The rank calculation is something that baffles MLM newbies. In case you want to learn how rank calculation works in MLM software, this post will be valuable.
MLM is an effective marketing strategy that promises huge success. At its core, it’s the collective work of individual distributors. However, companies need to promote these members based on their efforts in the business.
And that’s where the concept of rank calculation comes in. It defines how members will be placed in the hierarchy and move up the structure. But rank calculation is a complex process that involves several components. Thankfully, MLM software simplifies things a lot and makes the process easy. But what actually goes behind the scenes?
In this post, we will cover the entire process of rank calculation in MLM software to give you a complete overview.
Understanding MLM Ranks
If you are planning to venture into network marketing, it’s critical to understand MLM rank calculation. It helps you understand your future prospects and give you an overview of your progress. Furthermore, rank calculation helps set goals, track progress and make decisions for your MLM business.
Now, each member has a specific rank in the network. The rank advancement depends on different criteria – it could be meeting sales volume, recruiting a set number of members or maintaining a rank for a specific period. Members are placed in a hierarchical structure, and each rank includes its own set of responsibilities, perks, compensations and other benefits.
The Role of Rank Calculations
Rank calculation is an essential component of the MLM model and a powerful lever that encourages members to put in more effort. You see, rank advancement means more commissions, recognition, and significant perks. At the same time, it helps MLM companies manage their salesforce and keep the network structure intact.
Ranks also serve different purposes;
- It gives motivation to distributors, and ranks are seen as achievements.
- Rank calculation defines a clear path to achieve goals.
- It pushes distributors to put in effort and develop leadership skills.
- Rank calculation incentivises distributors based on sales or recruitment, which leads to more revenue for the company.
Factors Considered in Rank Calculations
The specifics of rank calculation are fluid and often vary between companies. MLM companies can implement several criteria for rank calculation. However, some key factors remain the same;
- Total sales number generated by the individual distributor.
- Group sales volume that factors in the sales volume of the entire downline.
- Total recruitments that a distributor has done.
- A specific period after which a particular rank is awarded.
- The compensation plan that the MLM company has adopted for its operations.
Now that you are aware of MLM rank calculation basics, let’s learn the actual process based on different compensation plans;
Binary MLM Rank Calculation
- MLM Structure – Distributors build two legs, typically A and B or Left and Right leg in the binary plan.
- Rank Calculation – In binary MLM, rank calculation usually depends on meeting specific criteria for sales and recruitment on both legs.
Unilevel MLM Rank Calculation
- MLM Structure: The Unilevel plan involves multiple levels with no bar in the depth of the downline. Members are compensated based on the efforts of their entire downline.
- Rank Calculation: Rank calculation and advancement in the Unilevel plan depend on personal sales and recruitment as well as of the downline.
Matrix MLM Rank Calculation
- MLM Structure: The Matrix plan has a fixed-width structure. It limits the number of recruitment on the front line. A typical matrix structure looks like 3×3, etc.
- Rank Calculation: Rank advancement in the Matrix plan occurs when distributors fill specific matrix slots.
Stairstep Breakaway MLM Rank Calculation
- MLM Structure: In this model, distributors ‘break away’ from the upline when they fulfil specific criteria.
- Rank Calculation: In the stairstep breakaway, MLM rank calculation is based on sales volume and downline growth.
Hybrid Models and Rank Calculations
MLM Structure: Hybrid MLM plans incorporate characteristics of different compensation plans. In such cases, there are no fixed rank calculation criteria. Instead, MLM companies define rank calculation, and the members advance in ranks within the limits of that criteria.
Challenges in Rank Calculations
We have already stated above – rank calculation is no easy feat. In fact, it involves several challenges that need to be overcome;
- Complexity of the MLM Plan – Compensation plans vary in complexity. Consequently, the rank calculation associated with each plan varies in complexity, too. It makes it difficult for distributors to understand how they will advance in MLM ranks.
- Transparency Issues – Rank advancement has come under scrutiny because of the lack of transparency in the rank calculation process. It leads to distrust among distributors. Clarifying the entire rank calculation process is a big challenge for MLM companies.
- Possibility of Errors – Rank calculation is a complex process; therefore, it needs precision to keep it error-free. Quality MLM software with advanced automation capabilities is needed for accurate rank calculations. However, good MLM software often comes at a hefty cost, but they are necessary.
MLM Software Features for Rank Calculations
In the above segment, we highlighted the necessity of MLM software for rank calculation. In this segment, we will explore the features that the MLM software includes for rank calculation;
- Accurate sales volume calculation.
- Support for multiple MLM compensation plans.
- Effectively incorporate rank qualification rules.
- Easily integrate different compensation structures.
- Facility for automatic rank advancement.
- Integrated communication tools to relay rank advancement status.
That will be all for rank calculation in MLM software. In a nutshell, rank calculation is a fundamental component of MLM business. It dictates how members will be put in the network and when they will advance in their ranks. But it’s a complex process and needs robust MLM software to keep it error-free. Only quality MLM software incorporates the necessary automation features that could accurately calculate ranks. Therefore, opt for powerful MLM software today to keep your MLM business streamlined and your distributors motivated with timely rank advancement.