Multi-level marketing trends are supplementing the dream of financial independence of millions for distributors worldwide, thanks to the different types of MLM Commission Structures.
There are different types of MLM commission structures in Compensation Plans.The marketers gets them at different points in the network marketing ladder upon achieving certain targets.
Generally, Sponsor bonuses, pairing bonuses, matching bonuses, and level commissions are popular commission structures provided by top MLM companies. MLM business holders are using MLM Software included with different MLM commission structure based on their business requirements. In this blog, we shall discuss the types of MLM Commission Structures in detail.
What are MLM Commission Structures?
MLM Commission structures are the framework based on which MLMs offer to compensate their distributors or members. These structures vary from company to company, but they typically involve multiple levels of commissions, with higher commissions paid to those who make more sales or recruit more distributors
Best Types of MLM Bonuses and Commission Structures
The best types of MLM commission structures are those that provide an incentive for all members to work hard and build their businesses. Most people choose to join MLMs with commission structures that are simple and easy to understand so that members know exactly how much they can earn. There are a few common types of MLM commission structures that are used by most companies.
- 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.
- Pairing Bonus
A pairing bonus or Binary bonus is paid to a member/distributor only when their left and right Personal volume(PV) matches. This bonus is based on the downline members’ sales. Most MLMs have a cap on the maximum pairing bonus they would pay. A network marketer gets a pairing Bonus only under Binary MLM Compensation Plan.
- Level Commission
A member or distributor receives Level Commission when those members in his downline achieve commission on making sales. A percentage of such commission is distributed to those in the uplines according to the rank or level on which each upline member is positioned.This bonus extends up to the nth level.
- 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.
- 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.
- 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.
- 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%.
- 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.
- Roll-up or Compression Bonus
A compression or roll-up bonus is given to a distributor who has a member in his downline who is not performing well. To make up for the pay discrepancy, such members will be promoted or rolled up to a higher level, and a bigger commission will be paid. This form of compensation is given to employees who work for a company with a significant network and number of members.
- 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.
In this blog, we have discussed the most commonly offered bonuses in major MLM Compensation Plans. In the ground-level scenario, the companies alter these bonuses as per their business. So, there might be chances that there are slight variations in the bonuses in MLM Compensation Plans discussed here when compared to the market. Nonetheless, you can get a brief idea of the topic from here. Well, anything is better than a blank canvas, isn’t it?