There are majorly three categories for a MLM business,
based on the source of revenue. These can be divided as the business that sells
a product followed by the business that sells a service and thirdly, the
business that sells memberships. What attracts most people towards a MLM
business is the one where one not just earns money from the sales that
they make but also from the commissions that they get from sales made by those
who they recruit in the business.
For the
MLM business that sells products or
service, basically the only difference from a regular store is that they sell
goods personally instead at a store front. They contract sellers who are
independent contractors, who then are free to use any sort of MLM plan or
Binary Plan software etc. to figure out how they want to recruit more people
and this in turns, leads to the expansion of the company. The MLM participants
earn commissions on their sales and also from the overrides and the sales that
their associates who they have recruited, make for the company. The companies
that sell their product are usually manufacturers as well. However, they can
also have a contract with a third party who manufactures the product for them
under the MLM label.
The third type of business where sales are made by selling
memberships, are often called as pyramid schemes. These pay associated to
recruit a new associate by providing them with an incentive. However there is
no emphasis on product or service therefore, these are termed as illegal firms.
One has to be cautious of such firms.
Therefore it is very important for a person to be careful as
well as aware of the things that should be kept in mind while joining a MLM
business. These things range from, keeping a tap on what sorts of business
is the company into, what products are they selling, is the company real, what
kind of people are involved with the company and other such information must be
gathered beforehand.
The concept of multi level marketing came into existence
between the year 1945 however, these trace back to the 1920 s. Even earlier, the
MLM companies required for the sales distributors to recruit more people and in
turn earn more commissions on individual sales as well as on the sales for the
recruited distributors. MLM industry today has become worldwide, and with more and
more companies coming in,the number of frauds and MLM scams are increasing as
well. Also, with the increasing MLM business, there is helpful MLM
Software launching every now and then in free as well as paid version. These
MLM Software help with the financial planning of the business and
now there are the Binary plan Software along with those that help
with the Matrix plan etc.
There are many more specific terms that need to be
understood before one can study the compensation plans deeply. These range from
the Rank Advancements to the variable commissions etc. However, the above
mentioned are the basics that one must understand to even fully grasp the
meaning of the various compensation plans.
Binary Plan: The most important of the MLM plans is
considered to be the
Binary MLM Plan. This is basically the 2xN matrix plan
where the N stands for the levels where commissions can be derived from. There
are minimum restrictions in this structure with each level earning on frequent quantity
of sales and this in turn helps bring in more affiliates to the organisation
thereby increasing the size of the MLM Business
.
To make management and organisation of this structure easier,
Binary plan Software have been launched which provide online solution for MLM
Business
using Binary Plan Calculations. These usually revolve around
simple steps based on easy User Interface which can be used by anyone without
much worry. The admin panels provide all controls that make using the software
even simpler.
The advantages of Binary Plan are that the pay-outs are much
more and the down line is infinite. It also helps nurture teamwork thereby
spreading cooperative energy. There is a lot of potential here for earning
depths through the compensation plans and for the person running the MLM
business the point of concern reduces from the power leg as it is being
built continuously by all those involved.
This system is much easier to understand even for the novice
and help the network marketers realise financial freedom, thus pushing them to
achieve success at a much higher pace. Now managing this system has become even
easier with the Binary plan software that allow one to manage the
power leg along with the profit leg easily. There are many Binary Plan
Software being introduced and developed in India which give MLM companies
freedom of business and efficiency in their working.
Matrix Plan: After the Binary Plan comes the Matrix
Plan which is also known as the ladder or the Forced Matrix plan.
Here members are organised horizontally as well as vertically and compensations
are set basis the level. The members here motivate the ones below them to earn
more profit. The member is allowed new recruitments under his downline. This
system has also begun to be managed by software that are designed with
consultation from experts in the MLM business.
In a
Matrix plan for example, one is allowed
that they can sponsor 3 front line distributors or associates and then they will
get paid down to 5 levels in the organisation. Once you achieve the fixed
number of front line associates the new associates are positioned under the
existing frontline associates/distributors thereby causing a spill over.
One of the major advantages of the Matrix plan is
that it helps one encourage people at the lower levels and foster leadership
within the business. The plans are usually rigid but now the businesses have
figured a way to balance these. Most companies following this compensation
scheme usually over the time modifies the planto overcome the vulnerability. This
is shaped as a pyramid and the Matrix plan also incorporates
certain characteristics of the Uni - Level compensation plan.
Uni – Level Plan: The
Uni – Level Compensation plan
is where the sponsor goes on the first level and there they are allowed to
sponsor as many associates as they can. Earlier there was only one level, thus
the name Uni – Level, but now there are various levels that being considered in
the industry. The main benefit of this scheme has been that the distributor gets
better pay depending on the percentage of his personal sales which is like an
incentive for someone to do more personal selling.
Help Plan:Then there is also the Donation Plan
which is known as the
Help Plan. These are basically run by
various MLM companies across the world with their network. These are illegal in
India however some countries allow it. The basic problem with this is that donations
keep laundering because if you give a single gift to a network then you get
multiple gifts from others as well. Now there are many
MLM Software
designed to support this Help Plan to the optimum. The key
features of a
MLM Help Plan Software are virtual gain, help
history, rejected help, re – assigned rejected help, bank receipts upload
facilities, secure and time saving applications, Manual or Auto Send help etc.
Stair – Step Breakaway Plan: This plan is where
distributors climb the ladder to reach certain level where they are allowed to
run their organisation independently. Here as well, like for any business, the
aim is to distribute the parent company’s products. Breaking away from the
upline basically helps the distributor because it means higher commission rate
for them therefore they work with more dedication, however there are a few
drawbacks as well.
The original sponsor still earns small percentage from each
breakaway distributor which is referred to as the override commission. Also,
for the parent company it might put a dent in the income even for a short term
when a distributor breakaway from the organisation. This is considered as one of the most
difficult of the plans because it is difficult to understand as well as explain
which makes it not a great choice when it comes to training newer recruits
every now and then.
Other plans: There is also the Differential Plan
where maximum percentage is allows to be distribute amongst members followed by
Board Plan where a structure is formed represented in a rectangular format. Apart
from these are the Generation Plan, Single leg business plan etc. that have come
up as more recent concepts.
Get For More details
Email: sales@mlmyug.com
Phone: +91 93522 12119
