leg.

You and I know that the binary plan pays commissions when you attain balance between your power leg and your profit leg. Since you receive spillover only on your power leg, your profit leg is likely to lag behind.

If any leg lags behind, there is a greater risk that you will not meet the required balance, and therefore earn no commission.

With the forced matrix plan, your challenges will be slightly different. For example there will be other distributors on your sponsor's first level who also expect new recruits from above.

Learn how the forced matrix compensation plan works here.

Since your sponsor decides where to place new recruits in her downline, you may end up with no one being placed anywhere under you. This is especially true if you are not actively recruiting.

In conclusion, joining a network marketing opportunity solely because its compensation plan uses spillover will not build your business. You have to build it yourself. Consider spillover only as an incidental part of the whole business, not the main thing.

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