The viability of a network company depends on the activity of distributors and their ability to duplicate the leader's actions. To ensure the sponsor's success is replicated and to build a duplication process, the conditions of the compensation plan should be optimized for the industry in which the company operates and involve people in the gaming process.

To learn more about what marketing should be like, you can read the article Your Ideal Marketing Plan

Effective marketing must meet certain requirements and parameters. First and foremost, attention should be paid to:

1. Width of the first line. The development of the first line is ensured by linear marketing - the simplest and most reliable basic type of compensation plans. In companies with developed linearity, stronger and friendlier relationships are established between people, which increases the effectiveness of mentoring.

You can learn more about linear marketing in the article LINEAR STRUCTURE IN COMPANY MARKETING. HOW LINEAR MARKETING PLAN WORKS.

However, in order to earn more, partners must remember the role of personal recruiting, stimulating structure activity, and building a duplication process.

2. Depth of the structure. The dynamic construction of the structure in depth is responsible for matrix marketing (in some cases - binary). Each participant must recruit a certain number of new members corresponding to the matrix, which helps the network expand faster compared to other plans. Furthermore, developing distributors in depth has a positive impact on the turnover of the structure and the leader's qualification.

You can learn more about matrix marketing in the article MATRIX MARKETING PLAN. HOW MATRIX WORKS IN MLM.

To build a structure correctly, it is necessary to control the balance of development both in depth and in width. The specialists of the FlawlessMLM team recommend using basic types of marketing in combination and outlining a more complex compensation plan. By mixing linearity with binary, you will accelerate the company's development dynamics without losing the structure's stability.

Marketing development is not standing still, and the FlawlessMLM team is constantly monitoring trends in the network marketing industry. Among the technologies used to build compensation plans are the following:

Structure Compression

Compression is based on moving a partner with their structure under a leader above their sponsor. Such reshuffling occurs when the following conditions are met:

1. The distributor achieves a higher status than their sponsor;

2. The sponsor does not reach a similar or higher level of status for several periods after the distributor's promotion.

Compression is applied exclusively to partners at the initial levels of the MLM career ladder and is a method of consolidating and purifying the structure from partners not interested in long-term and active collaboration.

Through compression, active users become part of active leaders' teams. A passive sponsor can become a parasite to the invited partner, not providing a basis for quality learning and development. Compression makes the structure more profitable and balanced; active partners have the opportunity to learn from real leaders.

Clause

The clause acts as a kind of equalizer and is imported into marketing conditions to ensure that the structures of personally invited partners develop evenly.

Imagine that one of your distributor's teams generates more than 50% of the total turnover of the entire structure. In this case, bonuses from the performance of this team decrease due to the Clause, and you risk losing part of the potential profit from the structure. In order to restore the previous income level, it is necessary to stimulate weaker partners to make up for the shortfall and increase their turnover over several monthly periods (coefficient 1.5:1). If the condition is not met, the amount of the Clause is reset to zero, and you lose a small portion of your income.

The Clause calculation is done by the formula:

C = (S - Sm) / 2, where

C - calculated value of the Clause;

S - total turnover of the structure;

Sm - turnover of the personally invited team, which accounts for more than 50% of the total income.

The clause operates at all levels and motivates the leader to maintain a balance of profitability among different branches of the structure. If the imbalance between the performance of teams is not addressed, the leader will progressively lose their earnings.

Example:

There is a certain structure. The profitability of different levels of the structure is distributed as follows:

6.67 units - personal-invite structure #1;

3.33 units - personal-invite structure #2;

100 units - personal-invite structure #3;

6.67 units - personal-invite structure #4.

The turnover of personal-invite structure #3 was 85.7%. The leader is calculated Clause, according to the formula, which will be (116.67 - 100) / 2 =8.34 units. Sponsor's income will be (116.67 - 8.34) = 108.33 units, instead of potential 116.67. Structures of personally invited No. 1, No. 2, and No. 3 need to attract investments of 12.51 units (ratio 1.5:1) over several monthly periods to return the leader's Clause amount.

Agio

Agio represents an additional value to the main payment, a certain percentage of the investment that pays off over a certain period of time. Agio includes companies that want to attract investors who play "for the long term," as it simply becomes unprofitable for them to withdraw money immediately after investing.

The user may have the opportunity to pay Ajio with credit funds - the user will simply block a certain percentage of the investment amount until the loan amount and interest on it are repaid.

Example: the user selected the "Basic" package and makes an initial contribution of 10000 EUR. The Ajio amount of 6% is added to the contribution amount, which amounts to

(25000 * 6/100) = 1500 EUR. If the user chooses to pay Ajio with credit funds, 10% of the invested amount is blocked, which amounts to 2500 EUR, until the loan is repaid.

Bonus Motivation System

Royalties

Royalties are a bonus for the contribution of personally invited partners, it is a more complex version of a regular referral bonus

The amount of Royalties is calculated by the formula:

R = (S / n) * K R, where

R – calculated amount of Royalties;

S - deposit amount of personally invited;

n - constant coefficient;

K R - Royalty coefficient that increases depending on the partner's qualification.

Example:

There is a specific structure. User 1 is qualified as a Consultant with Personal units of 100 and Structural units of 3100. To upgrade qualification to Advisor, User 1 needs 200 units.

User 2 makes a contribution of 100000 EUR. We calculate the number of calculation units:

(100000 / 300) = 333.33.

Royalty coefficient for Consultants - 6.5.

Royalty coefficient for Advisors - 8.5.

The royalty for Consultants is calculated from 200 units, the royalty for Advisors is calculated from the remaining 133.33 units:

200 * 6.5 = 1300 EUR;

133.33 * 8.5 = 1133.31 EUR.

User 1 should receive royalties in the amount of (1300 + 1133.31) = 2433.31 EUR.

Leadership bonus

Passive income for a mentor, rewarding for developing the structure of a leader he "raised". Relevant for step-type marketing with a margin, used in hybrids.

Matrix Bonus

Accrued when sponsors fill their matrix with downlines. Each distributor earns income only when all matrix cells are filled and "triggered" (meeting the required minimum action).

Fast Start Bonus

Reward for achieving a specific goal by an agent, received by both the partner themselves and the mentor who brought them in. Typically, the "goal" is considered achieving an honorary title in the company in a short period.

Cycle Completion Bonus

One-time, fixed reward paid when all participants in the structure have achieved a certain turnover.

Providing various types of rewards increases the activity of the structure and the business as a whole. Based on the experience of the FlawlessMLM team, the higher the percentage of income the company returns in the form of compensations, the faster it achieves success.

For example, one of the FlawlessMLM team's projects achieved success in less than two years of operation by using hybrid marketing and allocating 83.33% of its total revenue to the partner program, distributing compensations across 8 types of bonuses.

The hybridization of the company's marketing and optimizing its profitability using the above-mentioned technologies increases the company's resilience and profitability. We recommend not to forget that first and foremost, the company and its marketing should be as attractive as possible to both potential and existing partners.

Thanks to the internet, attracting people has become easier, faster, and cheaper, allowing the structure to develop and scale faster. But there is a specific feature: if previously it was possible to calculate and control the work of structures manually, now, considering the size, number of teams, and the variety of compensation conditions, it is practically impossible to do this without automation. Software is an integral part of running an MLM business.

The team FlawlessMLM has years of experience in writing from scratch and optimizing marketing and developing comprehensive software solutions for network companies of various orientations.

How to increase MLM structure activity