Marketing in MLM. Comparison of different types of compensation plans

Compensation plan (marketing or bonus plan) - an algorithm that determines the volume and order of financial rewards for MLM company partners. Marketing sets the direction for the project's development.

Why a marketing plan is needed

First of all, marketing ensures the implementation of the following tasks:

1. Enterprise profitability. A quality bonus allocation plan plays a role in maintaining the turnover of goods at the proper level, proportionality of profit distribution, optimization of the amount and volume of payments compared to the income received.

2. Formation of a distribution network. A partner structure is built from people who have entered the business, the task of which is to convey information about the product to the end consumer and increase the sales volume of the company's product.

3. Support of structure activity. Marketing conditions motivate distributors to increase sales volume and attract more new trade agents to their teams.

If the compensation plan does not cope with the above-mentioned commercial tasks, the company may fail.

What a compensation plan can be like

Each well-known network company has developed a unique compensation plan and worked on its improvement. Despite the variety of marketing conditions in the industry, they can be classified into four main types:

- linear (UniLevel or equal level);

- binary (Binary or binary);

- matrix (Matrix or array);

- step (StairStep).

In this article, we will compare linear and binary marketing, as they are the most commonly used in the industry.

Linear Marketing

This is the simplest and at the same time strategically flexible principle of reward calculation. In it, the structure of personally invited distributors is built into a line, without restrictions on its width.

The leader of such a structure is equally focused on expanding his line and developing the lower levels of the structure through the work of the team he has built. The leader's earnings directly depend on the number of generations (such structural lines that develop lower-level partners).

Advantages: stability and sustainability of the developing business.

Cons: slow development speed of the structure.

In the marketing of the NL international company, a certain linearity is visible. And not for nothing, starting from the year 2000, they confidently scaled up and worked on their reputation. The conditions of the NL partnership program imply that all personally invited newcomers become part of the first line. Those invited by distributors are subsequent generations. From all structural levels, the leader receives a bonus for the group sales volume.

Binary Marketing

In binary, the structure develops in depth, assuming only two positions in the first line. The third person recruited will drop down to a lower level, into an empty cell of one of the partners. This plan divides the structure into the right and left branches.

Often, one branch is defined as strong, and the other is called weak. These names do not exclude the fact that to receive rewards, their balance must be maintained. If you have seven sales in the first branch and two in the second - there will be no bonus.

Advantages: you only need to control two distributor teams, and the structure develops very quickly in depth.

Disadvantages: complexity of implementing a reliable plan.

Given the speed of development of projects built on pure binary, this principle has gained popularity among "hype projects" whose operation is similar to financial pyramids. You can learn more about the difference between scams and legitimate business in the article Network Marketing vs Pyramids. 

To avoid a quick collapse in a project built on binary, it is important to think about ways to stabilize such marketing. This can be done as follows:

- limit the number of binary levels. By closing the allowed number of levels, spillover will occur, and the leader will start developing a new structure from scratch. With a closed structure, the leader will continue to receive a certain passive income.

- combination with other marketing. The success of many projects lies in the fact that they do not use a specific type of bonus plan in its pure form but hybridize it.

Mixed Marketing

Hybrid marketing - a commission scheme that combines the conditions of the aforementioned types of marketing. When developing such a reward scheme for trading agents, it is possible to eliminate the drawbacks of basic types of MP and take advantage of all their benefits.

Keep in mind that not everyone can develop such marketing effectively. A specialist must possess deep knowledge of the nuances of basic marketing types, carefully work out and test the final version.

Advantages: includes the benefits and excludes the drawbacks of "basic" marketing types.

Disadvantages: development complexity.

In the product MLM company, Siberian Health, a hybrid marketing strategy is skillfully developed. This project was founded over 20 years ago and has proven to be absolutely sustainable. Linearity in the marketing of this business is embodied in the principle of structuring, and the structure is divided into qualification branches.

Most major network companies periodically review the terms of their compensation plan, consulting with experts in the field of developing multilevel marketing companies. As needed, new bonuses and motivation programs are implemented for partners.

How to Develop a Network Company Marketing Plan

When creating a network company, it is important to involve professionals in developing the compensation plan. For marketing writing, an expert approach and practical experience are important. Most contractors in the business analytics industry do not know the specifics of MLM and do not have experience in marketing calculation. By turning to IT specialists working in the network business field, you will save both time and money.

Team FlawlessMLM will write or optimize marketing according to niche trends and the specifics of your business. Ask questions to managers in the website chat flawlessmlm.com. They will select the optimal type of marketing that will allow you to maximize the company's potential.

All information about compensation plans in network marketing is gathered in the blog section MARKETING PLANS