Do you breathe? How often? What is your requirement for breathing?
Just as silly and obvious as these questions may sound yet how important the process is to the survival of humans, the relationship of MLM plans to network marketing business also holds a similar tone. MLM compensation plans breathe life into multilevel marketing businesses.
Breathing is a process that streamlines the pulse and beat of your body. Even a slight variation in the patterns will have its own implications on your overall health. Likewise, MLM compensation plans determine the health of an MLM business and that’s the major reason why MLM companies invest so much of their time, effort, and capital in devising a flawless compensation plan.
And with so much hullabaloo about MLM compensation plans, let’s dive deeper into understanding the basics of it.
Simply put, an MLM compensation plan or MLM commission structure describes the process by which MLM companies pay their independent salesforce aka distributors for the sales they have personally made and the sales of distributors they have enrolled into the system.
In a broader outlook, MLM compensation plans are what keeps MLM businesses alive and kicking. They reflect an organization’s culture, values, and ethics. Effective compensation plans recognize, reward, and incentivize distributors perfectly.
It can be defined as a sturdy business structure with bonuses, commissions, revenue and profitability markings. Structured on pure mathematics, an MLM compensation plan with even a hairline flaw can break the business.
One big advantage of an MLM plan is that you get to know it better when your business progresses and you can make alterations to suit your business stability. However, this advantage is a must-do for maintaining the strength of your network marketing business.
Different compensations work differently. Their commission structure and bonuses vary. Major compensation plans pay distributors for the personal sales volume and for the sales made by their downlines. Some compensation plans also pay commissions up to certain downline levels.
Multilevel marketing is vibrant with a wide variety of compensation plans to its credit. There are 3 types of major compensation plans—Binary, Unilevel and Matrix. Rest are hybrid versions of these plans. Each has its own unique characteristics and MLM organizations choose to decide which plan to employ based on their business interests. This decision is also dependent on various factors such as product pricing, the cost to customer ratio, organizational goals, etc.