GENERATION PLAN IN MLM [ENGLISH]

INTRODUCTION

A Generation Plan is called because the plan illustrates a generation or genealogy. It is based on the profit-sharing marketing business. It is also called Gap Commission Plan and Repurchase Plan. This plan is recognized as the powerful MLM plan that can be paid up to many deep levels. The interesting fact is that this plan grows horizontally instead of vertically and flows from top to bottom and left to right. A compensation model that appears to be unilevel yet has different generation levels. A distributor and its acquired consumers are at the level of every generation. Thus the tree structure of the plane is connected to different levels of generation. This plan offers a good commission from the effort taken by the downlines. In short, the Generation Plan divides the downlines into different levels or generations and the commission is also decreased as the generations grow.

STRUCTURE AND WORKING

The best solution is preferring a generation plan over other compensation plans. Instead of a single generation level, there will be many generations. Let’s use the above example of distributor A to explain the plan.

Clearly, there is a significant difference from the normal unilevel plan. A1, A2, A3, and A4 are the direct referrals of distributor A.

Generation 0: This group consists of the sponsor (Distributor A) and his/her customers.

Generation 1: This group consists of the sponsor’s (Distributor A1) first direct downline and his/her customers.

Generation 2: This group consists of the sponsor’s (Distributor A2)second downline and his/her customers.

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Generation 3: This group consists of the sponsor’s (Distributor A3) third downline and his/her customers.

Thus there will be many generations in a single generation plan. This particular tree is termed as a generation tree.

The profit received by the distributors once they sell a product to the customers outside the MLM system. The distributor gets the products in wholesale rate from the product selling company.

First, get sponsored to a system and then the distributor enrolls in the plan by purchasing a package. They get the products in wholesale price that equals the enrollment package fees.

Distributors then sell their products to outside customers for a retail price. Thus the distributors get a retail profit which is the difference between the retail value and wholesale value. This is beneficial mainly for e-commerce business.

COMPENSATION IN GENERATION PLAN

The sponsor receives a percentage of sales made from the generation groups as a bonus.

Bonus received for adding new members to the tree.

Bonus received once the team achieves a specific target.

The difference between the retail rate and wholesale price is received as commission for distributors.

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
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DISADVANTAGES

  • 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.
  • 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.

CONCLUSION

Today, a lot of network marketing software companies have benefitted by choosing the MLM Generation Plan and it is one of the most lucrative plans for MLM companies that specialize in consumable products.

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