Top 5 MLM Compensation Plans

An MLM compensation plan is defined as a specific structure by which the distributor lineage is formed. It essentially describes the process by which network marketing companies pay their distributors for the sales they have made. Also, it includes methods and formulas for calculating distributors' earnings.

Hence, compensation plans are one of the most important factors that determine the success of companies, and choosing the best one requires excellent analysis and understanding. This blog will help you understand the best MLM plan of all.

Binary Compensation Plan

The binary MLM plan is one of the most popular and oldest schemes that is based on sales volume rather than sales level. It follows a two-legged tree structure with right and left legs. While one subtree of the plan will act as a power leg, the other is considered the weak leg. And the payout calculation is based on the weaker leg sales.

In this plan, every distributor has to add two downlines as their right and left leg. Since a binary tree has only two legs, additional members or consecutive distributors spilled over to the right or left leg, which is called spillover. This process goes on unlimited depths or as specified by the network marketing company.

Board Compensation Plan

The Board plan is also known as the Revolving Matrix Plan where the position of the distributors is recycled to a new position on a newly created board. It is a popular approach appropriate for an MLM company that wants to operate with a limited number of distributors.

Although this plan payment model is similar to the binary plan, there are some fundamental differences in that the board scheme adopts a cross-matrix structure. Also, this scheme has different types like single, multiple, shuffle, and autofill. Also, it has multiple boards based on the needs of the company.

Matrix Compensation Plan

A Matrix plan is the most popular plan in many countries commonly called the forced matrix plan. This scheme is based on the "M*N" width & depth formula. It allows members to specify the number of downline distributors according to the fixed Width*Depth. As it follows the formula of “M*N” which limits the number of members in the initial phase while encouraging them to grow the network.

In this plan, the commission and bonus factors boost individual performance and keep the entire network comparatively active. Its bonuses are the best among all other compensation plans, as it offers Sponsor Bonuses, Matching Bonuses, Level Commissions, Position bonuses, Matrix bonuses, and more for distributors to get rewards for their efforts.

Monoline Compensation Plan

Monoline MLM Plan is also known as a single-leg compensation plan, one of the popular strategies among other network marketing schemes. It only adheres to the principle that everything falls into a single line, so there are no limitations on the width, depth, or number of legs. The straight-line members who are from the downline join the scheme after the upline member. Besides, it is the timing of joining that determines the earnings and it doesn't matter who adds whom.

MLM Party Plan

The Party MLM plan is a technique followed in direct selling business to advertise or brand any products by organizing social events like a meetup, home-based parties, or any get-together. During this event, the products are displayed and a brief explanation is given to impress the people. This plan is considered one of the most effective ways to market a product easily among guests and other people. It is a widely used scheme with a network that grows faster than any other plan.

There are numerous MLM plans that you can choose from. Each plan has its own benefits and functions yet each is unique in the way it drives success for your business. The term "best MLM compensation plan" is meaningless; it depends on your business model and profitability objectives. Molding the plan perfectly to suit your company's needs makes it the best compensation plan for your business.