How does a linear marketing plan work in network marketing

The linear MLM marketing plan attracts entrepreneurs with its simple and clear structure. However, this simplicity also hides nuances that can significantly impact the long-term development strategy of a network business. So, what are the main features of linear marketing? Let's find out

What is a Linear MLM Marketing Plan?

A linear marketing plan, also known as a single-level or classic plan, is a compensation structure that allows you to sponsor only one line of partners. This means all new participants attracted by a distributor are placed in a single line directly beneath them. This approach is effective in various business sectors because it provides a simple and clear way to build a team.

In network companies with a linear marketing type, all distributors are equal in their rights and purchase products at a uniform price. The linear MLM plan does not limit the number of partners on the first level. Each of these partners can also have their own N number of distributors. 

The created structure is divided into generations (levels), and compensation is typically paid for the activity of participants in the downstream structure, usually at a depth of 4 to 10 levels.

Imagine a linear marketing plan with four levels that pays compensation when the sales volume in a line reaches $1000. Commissions typically decrease at each level. The bonus from first-level partners' sales would be 25% of $1000 = $250. On the second level, it's 10%; on the third, 5%; and on the fourth, 2.5%. In total, the structure would bring in $425 in income. The size and period of compensation, as well as the number of levels, depend on the specific network company's marketing plan.

This marketing plan is the most “strategically flexible” and has always been considered technically the best plan for any area of MLM business. In modern business conditions, most large companies use linear marketing as a partnership or bonus program that creates a more attractive image and increases sales. 

Calculation of Commissions in Linear Marketing

In a pure linear marketing plan, three types of bonuses are often used to increase structural stability and activate team work:

1. Sales Commissions - the amount paid based on the sales performance achieved by downstream participants in the structure.

2. Sponsor or Referral Bonus - profit a user receives by attracting new members to the company.

3. Team Bonus - compensation a leader receives when their team closes a sales cycle.

4. Fast Start Bonus - a reward for an agent achieving a specific goal, received by both the partner and their mentor. Usually, the “goal” is achieving an honorary title in the company within a short period.

5. Matching Bonus - paid to team leaders as a percentage of their partners' commissions. The reward amount usually depends on the partner line's level but applies across every generation. This bonus is paid only if the downstream participant in the structure has not achieved a “rank” higher than yours.

6. Infinity Bonus - an element of hybrid marketing (linear + stair-step). It implies that bonuses are paid from an infinite number of levels deep.

Often, MLM companies include various additional conditions for commission payouts. For example, a rule for a minimum number of participants in a structural line. Also, companies may periodically vary the number of paid levels deep and their percentages.

Advantages and Disadvantages of the Linear MLM Marketing Plan