Generation MLM Plan

Key Terms in Generation MLM Plan

How the Plan Works

The Generation MLM Plan rewards distributors based on the performance of their downline, divided into multiple generations. A generation begins when a member of the downline achieves the same or a higher rank than their sponsor. This structure encourages leadership, as distributors must not only recruit new members but also help their downline reach higher ranks to create new generations. In this type of plan, the commission typically decreases as generations go deeper, rewarding those who focus on long-term growth and team development.

Example:

In this example, Alice is at a higher rank (Rank 3), and the other distributors (Bob, Charlie, Diana, etc.) are at lower ranks (Rank 1 or Rank 2). Here’s how the MLM structure and commission flow work with multiple ranks.

Alice’s Position

• Alice is at Rank 3, the highest rank in this example.
• Alice recruits Bob, Charlie, and Diana, who all start at Rank 1.

Bob’s Progression:

• Bob works hard and progresses to Rank 2, which creates a new generation for Alice, marking Generation 2.
• Bob recruits Eve, who starts at Rank 1, making Eve part of Bob’s downline and part of Generation 2 for Alice.

Charlie’s Progression:

• Charlie remains at Rank 1. Charlie recruits Frank, who also starts at Rank 1, making Frank part of Generation 1 for Alice (since Charlie is still at Rank 1)

Diana’s Progression:

• Diana stays at Rank 1. Diana recruits Grace, who is also at Rank 1. Grace becomes part of Generation 1 for Alice, as Diana has not moved up in rank.

How the Generations Form:

• Generation 1 (Rank 1): Alice’s direct recruits who remain at Rank 1, such as Charlie, Diana, and Grace. These people form the first generation under Alice.
• Generation 2 (Rank 2): When Bob progresses to Rank 2, he triggers the creation of Generation 2. This generation includes Bob’s downline, such as Eve, who is at Rank 1.
• Generation 3 (Rank 3): Since Alice is at Rank 3, Generation 3 starts for Alice whenever someone in her downline achieves Rank 3 (which could happen as the network grows).

Now, let’s consider how commissions work

Referral Bonus / Sponsor Bonus

In the MLM plan, Referral Commission is earned by a distributor when they personally refer or recruit new members into the network. The distributor earns a one-time commission based on the enrollment or purchase made by the new recruit. This type of commission rewards distributors for bringing in new customers or team members.

How it Works

• When a distributor recruits a new member, they earn a commission based on the new recruit’s enrollment fee, product purchase, or initial investment. This commission is often a percentage of the recruit’s first purchase or enrollment.
• Referral commissions are typically paid once, at the time of the new recruit’s sign-up or purchase.

Referral Commission Amount

• Referral Commissions can vary depending on the company’s compensation structure. They are usually a fixed percentage of the new recruit’s initial purchase amount or a flat fee.
• The amount may differ based on the product or service sold, the new recruit’s package, or other factors defined by the company.

Example

• Example 1: Alice recruits Bob, and Bob pays a $100 enrollment fee. Alice earns a Referral Commission of $20 (20% of Bob’s fee) as a reward for bringing him into the system.
•  Example 2: If Alice recruits Charlie, who buys a product worth $500, Alice might earn a Referral Commission of $50 (10% of Charlie’s product purchase).

Purpose

• Referral Commissions are designed to incentivize distributors to actively recruit new members into the network. This commission type rewards distributors for their efforts in expanding the network, which is the foundation of the MLM business model.
• These commissions encourage active recruitment and help distributors see immediate rewards from their recruiting efforts, motivating them to continue building their network and increasing their earning potential

Generation Bonus

A Generation Bonus in the MLM plan is a commission earned by a distributor based on the performance of their downline across multiple generations. This bonus is typically tied to the sales volume or business turnover generated by distributors within a specific generation. The goal of the Generation Bonus is to reward distributors for their leadership and the success of their downline members as they progress through the generations of the MLM structure.

How it Works

• Generation 1: This includes all users who are either unranked or at the basic rank (Rank 1) and their downline members, including those who do not yet have a rank.
• Generation 2: This includes all users who have achieved Rank 2 and their downline members, including anyone placed under them, regardless of their direct recruit status.
• Generation 3: This includes all users at Rank 3 and their downline, and so on.

So, if a new user joins under someone who is at Rank 2, they will be classified under Generation 2, and any of their downline members will also be placed in Generation 2. This ensures that commissions and bonuses are calculated across all levels of downline activity based on ranks, promoting leadership and growth across the entire team

Example

Let’s take an example with Alice and her downline, considering different rank levels and how new recruits are assigned to generations.

• Alice is at Rank 3.
• Bob is at Rank 2 and is a member in Alice’s downline.
• Charlie is a new user who joins Bob’s downline.

According to the structure:

• Generation 1: All distributors with Rank 1 (no rank or basic rank) and their downlines.
• Generation 2: All distributors with Rank 2 and their downlines, including Charlie who joins under Bob (who is Rank 2).
• Generation 3: All distributors with Rank 3 and their downlines (including Alice and anyone directly or indirectly under her)

Commission Structure Example

Let’s assume the commission structure is as follows:

• Generation 1: 10% of total sales
• Generation 2: 8% of total sales
• Generation 3: 6% of total sales

Now, based on the sales from these generations:

• Sales from Generation 1: $20,000
• Alice earns 10% of $20,000 = $2,000
• Sales from Generation 2: $15,000
• Alice earns 8% of $15,000 = $1,200
• Sales from Generation 3: $10,000
• Alice earns 6% of $10,000 = $600

Total Generation Bonus for Alice

• Generation 1 Bonus: $2,000
• Generation 2 Bonus: $1,200
• Generation 3 Bonus: $600
• Total Generation Bonus: $2,000 + $1,200 + $600 = $3,800

Key Takeaways

• Generations are based on rank: If a user joins under someone with Rank 2, they are considered part of Generation 2, regardless of whether they are a direct recruit or not.
• Commissions are based on the rank of distributors in the downline, not just direct recruits. This promotes a team-based approach where distributors earn from the efforts of the entire team.
• Promotes leadership and team growth: Distributors are incentivized to grow their downline and mentor others to achieve higher ranks, thus moving their downline members into higher generations.
• Commissions decrease as the generation level increases, rewarding those who are successful in developing larger teams and achieving higher ranks.

Matching Bonus

Matching bonus is the money a distributor earns from the sales made by the people in their downline, organized by levels. The first level includes the distributor’s direct recruits, while the following levels include recruits of those direct recruits. The commission usually gets smaller as the levels go deeper, but the distributor earns from all levels in their downline, allowing them to earn passive income as their network grows

How it Works

• In a Generation MLM plan, a distributor earns a commission based on their position in the network. Commissions are paid out to the distributor for the sales and purchases made by members of each level in their downline.
• For example, if Alice recruits Bob (Level 1), she earns a commission from Bob’s sales. If Bob recruits Eve (Level 2), Alice will earn a commission from Gina’s sales, and so on for deeper levels.

Matching Bonus amount

• In a Geneartion MLM plan, commissions are earned based on the levels in the distributor’s downline

• Level 1 (Direct recruits): Alice earns 10% commission from sales made by people she directly recruits (e.g., Bob, Charlie, Diana).
• Level 2 (Recruits of direct recruits): Alice earns a smaller commission (e.g., 5%) from sales made by the recruits of her direct recruits (e.g., Bob recruits Eve).
• Level 3 (Recruits of Level 2): Alice earns an even smaller commission (e.g., 2%) from sales made by recruits of Level 2 (e.g., Eve recruits Jack).

The commission percentage typically decreases as the levels go deeper, but Alice continues to earn from each level in her downline.

Purpose

• Incentivizing Network Growth: Level commissions incentivize distributors to not only recruit but also to support and help their downline succeed. As a distributor’s network grows, they can continue earning from multiple levels.
• Passive Income: Distributors earn a percentage from all the sales made by their downline, allowing them to benefit from the collective activity of their network

Rank / Rank Advancement Bonus

In an Generation MLM plan, a Rank refers to the distributor’s position within the network, which is determined by their performance, including sales volume, recruitment, and team-building efforts. As distributors achieve specific milestones or criteria, such as sales targets or the number of recruits they bring in, they progress through various ranks, which could be defined by the MLM company as Rank 1, Rank 2, Rank 3, and so on.

Rank Advancement Bonus Amount

The Rank Advancement Bonus is a commission or reward given to a distributor when they achieve a new rank within the MLM structure. This bonus serves as an incentive for distributors to continue their efforts in building their network, rewarding them with a one-time payment or a percentage of sales when they reach a new rank.

Example:

• Alice, initially at Rank 1, works hard to meet the necessary sales and recruitment targets. After achieving these milestones, she advances to Rank 2. Upon reaching Rank 2, she receives a Rank Advancement Bonus of $500 as a reward for her progress.
• Bob, a higher-ranking distributor, moves from Rank 2 to Rank 3. His Rank Advancement Bonus is larger, for example, $1,000, depending on the MLM company’s compensation structure.

Purpose

The Rank Advancement Bonus is designed to motivate distributors to strive for higher achievements and to help them develop their network. By rewarding distributors when they reach higher ranks, it encourages long-term commitment, enhances performance, and provides a sense of accomplishment. The bonus structure can be adjusted to fit the business goals of the MLM company, recognizing distributors who demonstrate exceptional growth, leadership, and success within the network.