The best way to grow your business and increase its brand awareness is to sell it through multi-level marketing (MLM) plan. Also called direct selling or network marketing, this type of plan succeeds when the members have a strong network and use it to join new members in the plan. This way, the products/services get sold and you reach a wide customer base. This MLM plan works when you offer attractive incentives and profits to the members.
Each MLM plan is structured depending on what a business wants to achieve and the product/service that it wants to sell. An MLM has many types. A business may want to achieve more customers, more product sales, target a specific location or group and so on. Based on this, the MLM type is decided.
The reason why MLM business is popular is that it offers a chance of income from top to the bottom of the tree. IN any MLM plan, you join as a distributor under someone. You start to enroll people under you. When the people under you make any sale, a small part of the profit gets distributed among the upline members. If the right people join under you, you are guaranteed a good income from your downline. The people under you also ensure the same and hence everyone is benefitted by it.
Types of MLM Plans:
There are main 3 types of MLM plans-
1. Binary MLM plan
The Binary MLM plan follows a tree-structure with two legs, usually termed as the right leg and the left leg. Only 2 people can be recruited directly under a distributor and the remaining goes under the downline. Usually, the two legs in the Binary MLM plan is known as the power leg and profit leg. New recruits are added in the power leg and the tree keeps growing. A new recruit is added to the profit leg to complete the binary structure. The profit compensation is distributed among the upline members.
2. Uni-level MLM plan
This is the simplest MLM plan and allows distributors to add unlimited recruits directly below them. The distributor can keep adding newcomers and increase the width of his tree. The commission is distributed up to a fixed depth as previously decided. The process continues and schemes are made attractive by bonuses and incentives after reaching a specific level of frontline depth. This is most preferred for new MLMs as the concept is easy to explain for newcomers.
3. Matrix MLM plan
Also known as the forced matrix plan or the ladder plan, this MLM structure has a fixed width and depth as pre-decided by the company. Since the width is limited, the distributor has to drive more sales from his downline to enable profits. To qualify for the position and the forced matrix bonus in the Matrix MLM plan, the member’s downline team will have to complete their matrix and fill in all the required free positions. This type of plan is usually preferred by businesses that need people to purchase its products only once like RO filter, power bank and so on. Here a repeat purchase is generally not done by the members.
The rest of the MLM plans are derived from these 3 MLM types. A company can select the type of MLM that best suits their product and the business target they want to achieve.
4. Tri-Binary MLM Plan
This plan uses 3 child members under a single parent. Similar to the binary plan, a third leg is added usually to the left side here for sales support. During the time of payouts, 3 IDs are required for matching.
5. Australian Binary MLM Plan
This plan is very popular now and is preferred by most of the newly formed MLM companies. It is very similar to the tri-binary plan, but the only difference is that binary matching is not essential to complete the tree. It is also called the X-Up Plan or Step-Up Plan.
6. Straight-Line MLM Plan
This MLM plan grows in depth with recruits added one under the other. Also known as a monoline or linear compensation plan, here the distributor at the top of the hierarchy profits from every new user added downline.
7. Board MLM Plan
Also known as the revolving matrix plan or the recycled matrix MLM plan, this constitutes a board with a member limit set by the company. The role of the member is to recruit other members in the downline. When the matrix is complete, the board is divided and the member now has to recruit new members to complete the new board matrix. He gets a commission for the completed board and has to pay to join the new matrix.
8. Gift MLM Plan
Also named as the Crowdfunding MLM, Donation Plan, Money Order/Cash Order Plan or the Help/Helping Plan, this is a give and take plan. A distributor receives help from his network/downline in the form of donations when needed. Or a distributor sends a gift directly to one member and receives gifts from many other members. So, some of the members receive multiple gift receipts from others. This is beneficial for people who lack financial resources for maybe initial startup, business diversification or some other purpose. In turn, when other distributors need money, all other distributors have to pool the money so that they help him. The Gift MLM plan is considered illegal in some countries.
9. Mobile Recharge/ DTH Recharge MLM Plan
In this plan, members recharge other people’s SIMs and DTHs. The bonus or incentive is received when a set number of transactions are completed. You also add new recruits to increase the network.
10. Generation MLM Plan
One of the popular MLM plans, the generation plan is also referred to as the repurchase plan or the gap commission plan. This involves the generation structure or the levels and members earn a certain income either on level completion or rank achievement. The level completion bonus is when a certain level in the tree structure is completed. The rank bonus is based on your performance and is mainly associated with how active your downline team is. The FMCG products generally follow the Generation MLM plan.
11. Party MLM Plan
In a party MLM plan, the products/services are marketed through the arrangement of gatherings, parties, and social events. The host conducts the party inviting his family and friends and pitches the products to them.
12. Hybrid MLM Plan
The Hybrid MLM plan is a combination of two or more plans adapted to suit the business strategy and growth. Usually, the uni-level and binary MLM plans are combined to extract the strengths of both the plans.
13. Stair Step MLM Plan
This MLM plan also called the Stair Step Breakaway Compensation MLM Plan is based on a pre-decided volume of sales target that forms a step. When the distributor, with the downline team, completes the target/step, he is promoted to the next step or the higher level. The compensation is paid when the set target is complete. In this MLM plan, all strive for higher sales and better profits. While you move higher in the network, you better your income. Finally, those who earn higher or reach a threshold, breakaway and form part of another group within the MLM that aims for much higher income.
An MLM works well for businesses that lag behind in networking resources. MLM helps them to broaden their network and join new customers with the help of others. It also augments the income of its members.
An MLM works best when you manage the MLM tree structure and the payouts efficiently. The MLM software including the website and the app helps businesses to manage their MLM effectively. It fastens the calculations and helps in payout and member management.
If you are interested in MLM software, select the best MLM software development company near you that will design the software/website/app as per your MLM business requirement. After all, good MLM software will help you manage and increase your profits.