In the dynamic ecosystem of the MLM world, each individual has a different role to play. From the administrator, and the distributor right down to the sales executives, each person’s efforts together contribute to the MLM company’s collective success. MLM compensation plans work to bring this entire network together. A flawless compensation plan not only creates a strong marketing network but also provides sustainable growth for the company.
But what exactly are MLM compensation plans?
A compensation plan in MLM is a structure that MLM companies use to reward their network members. It outlines how distributors and sales representatives earn commissions, bonuses, and other incentives based on their sales and recruitment efforts.
This Article Contains:
Best Network Marketing Plans
There are ten predefined best network marketing plans, which MLM companies choose based on their requirements. If you are looking for the Best MLM compensation plans for 2024, you are at the right place. Whether you are a novice in the MLM field or an expert, the below list will provide you with all the information you need about these MLM plans.
1. Unilevel MLM plan
The Unilevel MLM plan is one of the best MLM plans with a simple and transparent network. In this plan, each distributor’s downline consists of their directly sponsored members. They can sponsor any number of members without restrictions to create an expansive network. This plan is perfect for MLM companies looking for a simple network structure without any frills.
Understanding the Unilevel MLM plan
In the Unilevel compensation plan, distributors build their team horizontally by recruiting members. All these members are placed directly below them.
Below is a perfect example of a Unilevel MLM plan genealogy tree.
In the above image, A heads the marketing network of Company X, which employs the Unilevel MLM compensation plan.
A1, A2, A3 and A4 join the company. They become the downline of A.
Later, they recruit members B1, B2, B3, and so on. Each distributor can recruit any number of downline members.
Commissions and Bonuses in Unilevel MLM plan
The Unilevel MLM plan provides unlimited earning opportunities to distributors as they earn commissions on the sales of their sponsors. It also rewards them with a fast start bonus, rank achievement bonus, and leadership pool bonus. Calculating various pay-out components for each member can easily be automated through the Unilevel MLM software.
2. Binary MLM Plan
The Binary MLM plan is one of the best network marketing plans. It encourages distributors to build two legs of their team. They also work towards balancing efforts between both teams, leading to an equilibrium. This simple yet straightforward strategy helps MLM companies expand their network rapidly and create strong marketing teams to survive the tough competitive space of the MLM world.
Understanding the Binary MLM plan
The Binary MLM plan provides each distributor with two frontline positions only. These two positions are often referred to as the left leg and the right leg, based on their placement in the genealogy tree.
Below is a perfect example of the Binary MLM plan genealogy tree.
In the above image, A heads the marketing network of Company X which employs the Binary MLM compensation plan.
A1 and A2 join the network. A1 becomes the left leg of the binary tree and A2 becomes the right leg. Each of them gets two positions to fill in their downline.
A1 recruits B1 (left leg) and B2 (right leg). A2 recruits B3 (left leg) and B4 (right leg).
Thus the Binary tree continues to expand vertically downwards.
Commissions and Bonuses in Binary MLM plan
Commissions are calculated on the sales generated by the weaker leg or the leg with lower sales volumes. Members are also paid pairing bonuses or matching bonuses based on member and team performances. The binary MLM plan is the one that implements the Binary MLM software to help manage numerous binary teams within the network.
Also Read: Difference between Binary MLM plan and Matrix MLM plan
3. Matrix MLM Plan
The Matrix MLM plan or the Forced Matrix Plan is one of the best MLM plans that have a fixed width and depth. Distributors can sponsor a limited number of members at each level based on the company matrix structure. Thus, leading to the network’s structured growth.
This plan emphasizes group efforts as distributors often work with each other to complete a matrix or achieve sales targets.
Understanding the Matrix MLM plan
The Matrix MLM plan helps companies build a restricted network with limited members. This way, distributors can focus on their team and support them.
Below is the perfect example of the Matrix MLM plan genealogy tree.
In the above image, Distributor A is the head of the marketing network of Company X which employs the 3X2 matrix MLM plan structure.
Distributors A1, A2 and A3 join the network. Each of them has three positions to fill in their downline.
A1 recruits B1, B2 and B3, A2 recruits B4, B5 and B6. A3 recruits B7, B8 and B9. Thus level one of the matrix is filled.
Similarly, these members further recruit three members each in their downline, forming level two of the matrix. This completes the matrix cycle.
Commissions and Bonuses in Matrix MLM plan
In this plan, distributors receive commissions based on the combined sales of their matrix. They also earn other bonuses like the matrix completion bonus, sponsor bonus, and level bonus which are performance-based. Companies can pre-set these performance metrics using Matrix MLM software and automate payouts for accuracy and efficiency.
4. Single Leg MLM plan
The Single Leg MLM plan is one of the simplest and best MLM compensation plans to understand. This plan places the network members in a single line. All the members have a common downline, regardless of their sponsors. The linear structure of the plan allows for quick and continuous expansion of the company’s marketing network.
Understanding the Single Leg MLM plan
The Single leg MLM genealogy tree consists of a single line. New members are placed on a first-come-first-serve basis, creating a continuous structure without limitations on the depth of the network.
Below is a perfect example of the Single leg MLM plan genealogy tree.
In the above image, A heads the marketing network of Company X which employs the single leg MLM compensation plan.
A1, A2 and A3 join the network.
A sponsors A4 and is placed under A3.
Two new positions are created under A4 as B1 and B2, and they join the network.
Later, A1 sponsors B3 and he is placed in the network under B2.
All these members are placed in a single line due to the company’s network structure.
Commissions and Bonuses in Single Leg MLM plan
Commissions are based on the performance of the network members. They also receive referral bonuses for referring new members. Members who meet certain sales criteria receive a new position in the network and earn a re-entry bonus. A Single Leg MLM software helps businesses to track individual member performance and reward them accurately.
5. Board MLM plan
The Board MLM plan is also called a Revolving Matrix plan. This MLM plan provides distributors with a limited number of positions in their downline, called a board. Once they fill up all the positions, the company moves them to a new board. The main aim for distributors is to fill multiple boards by recruiting members, thereby contributing to the growth of the company’s network.
Understanding the Board MLM plan
The genealogy tree of the MLM company comprises many boards. Distributors get multiple earning opportunities with each new board.
Below is a perfect example of the Board MLM plan genealogy tree.
In the above image, A joins level 1 of company X’s network that employs the 2X2 Board MLM compensation plan.
Later, A1 and A2 join the company’s marketing network and fill up Level 2.
A1 recruits B1 and B2. A2 recruits B3 and B4. These members make up Level 3. The board is complete once all the positions are filled.
Later, A moves to a new board, where he starts recruiting new members again.
Commissions and Bonuses in the Board MLM plan
Members of the Board MLM network marketing plan earn a board completion bonus and re-entry bonus along with commissions. Members are compensated based on their performance and position on the board. Specialized MLM software like the Board MLM software makes it easy for companies to track member positions in such a complex network structure.
6. Generation MLM plan
The Generation MLM plan is a structure that places all the directly sponsored members and acquired customers of a distributor in a single generation. The network of the MLM company comprises multiple such generations. E-commerce businesses widely use this plan due to its expansive reach and incentive structure that aligns with the dynamics of online sales.
Understanding of the Generation MLM plan
The Generation MLM plan provides no limitations on the number of members in each generation. Therefore, the network grows rapidly.
Below is a perfect example of the Generation MLM plan genealogy tree.
In the above image, A1, A2, and A3 join the network of Company X, which employs the Generation MLM compensation plan.
A1 along with its sponsors and customers form Generation 1.
Similarly A2 and A3, form Generations 2 and 3 along with their sponsors and acquired customers.
Commissions and Bonuses in Generation MLM Plan
Retail commissions are the main income source for members of the Generation MLM plan. Members also earn generation bonuses, referral bonuses, and team sales bonuses. Implementing the Generation MLM software is crucial for businesses utilizing this plan as it automates complex calculations involving multiple generations. It also supports 3rd party app integrations, ensuring smooth and efficient operations.
7. Party MLM plan
The Party MLM plan revolves around organizing and hosting home parties. Consultants earn commissions based on sales generated during such parties. It is one of the best compensation plans for MLM companies where personal demonstrations and social interactions play a significant role in sales, such as cosmetics, home goods, etc.
Understanding the Party MLM plan
The Party MLM network grows as party guests express their interest in joining the plan. Thus, the party host becomes the sponsor of the new member and is placed under them in the genealogy tree. The new members further host parties of their own where they meet potential leads to expand their own network.
Below is a perfect example of the Party MLM plan genealogy tree.
A1 joins the network marketing structure of MLM company X that employs the Party MLM compensation plan and becomes an independent representative.
One of A1’s customers, B1 decides to join the MLM company as an independent representative.
She hosts MLM parties, where she interacts with individuals and sponsors new members into the organization.
Commissions and Bonuses in the Party MLM plan
Members of the Party plan earn commissions on sales made during their parties. The company also provides them an opportunity to earn sponsor bonuses, rank bonuses, or fast start bonuses based on their performance.
Many active components are required to be managed under the Party MLM plan. Planning, managing, and hosting such parties is not a small task. A Party MLM software helps to streamline the scheduling of parties and track sales generated, thereby enhancing coordination and productivity among representatives.
Also Read: Unlocking the secrets of the Party MLM Plan
8. Stair Step MLM plan
The Stair Step MLM plan is an MLM compensation structure where distributors progress through various ranks or steps based on the sales they generate. Once they achieve a specific rank, they “break away” from their upline and operate independently. This plan is perfect for organizations that require a motivated and engaged distributor base.
Understanding the Stair Step MLM plan
The Stair Step MLM plan provides distributors with a clear hierarchical structure. They receive higher payouts and more benefits with each rank advancement.
Below is the perfect example of the Stair Step MLM plan structure.
Distributor A joins the marketing network of MLM company X and employs the Stair Step MLM compensation plan.
He starts from the Sales executive level position at joining.
He moves up the levels by achieving sales targets at each level.
He finally gets promoted to the highest level and becomes the national director of the MLM network.
Commissions and Bonuses in the Stair Step MLM plan
Network members in the Stair Step plan can earn bonuses like the fast start bonus, leadership bonus, rank achievement, and overriding bonus based on their performance. The stair-step MLM software ensures complete accuracy and transparency in the plan by automating rank advancement, commission calculations, and breakaway processes. It saves time and reduces administrative efforts.
9. Australian Binary MLM Plan
The Australian Binary MLM Plan is a variation of the Binary compensation plan. In this plan, distributors can employ a third leg for added benefits. With no restrictions on depth, the distributors can add any number of sponsors to their downline. This plan encourages rapid network growth and collaboration among distributors.
Understanding of the Australian Binary MLM plan
The extra leg in the Australian Binary MLM plan provides the distributor with an opportunity to grow the team faster. Also, distributors do not have to worry about balancing the sales for this leg, leading to faster payout.
Below is the perfect example of the Australian Binary MLM plan genealogy tree.
A heads the marketing network of Company X which employs the Australian binary MLM compensation plan.
A1 and A2 join the network. A1 recruits B1 and B2. A2 recruits B3 and B4 in their downline to complete their binary tree.
Further, A3 joins the network and forms an extra leg under A. He recruits B5 and B6 in his downline.
A receives extra income opportunities from the commissions of sales made by B5 and B6 from A3’s team.
Commissions and Bonuses in the Australian Binary MLM Plan
The Australian Binary plan provides its members with multiple commissions and bonuses for achieving various milestones and targets set by the company. This increases their earning potential and keeps them constantly motivated.
Australian Binary MLM software is vital for businesses using this plan as it streamlines administrative tasks and automates commission calculations. The software also aids in leg balancing and tracking the overall team performance. It creates a transparent and rewarding environment for the network members, thereby contributing to the MLM company’s success.
10. Hybrid MLM plan
Hybrid MLM plan is an innovative compensation plan that allows MLM companies to tailor their compensation models based on their business requirements. Hybrid plans often combine two plans, like the Unlievel and Binary compensation plans, combining the position points of these plans and eliminating the negative aspects.
Understanding the Hybrid MLM plan
Hybrid MLM plans are often a combination of two MLM plans. Companies take the genealogy structure of one plan and combine it with the compensation structure of another plan. Hence, the specific genealogy tree of a hybrid plan may vary based on company requirements.
Below is a perfect example of the Hybrid MLM plan genealogy tree.
The above image is an example of a hybrid plan combining the Binary and Unilevel structures.
A sponsors A1 in their downline.
Later, A1 sponsors B1, B2, B3 and B4. These members form A1’s downlines. The members are also divided into two legs- the left leg and the right leg.
Furthermore, B2 sponsors C1 and C2 in the left leg.
Similarly, C3, C4, and C5 form the downline members in the right leg of the genealogy tree.
Commissions and Bonuses in Hybrid MLM plan
The commission and bonuses in hybrid plans generally depend on the individual and group sales volumes of distributors. There may also be other incentives provided to the members based on the compensation structures chosen by the company. Such compensation plans with customized structures need specialized software like Hybrid MLM software. By leveraging the Custom and Hybrid MLM software, businesses can become flexible to adapt to the changing market dynamics.
Also Read: Difference between Hybrid MLM plan and Binary MLM plan
Which is the Best MLM plan?
Determining the best MLM compensation plan for your business is subjective and depends on a lot of factors, including company goals, preferences, commission structures, and specific features of each MLM compensation plan. Each compensation plan has its pros and Cons. You must choose the one that aligns with the company’s vision.
Some popular MLM companies like Amway, Herbalife, and Nu Skin have the best MLM compensation plans. They are known for their attractive incentive structure that provides ample earning opportunities to its members along with being a sustainable business model.
Conclusion
The MLM industry will undergo many changes in 2024. With transformations driven by technological advancements and shifting employee expectations, your MLM business needs to adopt innovative compensation plans that align with business objectives. This guide will assist you in understanding each MLM compensation plan and help make the right decision.
Once you have your ideal MLM compensation plan, you can complement it with Global MLM software. This reliable software will make it easier for you to navigate the challenging MLM landscape and emerge victorious.
FAQs
1. How do MLM companies address concerns related to pyramid schemes with their compensation plans in 2024?
MLM companies in 2024 focus on product sales, emphasizing genuine value over recruitment. They also focus on abiding by compliance rules and provide transparent compensation structures to their partners, distinguishing them from pyramid schemes.
2. Can MLM compensation plans be tailored to specific product categories or industries?
Absolutely!! In 2024 customization is key. MLM compensation plans can be adapted to various product categories or industries like health supplements, lifestyle goods, digital services, etc.
3. What measures can MLM companies employ to ensure fairness and equality in MLM compensation plans in 2024?
In 2024, MLM companies will emphasize equal opportunity through balanced commission structures, eliminating gender biases and promoting a level playing field for all distributors.
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