Multi level marketing (MLM), also known as Network Marketing, Matrix Marketing or Chain Marketing. It is a business-distribution model that allows a company to market its products directly to consumers by means of relationship referrals and direct selling.
Compensation plans are absolutely the way in which one gets paid in a network marketing business and therefore it is important to understand how they work. Many components go into making up a plan and circumstances change with time. Today we are going to discuss features of six commonly uses a different type of compensation plan:
Binary plan: In Binary plan, each member can sponsor two direct members immediately under him. But if he wants more ids to sponsor, then those ids are placed in his network as spills, which get attached to other members called as Adjusted to. Spill can only possibly in extreme left & extreme right.
The famous spill-over binary plan also comes under the category of Binary plan. In this plan each business center can recruit only two direct sponsors.
The key advantage of a binary compensation plan is it pays based on volume. There is no automatic cutoff beyond a certain number of levels.
Convenient plan, as everyone needs to sponsor minimum 2 distributors only.
It fosters teamwork as the system allows you to earn a payout on everyone below you.
Board plan: Board plan is also known as revolving matrix plan. The Board can compare of 3, 5 or 9 members, the structure can be of 1-2-4, 1-2-4-8, 1-2-4-8-16. The specific member will be entitled to commission every time the board entries are completed. The member can avail benefits such as loyalty bonus; referral commission and many others in addition to board income.
Matrix plan: The Matrix Compensation plan or as sometimes referred to as the Forced Matrix Compensation plan, is based around a compensation plan that has a set width and depth. It is by this width and depth that distributors / associates are paid. An example of this would be a (3 x 5) matrix. What this mean is that one is required to sponsor 3 Frontline distributors / associates and he / she will get paid down to 5 levels deep in their organization.
Generation plan: Generation Plan is considered to be the powerful MLM plan which can be paid many levels deep. A generation is the whole volume from up the line to down line (this includes people with the same and different ranks). The amount you can get will be more in the case of the first generation, and will be getting reduced for the following generations respectively.
Differential plan: This plan is based on re-sale of products or re-purchase of products. Companies generally allot BV / PV for each of their products. In this plan company decides maximum allowed percentage to be distributed among members. So each member gets difference between the maximum PV percentage he can get and percentage PVs which are already distributed in down line. As commission depends on difference between down line and up line PV percentage so this plan is termed as "Differential Plan." Ranks & design of distributors according to generated business are highlights of this kind of Business Plans.
Unilevel plan: Unilevel, as the name suggests, only enables you to sponsor one line of distributors, therefore everyone you sponsor is on your frontline. There are no width limitations to this plan and statements are normally paid out on a limited depth. Therefore, the common goal of this plan is to recruit a large number of frontline distributors and then encourage them to do the same.
There is probably no one plan that is perfect or right for everyone at every time. What may be the best plan today could change due to regulations, experience in the industry and / or the type of product, even new technology. And, it's those variations that can make the difference.
