Starting a new MLM business involves careful consideration of various business requirements. One crucial aspect is choosing the right compensation plan. This is because your profit is significantly influenced by the plan you choose. It should align with your product or service, company size, and business goals.

Among the numerous compensation plans available, the Generation MLM Plan stands out as one of the primary options.

Most particularly this plan is beneficial for companies like,

Manufacturing Fast Moving Consumer Goods (FMCG)
E-commerce business

If you find traditional marketing to be time-consuming and expensive, integrating your MLM network with this plan can provide a competitive edge. In this article, we aim to provide insights that will enhance your understanding of this plan.

What is a Generation MLM Plan?

The Generation Plan is also known as the Repurchase Plan or Gap Commission Plan. It encourages repurchases within the network and enables distributors to earn commissions through their downline sales. Although, this plan includes both product selling and recruiting, its primary focus is on product sales. Some of the benefits of this plan are as follows,

Motivates associates at all levels to actively sell products.
Enhances sales performance, and facilitates swift product movement.
Using this plan companies can consistently introduce new products.
Reducing advertising costs as it solely relies on word-of-mouth.
Focuses on creating multiple generations to increase stability and ensure longevity in the business.
Allows distributors to earn commissions from multiple generations within their downlines.

How Does Generation MLM Plan Work?

This plan shares similar characteristics with a Unilevel MLM Plan where customers and distributors will be under a single level. This may lead to complications in calculating commissions, especially for an e-commerce business with high traffic.

On the other hand, the Generation MLM Plan introduces multiple generations. It effectively separates customers and distributors, thereby reducing complexities. This distinction forms the main difference between the Unilevel and Generation plans.

For Example: Instead of a single level, the plan involves many generations. Let’s use the example of Distributor X to explain the plan.

As you can see in the picture, distributor X has direct referrals X1, X2, X3, and X4, along with customers (C).

Each generation includes its respective customers within that generation’s distributor and network structure.
By separating distributors (X) and customers (C), the complexity of commission calculation is ultimately reduced and this system is commonly referred to as a generation tree.

Commission Calculation

In a generation MLM plan, the commission calculation varies for each company. The number of levels considered as one generation differs between companies, commonly ranging from four to five levels.

As the generation grows, the commission percentage will reduce. Assuming 16 levels with only 4 generations, the distributor will receive a 10% commission in the first generation, progressively reducing to 6% in the second, 4% in the third, and 2% in the fourth.

The company decides these commission rates and the number of levels in each generation beforehand.

Compensation in Generation MLM Plan

Distributors earn rewards when they meet specific criteria set by direct selling companies. Different MLM companies provide compensation based on their policies. You can also customize your compensation, but here are four common options available in the generation MLM plan.

Generation Commission

The bonus is earned by distributors based on the sales volume and performance of specific generations within their downline. It encourages teamwork, long-term engagement, and commitment among distributors.

For Example: Consider distributor Z with a 4-level generation structure in the MLM arrangement.

The company provides generation bonuses at rates of 7%, 4%, 3%, and 2% for each corresponding level.

Generation 1 records $900 in sales
Generation 2 achieves $600
Generation 3 hits $350
Generation 4 totals $180

Consequently, distributor Z’s generation bonus amounts to (7% of $900 + 4% of $600 + 3% of $350 + 2% of $180) = $101.

Referral Bonus

It is received by the distributor when adding new members to the network. This ultimately motivates the members and encourages their active participation.

Example: If distributor “A” introduces a new member, then“A” will receive an 8% referral bonus, resulting in an $8 bonus ($8% of $100).

Team Sales Bonus

This bonus is awarded when the team achieves a pre-defined goal. It motivates distributors to achieve specific targets, thereby increasing productivity.

For Example: If Distributor A’s team exceeds a $1000 goal and achieves sales of $1400, the team receives a $100 commission.

Rank Achiever Bonus

Upon attaining a higher rank or level, this bonus will be awarded to the members. It encourages them to further develop and expand their groups.

Example: If distributor A achieves the qualification for a higher level. As a reward, they receive a promotion bonus of $200.

Retail Profits

Distributors get products at wholesale prices after enrolling in the plan. Selling these products to outside customers at retail prices allows the distributors to make a retail profit.

Example: Enrollment package cost: $500

Wholesale price of products in the package: $300
Retail cost of goods sold: $600
Now, let’s calculate the retail profit,
Retail Profit = Retail Price−Wholesale Price ($600 – $300 = $300)

These are the common bonuses available in the Generation MLM plan. Plus, you have the flexibility to customize compensation to your specific needs.

The Bottom Note

In today’s MLM market journey, this generation plan is a real gear changer as it benefits the business in many ways. Whether you are a newbie or an MLM wizard, this program is perfect for all of you and offers generational income options.

Notably, the program prioritizes product sales over recruitment, allowing distributors to earn retail profits by selling products. This feature is ideal for promoting new products and, it facilitates business expansion. Its flexibility and customization options accelerate the MLM race and generate more income at a faster pace. So, if you are aiming for success in the field of network marketing, opting for this program is a great option.