It’s undeniable that MLM is one of the known at home based business as of today, not just because it is easy to learn and profitable. But also, it can offer countless opportunity for you to improve your career and start it out as your own networking business. Although, MLM is based on commission but you can start out of this, by collecting more clients and you, your self can hire your own independent job seekers and help them out find a career out of this at home business. Let’s learn more about the MLM or the Multilevel Marketing Business.
MLM businesses operate in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising”. Additionally, distributors can also earn a profit by retailing products they purchased from the company at wholesale price.
Independent, unsalaried salespeople of multi-level marketing, referred to as distributors (or associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, etc.), represent the company that produces the products or provides the services they sell. They are awarded a commission based upon the volume of product sold through their own sales efforts as well as that of their downline organization.
Independent distributors develop their organizations by either building an active customer base, who buy direct from the company, or by recruiting a downline of independent distributors who also build a customer base, thereby expanding the overall organization.
This arrangement of distributors earning a commission based on the sales of their independent efforts as well as the leveraged sales efforts of their downline is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchiser as well as to an area or regional manager.
The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduced to the company, creating a downline of distributors and a hierarchy of multiple levels of compensation.
Commissions are paid to multi-level marketing distributors according to the company’s compensation plan. There can be individuals at multiple levels of the structure receiving royalties from a single person's sales. Basically your salary or your compensation will depend on what your company’s compensation plan is,
But you may choose from these different compensation plans that they offer to you.
And it is up to you to agree on it, or find another company that you may agree on their compensation plan. To give you a background of the different compensation plans that these company may offer.
We have a list here that may give you important information about your future compensation or salary with MLM companies or Network Marketing companies.
• Stairstep Breakaway plans This type of plan is characterized as having representatives who are responsible for both personal and group sales volumes. Volume is created by recruiting and by retailing product. Various discounts or rebates may be paid to group leaders and a group leader can be any representative with one or more downline recruits. Once predefined personal and/or group volumes are achieved, a representative moves up a commission level. This continues until the representative's sales volume reaches the top commission level and "breaks away" from their upline.
• Unilevel plans This type of plan is often considered the simplest of compensation plans. Uni-Level plans pay commissions primarily based on the number of levels a recipient is from the original representative who is purchasing the product. Commissions are not based on title or rank achieved. By qualifying with a minimum sales requirement, representatives earn unlimited commissions on a limited number of levels of downline recruited representatives.
• Matrix plans This type of plan is similar to a Uni-Level plan, except there is also a limited number of representatives who can be placed on the first level. Recruits beyond the maximum number of first level positions allowed are automatically placed in other downline (lower level) positions. Matrix plans often have a maximum width and depth. When all positions in a representative's downline matrix are filled (maximum width and depth is reached for all participants in a matrix), a new matrix may be started. Like Uni-Level plans, representatives in a matrix earn unlimited commissions on limited levels of volume with minimal sales quotas.
• Binary plans: A binary plan is a multilevel marketing compensation plan which allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributors front-line. This "spillover" is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. The primary limitation is that distributors must "balance" their two downline legs to receive commissions. Balancing legs typically requires that the number of sales from one downline leg constitute no more than a specified percentage of the distributor's total sales.
• Hybrid plans are compensation plans that are constructed using elements of more than one type of compensation plan.
Now that we gave you the 5 different types of compensation plans that you may receive when you start working with different MLM or Networking companies. It’s now just a matter of choosing the right company that will stand up to your expectations in term of compensation.