Types of MLM Bonuses and Commission Structures

Types of MLM Bonuses and Commission Structures

In Multi Level Marketing, commissions and bonuses serve as financial incentives for distributors, but they differ in terms of their structure and purpose: Commissions: Commissions in MLM are the earnings distributors receive based on the sales they generate directly. Bonuses in MLM:: Bonuses are additional incentives provided to distributors for achieving certain goals or milestones beyond regular sales commissions. MLM companies often employ a range of commissions to reward distributors for their efforts and achievements. Let’s delve into some of the most common types:

1. Sponsor/Introducer Bonus

   MLM distributors or members receives a Sponsor bonus if they recruit new members to the network as their downline. Also known as a referral bonus, this bonus is computed using the company’s specified rate.

   Eg:A motivated B to join the distributor network of his MLM company. B will be admitted as A’s downline and A will get a Sponsor Bonus.

   
2. Pairing Bonus

   A pairing bonus, also known as a binary bonus, is a reward given to distributors when they achieve balanced sales volume on both sides of their binary MLM structure. This structure typically involves recruiting two people directly under them, forming a left leg and a right leg.

   Eg: Distributor A sponsored B and C to his right and left and balanced the binary tree. Then he is eligible to get a pairing bonus.

   
3. Level Commission

   Level commissions in MLM are another type of commission structure where distributors earn a percentage of sales volume generated not just by their direct recruits, but also by downline members at various levels below them. This essentially means you could earn income from sales made by people you might not even know directly.

   Eg: Each level has a pre-defined commission percentage. Let’s say the first level gets 10%, and your second level gets 5%. If someone in your second level generates $100 in sales, you’d earn $5 as a commission.

   
4. Matching Bonus

   A matching bonus is a percentage of the pairing bonus paid by a member to those in the uplines who recruited or sponsored him to the network.

   Eg: X sponsors Y. A company offers a matching bonus of 15%. When distributor Y achieves sales or any other commission, his sponsor X will earn a 15% bonus on such commission.

   
5. Position Bonus

   A member in a Matrix MLM Plan gets a position bonus when the downline team members recruit new members and they join the matrix.

   Eg: For instance, there is a 3*3 matrix. A member will be eligible to receive a position bonus when a new member joins his 3rd down level. The percentage of position bonus can be adjusted as per the company’s policies.

   
6. Forced Matrix Bonus

   Forced Matrix Bonus is additional compensation for the distributors. The members would be eligible for this bonus when they fill their matrix with downline members as per the preset size of the matrix.

   Eg:Consider a 3×3 matrix plan with a Forced Matrix Bonus of $100: Distributor X successfully recruits and places 9 downline members, filling their entire matrix. Upon achieving this, they receive the $100 forced matrix bonus as an additional reward.

   
7. Fast Start Bonus

   New members are given a fast start bonus to enhance their interest in the MLM business. The fast Start bonus comes in form of a higher-than-average sales commission on a new member’s first sale.

   Eg: If a company is paying a 5 % commission to its members as per the basic plan, then the fast start bonus will enhance such rates of commission to 10%.

   
8. Party Bonus

   When a member arranges a party with the goal of selling MLM products or expanding networks, he earns a Party Bonus. Because a single event might inspire a large number of individuals to join the network, such Parties are rewarded with a Party Bonus.

   
9. Roll-up or Compression Bonus

   Roll up or compression bonus in MLM refers to a type of reward system where inactive or underperforming members in your downline are “compressed”, or skipped. And commissions from their active downlines “roll up” to you, i.e, the distributor next to him or below him will be rolled-up to the higher level in order to fill the gap.

   Eg: Distributor A earns commissions from the sales of their downlines in two levels. They get a bonus of 10% from the sales volume of Distributor B, who they directly recruited. However, if Distributor C, recruited by B, doesn’t make any sales, A won’t earn any bonus from that second level. But if there’s someone like Distributor D on the third level who makes sales, their commissions roll up to A, and they get a 10% bonus from D’s sales volume.

   
10. Generation Bonus

    A distributor or member will get a Generation bonus based on the predetermined percentage of commission or bonus decided for each generation by the company. Such a bonus is based on the sales made by each generation.

    Eg : Member X has 3 generations in his MLM network. Generation 1 ,2 and 3 makes 200,100 and 300 worth of sales respectively . In such case if predetermined rate for generation 1 is 30%,generation 2 is 20% and generation 3 is 30 % ,X will pay a generation bonus of 30% of 200 + 20% of 100+10% of 300.

    
11. Infinity Bonus

    Infinity Bonus is a lucrative reward reserved for top performers. It typically involves earning a percentage of sales or commission generated by members beyond a specific level in your downline structure, stretching indefinitely – hence the “infinity” aspect.

    

    Eg : Distributor A, who is ranked 5th, can earn “infinity bonus” of 2%, only if:

    1. No one below him in the network reaches rank 5 or higher.
    2. If someone below him reaches rank 5, he loses the bonus completely.
    3. If someone below him reaches a lower rank (like rank 4), he still gets a bonus, but it’s reduced by the amount the lower-ranked person gets (so if someone gets 1%, his bonus drops to 1%).

      Similarly, Distributor B, ranked 4th, can also get a smaller 1% infinity bonus, but it can affect Distributor A’s bonus if both conditions are met.

12. Matrix Completion Bonus

    Matrix Completion Bonus is a reward for those who operate within the matrix MLM plan. It is given to distributors who successfully fill up a specific matrix structure within their downline. This type of bonus differs from the standard commissions earned on individual sales and encourages rapid recruitment to complete the matrix quickly.

    Eg Distributor A, under a 3×3 matrix plan, initially recruits 3 downlines on the first level. Each of these 3 members subsequently recruits 3 members, resulting in 9 additional recruits (3×3=9). Following this, the 9 recruits each bring in 3 more members (9×3=27). Once this structure is complete, Distributor A becomes eligible for the matrix completion bonus.

13. Cycle/Board Split Commission

    When a distributor fills the entire board or cycle in the board MLM plan, they will be advanced to a new board level. Upon achieving this milestone, the company sets a commission for the distributor. For example, upon completing Board 1, the distributor earns a position in Board 2 and becomes eligible to receive the cycle commission.

    Eg: Distributor A, within a 2×2 board structure, recruits B and C on the first level, and D, E, F, and G on the second level. Upon successfully filling the board, Distributor A qualifies for a cycle commission, earning a certain bonus amount.

14. Re-entry Bonus

    In a matrix or board plan, a distributor or sponsor earns a re-entry commission when their downline completes multiple boards and re-enters the same matrix/board. This incentive is provided to motivate the distributor.

    Eg: In a 3*3 matrix, a distributor recruits to fill all 9 positions in their first matrix (board). Upon completing the board, they are promoted to a higher level or offered the option to re-enter the same 3×3 matrix. If they choose to re-enter, they receive a re-entry bonus as additional incentive.

15. Performance Bonus

    Performance bonuses in MLM, also known as achievement bonuses, are rewards given to distributors who exceed specific sales or recruitment goals. Unlike other MLM commissions based on downline activity, these bonuses directly incentivize individual effort and performance.