GENERATION MLM COMPENSATION PLAN
In Generation Plan, downlines are divided into different levels called generations and the commissions decrease as the generations grow. For example, if the rate of commission for the first generation is 10 %, it could be something like 7% for the second generation. And for the third generation and fourth generation, it could be something like 5% and 3%, respectively.
Generation plan is also called Repurchase Plan or Gap Commission Plan. This plan is favored by companies that are purely into product selling rather than recruiting associates. This plan keeps members motivated at selling, irrespective of the level or generation they are in.
Most other popular MLM plans tend to make members look down on selling after a while as they become seniors. This is a plan that puts emphasis on product selling above all and is popular among MLM companies in the fast moving consumer goods (FMCG) sector. Such companies prefer the generation plan because it helps them sell products efficiently, without having to spend on advertising.
HOW DOES GENERATION MLM SOFTWARE WORKS?
To understand how this plan works, first you need to understand the concept of Generations. Generations are groups of downline members. Each generation will have a set number of levels of downline members. It varies from company to company but could usually be four or five levels.
Let’s hypothetically say it is 5. In this case, downline members up to level 5 is considered First Generation. And level 6 to 10 makes the Second Generation, level 11 to 15 makes the Third Generation and so on. Now, the commission you get for products sold by your First Generation will be the highest, let’s say 10%. And from the Second Generation, you will be getting a lower rate of commission, let’s say 7%. From the Third Generation you will be getting even lesser commissions, let’s say 5% and it goes on like this. These commission rates are predefined by the company and so are the number of downline levels in each generation.
An important thing to consider here is that even though the commission rates decrease as the generations grow, the number of members in later generations will be far more than the former ones. For example, if the First Generation has 100 members, the Second Generation is likely to be around 300, depending upon the number of levels in each Generation.
GENERATION PLAN SOFTWARE ADVANTAGES
- Members tend to be slow in recruiting associates. Because of the emphasis on selling products, members tend to spend less time on recruiting new members. This situation negatively affects the company’s growth as an MLM business. It is equally crucial for an MLM company to keep getting new associates as it is about meeting sales targets.
- Difficulty in managing and accounting. The various commission rates and number of generations makes accounting difficult for companies following the generation plan. Also, managing different generations of the company is a complex task, as compared to managing teams with other compensation plans.
- Not suited for low sales volume products. Generation plan is not suited for companies into selling products like white goods and such low moving, but costlier products. This plan is suited mostly for high volume sales, not high value sales.
- Constant undue pressure on team members. Selling high volumes of products on a regular basis is a must for members to have expected income. This puts undue pressure on team members and people with low sales skills tend to even drop off. This is another risk an MLM business cannot afford.
GENERATION PLAN SOFTWARE DISADVANTAGES
- Most suited plan for companies oriented to selling products. This plan keeps every associate motivated in selling products, irrespective of their downline level. So, the company can be assured about good sales performance from the whole team, making products move fast. If you take the example of any MLM company in the FMCG sector, you will see that they all follow the generation compensation plan.
- No need for hefty advertising budgets. Companies following the generation plan are driven by word-of-mouth advertising. So, they need not spend money on conventional advertising. This is crucial in the case of products that have low profit margins and large volumes to sell in shorter time.
- Larger number of members in later generations make up for the lower commission rates. Even though commission rates decrease as the generations become newer, the increase in the number of members will yield more income. Imagine the following hypothetical scenario to understand this. You will be getting 10% commission for the sales volume generated by 100 members in the first generation, and 7% of the sales from 300 members in the second generation.
- Company can introduce newer products on a regular basis. Companies following this bonus plan tend to have an experienced sales team. This makes it easy for the company to try marketing newer products regularly.
UNIQUENESS OF GENERATION PLAN SOFTWARE
If you are a company selling high volume but low value products, this is the compensation plan you should be considering.
If your products are of good quality and you do not want to spend money on advertising, Generation Compensation Plan is the most suitable compensation plan for your company.
Advertising in media like newspapers and television will require huge amounts of money and it will ultimately will force you to increase product prices. Instead of that, if you opt for this MLM plan, you will be able to offer products to your consumers at more attractive prices.
That will be one attribute which will definitely improve your company’s reputation as well. And if you are someone with good selling skills, trying to decide on joining an MLM company, you should be looking for one that follows this mlm plan.
COMPENSATION IN GENERATION MLM SOFTWARE
The MLM Companies Define Their Compensation Plan Based On Their Policies. As A Leading Provider Of Generation Plan Software System, We Offer Different Compensation Structures As Per The Companies Requirements.
In a Generation Plan, the commission is calculated by 2 different ways – Level Wise income and Differential income.
REFERRAL / SPONSOR BONUS
It is same like in other compensation plans. This as a motivational bonus because these type of bonus is offered by sponsors to make members active in stable network expansion.
It is the amount earned as a percentage for every person signed on by your down lines. This actually starts almost 5-6 levels below you and is actually a motivation for you to grow your network deeper.
RANK ACHIEVER BONUS
his bonus is paid to existing members when they turn eligible to the higher level or rank. It acts as a promotion bonus in the MLM industry.