Wednesday, September 10, 2014
Different Types of MLM Business
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.
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