Overview:
The Generation MLM Plan is a type of multi-level marketing structure where distributors earn commissions based on the performance of distributors in their downline, but with an added twist: commissions are typically structured according to generations in the network. A generation refers to the group of distributors that are several levels deep from the original sponsor, typically defined by the performance or rank of distributors rather than their direct position.
This plan focuses on rewarding distributors based on the number of generations they are away from the original sponsor, rather than just direct recruits or levels.
How the Generation MLM Plan Works:
- Sponsoring and Generations:
- When a distributor (let’s call them Sarah) joins the network, they are placed at the first level.
- Sarah recruits new distributors, forming a downline. These recruits are placed at the second level (direct recruits).
- As Sarah’s recruits (second-level distributors) start recruiting, they form the third level, and so on.
Generations are typically defined by the rank or performance of the downline members, where a generation could be based on direct or indirect recruitment depth.
- Commissions by Generation:
- The key feature of the Generation MLM Plan is that commissions are calculated based on the generation a distributor is in.
- For example, a distributor earns a certain percentage of the sales made by those in their first generation (direct recruits), a smaller percentage from the second generation (the recruits of the first recruits), and so on.
The percentages decrease as you move further down the generations, but it encourages distributors to build wide networks rather than just deep ones.
- Rewarding Leadership:
- This plan rewards leadership qualities because as a distributor’s downline grows, they can earn more from several generations within their downline.
- The deeper the generations, the larger the group and the higher the potential income.
- Breaking Generations:
- Some companies may limit how many generations commissions can be earned from. For instance, you may only earn commissions from up to 5 generations down.
- If a distributor’s downline expands beyond the defined generations, they may not earn any commission from further generations.
Example of a Generation MLM Plan:
Let’s consider the following example where commissions are based on 5 generations:
Initial Setup:
- Sarah is the upline distributor (Level 1).
- She recruits John and Alex (2 direct recruits), which forms Generation 1.
- John recruits Linda and Tim (2 recruits), forming Generation 2.
- Alex recruits Emma and Liam, forming Generation 3.
- Linda recruits Gina and Harry, forming Generation 4.
- Tim recruits Mike, forming Generation 5.
The structure looks like this:
Commissions in Generation MLM Plan:
- Level 1 (Direct Recruits):
- Sarah earns the highest commission percentage from her direct recruits, John and Alex. This might be, for example, 20% of their sales.
- Level 2 (Second Generation):
- Sarah earns a smaller percentage from John’s recruits (i.e., Linda and Tim), say 10% of their sales.
- Level 3 (Third Generation):
- Sarah earns an even smaller percentage from Alex’s recruits (Emma and Liam), for example, 5% of their sales.
- Level 4 (Fourth Generation):
- From Linda’s recruits (Gina and Harry), Sarah might earn 3% of their sales.
- Level 5 (Fifth Generation):
- Finally, Sarah earns a minimal commission, say 1%, from Tim’s recruit Mike.
Generation MLM Tree Structure:
Here’s a graphical representation of the Generation MLM Plan:
Advantages of the Generation MLM Plan:
- Rewarding Leadership:
- This plan rewards leaders for helping their recruits build successful teams. The wider and deeper the downline, the higher the commission potential.
- Flexibility:
- It allows companies to adjust the number of generations for which commissions are paid, offering flexibility in commission structures.
- Wide Network Building:
- Distributors are incentivized to recruit widely (across multiple generations), ensuring that they have a large and diverse downline to earn commissions from.
- Multiple Revenue Streams:
- As distributors build their teams and each team grows, they continue to earn from each generation, creating multiple revenue streams.
Challenges and Considerations in Generation MLM Plans:
- Overemphasis on Recruitment:
- Like many MLM structures, this plan may overemphasize recruitment over actual product sales. Distributors may focus on filling up generations rather than building sustainable businesses.
- Generational Limits:
- Limiting the number of generations for which commissions are earned can limit long-term earning potential for top-level distributors.
- Complex Structure:
- The concept of multiple generations can become complicated for new distributors to understand, especially if the levels and generations increase.
- Income Distribution:
- As commissions reduce with each generation, it can result in lower earnings for those in more distant generations. This can create dissatisfaction among the downline.
Conclusion:
The Generation MLM Plan is a powerful tool for incentivizing distributors to build wide and deep networks. It encourages leadership and teamwork, while rewarding individuals for developing not just their direct recruits, but also helping their downline succeed. However, careful attention must be paid to the balance between recruitment and product sales to maintain a healthy and sustainable MLM environment.
This plan is particularly useful for businesses that prioritize the growth of large teams and the spreading of knowledge and resources throughout generations of recruits.