Discover the potential of MLM Generation Plan – a powerful compensation strategy that fuels network marketing success. Are you about to venture into the network marketing business? Then it’s prudent for you to understand the MLM Generational plan thoroughly.
It’s evident that compensation plans serve as the engines of an MLM business. It’s the foundation upon which MLM business stands, the motivation behind distributors to put effort and bring in new members.
Without a clear compensation plan, there’s no way an MLM company can decide how to pay its distributors. In short, a compensation plan is crucial for defining how members will be rewarded for their promotional efforts. There are multiple compensation plans, but one of the most commonly used is the Generation MLM plan, also known as Gap Commission Plan or Repurchase Plan.
In this post, we will learn more about the MLM generation plan and its advantages. Let’s go!
First thing first, what is the Generation plan? As the name suggests, this plan involves several generations of recruits. It lets you recruit a bunch of people; they will be under you in the genealogy tree – that’s the first generation.
Now, these recruits will bring in new members of their own. Those members will be the second generation for you and the first for your recruits. And the chain goes on, forming generations of recruits.
If you could visualize the structure, you would see the genealogy tree expanding vertically and horizontally. And the best thing is a generation plan has infinite depth, which means the network can go on expanding.
Now, if a recruit under you and further below makes a sale, some commission will reach you through the generations of members in the downline. That’s what makes the generation plans so lucrative. You can continue to receive residual income as long as the network continues to expand.
If you understand MLM compensation plans, it will be evident to you by now that the MLM generation plan is different. To further your knowledge, here are some key aspects where the generation plan differs from other compensation plans;
Now that you have a general overview of the generation plan let’s understand its structure in more detail.
First, let’s understand generation. Simply speaking, a generation is a group of members. Depending upon the company, generation could have a predefined level of downline.
For the sake of this post, let’s consider four. Then all the members from one to four downline levels will be called the first generation. Moving further, members from levels five to eight will be called the second generation, and so on.
Understand that the generation plan is mostly adopted by companies who are into selling products. Therefore, the focus here is to make sales rather than expanding the downline – which is a byproduct of the generation plan.
Now that we have an overview of the structure of the generation plan let’s move on to learn how members are compensated.
In the generation plan, commission tends to decrease as you move down in generation levels. Therefore, if, suppose, you receive a 10% commission from products sold by the first generation, it will only be 8% from the second generation, and so on.
Generation plan has several advantages, some of them are as follows;
- Generation plans offer better-earning potential due to the possibility of a deeper network.
- Another advantage is the simplicity of generation plans. It’s not too technical and involves only adding members in a downline – easy to understand for new recruits.
- It promotes teamwork since each generation earns commissions from the generation down below.
- It ensures long-term passive income. Every coming generation will make new sales, and the commission will be distributed to each member above.
Just like advantages, generation plans have challenges too. Let’s look at the key challenges that MLM businesses might face when they implement a generation plan;
The generation plan is not suitable for every MLM business. Here’s how you can assess whether the MLM generation plan is right for your business;
- Do you sell high-volume products?
- Are you aware of the complexities of compensation structure in the generation plan?
- Are you comfortable with recruiting and managing deep downlines?
- Does your product have enough margin to sustain a deep downline?
If the answer to all these questions is YES, then the generation plan is suitable for your business.
To conclude, a generation plan is a straightforward way to manage and compensate for an extensive downline. It has multiple advantages like easy implementation, long-term residual income, etc. However, it’s not without its challenges too.
Ultimately the success of the MLM generation plan comes down to how motivated your downline is, how transparent you keep the MLM processes, and how well you handle the downline. If you can handle the challenges, an MLM generation plan could help you achieve unprecedented sales volume.