Investment MLM plan

Key Terms in a investnment MLM Plan

How the Plan Works

Compared to other MLM plans, the Investment MLM Plan does not have a fixed tree structure. Instead, it allows for flexibility in using any existing MLM plan by incorporating investment features into it. This means that structures like Unilevel and Monoline can be adapted to include investment-based rewards, making them the most commonly used plans for this type of system.
 In the Investment MLM Plan, members invest a certain amount, which determines their  earning potential through various bonuses and commissions. Earnings are generated not only from personal investments but also from the investments made by their downline, creating a network-wide opportunity for profit-sharing.

Bonuses and commissions are typically based on investment amounts, recruitment milestones, and the performance of the overall network. As new members join and invest, the system rewards both the direct and indirect recruits, ensuring that everyone in the network has a chance to benefit from collective growth.

This approach offers flexibility while maintaining the core principles of network marketing, ensuring that both individual and team success is rewarded. It provides a dynamic structure where earnings are directly tied to the investment and expansion of the network, creating opportunities for continuous growth and profit.

Example:

Let’s say Alice is a distributor who joins the Unilevel MLM Plan. She recruits 5 people: Bob, Charlie, David, Eve, and Fay. These 5 people are placed on her first level (frontline).

• Level 1: Bob, Charlie, David, Eve, Fay (5 direct recruits of Alice).
• Level 2: If Bob recruits 3 people (e.g., Gina, Harry, and Igor), they will be placed under Bob, making them part of Level 2 in Alice’s network.
• Level 3: If Gina recruits more members, they will be placed under Gina, forming Alice’s Level 3.

Now, let’s consider how commissions work

Referral Bonus / Sponsor Bonus 

In an Investment MLM plan, the Referral Bonus or Sponsor Bonus refers to a commission or bonus earned by a distributor when they personally recruit someone into the network, who then makes an investment. These bonuses are typically a one-time payout given to the sponsor for successfully enrolling a new member and encouraging them to invest in the system.

How it Works

• When Alice recruits a new distributor, she earns a Referral Bonus for sponsoring that person (for example, Bob), who then makes an investment into the system.
•  The amount of the referral bonus may vary depending on the company’s compensation structure and could be a fixed amount or a percentage of the recruit’s initial investment.

Referral Bonus Amount

• The Referral Bonus is often higher than the commission earned from deeper levels because it rewards the sponsor directly for bringing in new investors.
• The bonus may be a flat fee (e.g., $50) or a percentage of the recruit’s investment amount (e.g., 10% of Bob’s initial investment).

Example

• Example 1: Alice recruits Bob into the Investment MLM plan, and Bob invests $1,000. Alice might receive a Referral Bonus of $100 (10% of Bob’s investment) as a reward for bringing him into the system.
•  Example 2: If Alice recruits Bob, who then invests $500, Alice could earn a Sponsor Bonus of $50 (10% of Bob’s investment).

Purpose

• Referral Bonuses are designed to encourage distributors to actively recruit new investors into the MLM program and help grow the network.
• These bonuses are typically structured to be more lucrative than commissions from deeper levels to provide immediate financial rewards for successful recruitment and investment.

Level Commission

Level Commission in an Investment MLM plan refers to the earnings a distributor receives based on the investments made by people in their downline, organized by levels. The first level consists of the distributor’s direct recruits, while the following levels include the recruits of those direct recruits. There are two common cases for earning commissions, and one of them is typically used

• Investment-Based Commission: Commissions are earned only when a recruit makes an initial investment.
•  ROI-Based Commission: Commissions are earned on a regular basis whenever a recruit’s investment generates ROI (Return on Investment).

How it Works

• In an Investment MLM plan, distributors earn commissions from the investments made by their recruits. Typically, only one of the two commission types is applied:
• Investment-based commission is earned only when a recruit makes an initial investment.
• ROI-based commission is earned regularly whenever the recruit’s investment generates ROI.

For example:

• If Alice recruits Bob, and Bob makes an investment of $1,000, Alice can earn a commission either based on the investment amount (e.g., 10% of $1,000 = $100) or based on the ROI generated by Bob’s investment (e.g., 10% of $500 ROI = $50). In the case of investment-based commission, Alice would only earn the commission when Bob invests. In the case of ROI-based commission, Alice would earn a commission whenever Bob’s investment generates ROI.

Level Commission Amount

Commissions are earned based on one of the following two criteria, depending on the plan

Investment-Based Commission: Commissions are earned when a recruit makes an initial investment.

• Level 1 (Direct recruits): If Bob invests $1,000, Alice earns 10% ($100).
• Level 2 (Recruits of direct recruits): If Gina invests $500, Alice earns 5% ($25).
• Level 3 (Recruits of Level 2): If Jane invests $300, Alice earns 2% ($6).

ROI-Based Commission: Commissions are earned whenever ROI is generated from the recruits’ investments.

• Level 1 (Direct recruits): If Bob’s investment generates $500 in ROI, Alice earns 10% ($50).
• Level 2 (Recruits of direct recruits): If Gina’s investment generates $200 in ROI, Alice earns 5% ($10).
• Level 3 (Recruits of Level 2): If Jane’s investment generates $100 in ROI, Alice earns 2% ($2).

In this structure, the commission percentage may decrease as the levels go deeper, but Alice continues to earn from either the investment amount or the ROI generated, depending on the commission type applied to the plan.

Purpose

• Incentivizing Network Growth: Level commissions encourage distributors to recruit for long-term growth. By earning commissions based on either the investment or ROI, distributors are motivated to support their downline in generating profitable returns, whether immediately or regularly.
• Long-Term Passive Income: Distributors earn commissions from either the investment or ROI generated across multiple levels, creating a sustainable passive income stream that grows as the network’s performance improves.

ROI

The Return on Investment (ROI) is a core component of the Investment MLM Plan. It refers to the earnings generated from the funds invested by distributors or their recruits. ROI provides a regular income stream to distributors based on the profits generated by investments, and it is distributed periodically (daily, weekly, or monthly). This system rewards distributors for their involvement in growing the network and ensuring that investments perform well.

How it Works

ROI (Return on Investment) refers to the earnings generated from the money invested by distributors or their recruits. When an investment is made, the company uses the invested amount to generate profits, and the ROI is distributed back to the distributor based on the earnings from that investment. The ROI can be distributed daily, weekly, or monthly, depending on the company’s system. The distributor earns a share of the ROI based on how much the company profits from the investment, and this is provided regularly.

ROI Amount

The amount of ROI a distributor earns is typically a percentage of the profits generated by the investment. The percentage can vary based on the compensation plan and the performance of the investment. The ROI amount may also be determined by the type of investment and the company’s earning model.

Example

• Example 1: Bob invests $1,000 into the system, and the company generates $500 in profits from Bob’s investment in one month. If Bob’s ROI percentage is 10%, he will earn $50 in ROI that month.
• Example 2: If Alice recruits Bob, and Bob invests $1,000 and earns $50 in ROI for the month, Alice could earn a percentage of Bob’s ROI, for example, 5% of $50, which would be $2.50.

Purpose

The purpose of ROI is to provide a regular income to distributors based on the returns generated from their investments or the investments of their downline. This system incentivizes distributors to recruit and support others in making investments, ensuring that everyone benefits from the growth of the network and the performance of the investments. Additionally, the ROI model allows for sustained earnings over time, typically until the expiry period of the investment, such as one year.