Types of Multi-Level Marketing Compensation Plan in Network Marketing
MLM, typically known as network marketing or pyramid selling, is a marketing strategy for selling services and products. Network marketing is a vibrant business with a wide range of compensation schemes to its credit. A remuneration plan is a process by which pyramid companies pay/reward their independent salesforce.
The multi-level marketing industry is tremendously increasing because of remuneration plans. A compensation scheme is a fundamental factor for every Multi-Level Marketing business. Remuneration plans work differently. The commission structure varies for every compensation scheme. The network marketing scheme also keeps track of the distributors for their sales in person. And the sales distributors have enrolled in the system.
Your network marketing business can grow with a large income possibility with an effective compensation plan. A network marketing commission software makes your remuneration plan effective. The software allows multi-level companies to operate large-scale network structured data. It also performs fast calculations with it. The following are the types of network marketing compensation schemes.
- Uni-level MLM Plan
The Uni-level compensation scheme is user-friendly and very simple. The Uni-level compensation scheme has only one business level. All sponsored members of a distributor are placed at the first level. In the Uni-level, the distributor’s rank will determine how many pay levels they will earn. Although, the percentage remains constant at all levels. Distributors in Uni-level with single pay level will have to generate huge sales to earn a decent commission.
All Multi-level marketing companies using this remuneration plan supplement the commission with extra bonuses. These bonuses are pool bonus and fast start bonus. This levels the commission of a distributor with a single paying level. Uni-level remuneration plan is ideal because it has unlimited width.
- Binary MLM Plan
The binary compensation scheme is also easy and simple to understand. Unlike Uni-level, all distributors in binary will only have two downlines. They are also known as ‘legs.’ The Sales representative frontline is limited to two legs, but the depth is unlimited. A binary remuneration plan also offers a fast start bonus for salespeople, while higher-level distributors get a pool bonus.
In a binary MLM scheme, a commission is calculated based on which leg has the least amount of volume. Network marketing binary plan pays their salesforce with a pay leg commission. Binary compensation pays faster than other remuneration plans with unlimited depth.
- Stair-step or Break-away MLM Plan
Stair-step is an advanced scheme that regulates the growth of distributors from level to level. A break-away commission is a type of differential commission with progressive steps. A representative is responsible for group sales and personal sales volume in the break-away scheme. An individual in this remuneration plan will have to generate many sales to climb steps. Stair-step compensation plans are great at rewarding customer sales. Break-away plans work perfectly for party plans. Your efforts will elevate you to another level until you reach the break-away point in this scheme.
- Matrix MLM Plan
A matrix scheme is also known as a forced matrix plan. Because the matrix plan has a fixed width and depth, distributors in the matrix scheme can only grow their downlines to a fixed number of members. Earning increased productivity is one of the advantages of a matrix compensation scheme. The matrix plan has extra bonuses such as sponsor bonus, level completion bonus, and matrix completion bonus. Matrix plan software is a tool that helps members calculate their commissions and bonuses. The software also monitors the performance of sales affiliates and forecasts the strategic actions needed to meet the targets. The forced matrix scheme is simple and easy to manage.
Conclusion
All compensation plans are the backbone of a successful Network marketing business. Network marketing companies are advised to choose a remuneration plan which works perfectly for their business. There is no compensation scheme which is better than the other. All remuneration plans are effective and productive. We have discussed the best multi-level marketing compensation schemes above, such as Uni-level, Binary, Break-away, and Matrix.
