MLM compensation models are an important aspect of understanding how network marketing compensation plans work and just like other successful business models? MLM compensation models are designed with a specific purpose, and each one can be an additional revenue stream. Who doesn’t like getting paid from multiple sources? A well-designed MLM compensation plan offers novice and seasoned entrepreneurs – multiple ways to get paid.

Navigating the world of MLM can be intimidating and complex for those just entering the biz. Two of the most frequently asked questions is how do MLM payouts work and when do they pay? Although both are valid questions that will be answered below. It’s important to understand that MLM is not an overnight get-rich scheme. If hitting it big overnight is important to you? Perhaps, you should consider buying a Power-Ball ticket because both come with the same odds.

However, if you really want to know how do MLM payouts work as well as take an in-depth look at MLM models featuring different network marketing compensation plans? Keep reading this informative guide on MLM compensation models to discover the multiple ways to get paid and build a successful MLM business.

The Flexibility of MLM Compensation Models

A concrete MLM compensation plan is a key component to the fundamentals of starting your new MLM business. Creating a small business MLM plan that works for you, generally starts on paper. That is, once you’ve done all of your homework. It’s important to know what you can do and which MLM compensation plan best suits your current entrepreneurial skills. Once you evaluate the four MLM compensation models listed below, you should be able to pick one that works for you.

Network marketing compensation plans offer flexibility because they provide multiple ways to earn a sustainable and revolving income stream. Although it may be tempting to jump right in and try all four at once? Experts in this field recommend starting with just one before tackling others. It’s also highly recommended to partner with an MLM software company to keep track of your business and get the most out of your new endeavor.

 

4 Business Models for an Effective MLM Compensation Plan

1. Referral Marketing

Referral marketing works on the premise of standing behind the products that you are marketing and referring them to prospective buyers. When you provide excellent customer service and provide your customers with stellar and consistent buying experiences? It’s a great way to get them to believe in the products as well and refer them to their friends and family. Referral MLM business models provide a structured flow of retaining and organizing your referrals.

The bottom line, referrals are an inexpensive and low-risk way to market your brand. Complex network marketing compensation plans can be expensive and time-consuming, which is why referral marketing makes sense for those embarking on their first MLM adventure. For more information about an MLM referral business model, click here.

 

2. Influencer Marketing

If chatting with your friends and family and posting pics on Facebook, Twitter, LinkedIn or other social media sites are currently a part of your daily routine? You would be great at influencer marketing. This MLM business model involves social media marketing that generally uses product placement and endorsements from influencers. A marketing influencer is someone who has experience convincing others on social media platforms to “like” or buy something they post.

Some people also call this a form testimonial advertising. Your job is to act as a potential buyer and write either standard 500-word reviews or short posts under 100 words, basically stating why you recommend this product. You can also get endorsed by third-parties such as manufacturers, industry analysts, retailers, journalists, etc. This adds value to your product and builds credibility as well as brand awareness. If people buy what you are saying, they will click your embedded link because you influenced them to do so.

 

3. Direct Sales Model

The direct sales model is based on network marketing, which includes a number of factors that remain constant in the marketplace and throughout the MLM industry. This business model works by making products readily available that auto-ship direct to the consumer on a routine basis. For example, subscription services are geared toward making a customer for life by selling them products such as skincare, vitamins, CBD oil, and others that need to be replenished every 30 days or so. The MLM model for direct sales generates orders automatically and puts money in your wallet with minimal effort on your end.

The best part of this MLM business model? The cost to be an affiliate member or independent representative is generally affordable and you can get started on your MLM marketing campaign as soon as you place your first order and receive your affiliate links. If you can make this product popular and generate sales? You’re looking at the exponential growth of your company and income. There are many high-level e-commerce businesses that found success with this networking business model.

 

4. Affiliate Model

The affiliate business model is the more complex of the four, but it’s also the most rewarding one. An affiliate model is known as a click-through model. It’s designed to build an e-commerce relationship with an online merchant. Let’s use Amazon for this illustration. Amazon pays the affiliate for advertising their products on places like social media platforms, online forums, blogs, article submission sites, and websites that allow guest posting.

Every time a click-through purchase is made, you will receive a small commission of the sale. The mathematics are quite simple – the more pay-through clicks you get, the more money you will make. This is a win-win deal for both the affiliate and the merchant. The affiliate receives a steady source of income while the merchant gets new traffic and increased sales. There are a lot of different components to the affiliate MLM business model; however, if you’re ready to jump right in, click here to become an Amazon Affiliate.

 

How Do MLM Payouts Work?

There are generally two ways MLM payouts work. The first one is commission-based, where the merchant or retailer pays independent MLM contractors a set commission based on their sales. The percentages can vary widely between businesses with some paying 50 percent while others offer as little as one percent commission.

The second way is the bonus method, which works on the downline. Meaning, you get paid for your sales plus the sales of those in your group of recruits. Most businesses have a downline bonus of five percent. Payments are generally automatic and paydays are oftentimes set by each company. Most companies pay network marketers every quarter.

 

Partnering With Trinity Software

Regardless of the MLM business model you choose? You will need a sure-fire way to keep track of all of your network marketing data and records. Trying to manage an MLM business with programs on your computer can become a daunting task as your business expands. Trinity Software is well-known in the industry for providing the best MLM software called Firestorm.

If you want to be successful in the business of MLM? Partnering with Trinity Software will help launch your MLM business to new heights and get you going in the right direction. Contact Trinity Software and watch a free demo to see what Firestorm can do for you.

 

Learn More About MLM Models:

1. https://en.wikipedia.org/wiki/Multi-level_marketing
2. https://www.awe.sm/2019/04/24/how-the-mlm-business-model-makes-money/
3. https://www.investopedia.com/terms/n/network-marketing.asp

 

Video Transcription

What are the MLM Models?

Ok, now that we all understand the basics concept of what makes up multilevel marketing, because remember there’s multiple levels as the organization grows. There are several models of this that I want to talk about. So, let’s give this a title.

 

Referral Marketing

Ok, what we’ve just described already is what we would call “referral marketing.” So, as you enjoy selling products, you’re going to talk to this person, and they’re going to sign up to buy those products. This person loves the products as well, so they’re going to refer these people. Now as these people are tied to this person, this person says “hey, I’m going to, I want to share the good news too.” So, he’s going to refer people. So, the growth is organic in referral marketing.

There was a commercial a long time ago that says, “two refer two, refer two, refer two.” That is a good example of how this can expand and grow – it’s very exciting!

 

Influencer Marketing

Influencers – this is a relatively recent phenomena with social media, is that when people subscribe to someone else’s YouTube channel or whatever, the influencer, if they pick a product that they really like, they feature it. Ok? And if you’re following this person, you’re going to see it, so they are talking to you, albeit indirectly through a video, and they are influencing you to buy that product. Well the technology today allows this type of model to work, because we can still tie that order that came in back to the original influencer.

 

Affiliate Model

Alright, so as we begin, as we continue down our list here, we’re going to talk about affiliate model for a minute. An affiliate is basically a customer of a customer. So, these can be implemented in many ways. They will end up in a structure very similar to this.  And basically, an affiliate model would be where technology would allow you to have say a website, where it’s your website and any order that comes through that website is going to get credited to you for commission payment later. And we’ll talk about commission payments later, so don’t worry about that.

 

Direct Sales Model

The direct sales model is a very traditional type approach. This is where it’s your warm market where you’re selling products. Avon is a great example of this. It’s like you’re going to go have you catalog with your new products in it and they’re going to look at those and they’re going to place an order with you. Then you’re going to deliver that product typically to the purchaser. So that is a great model. It is face to face. Belly to belly, as we like to say. But it’s also very traditional and it goes back many, many years. But it does work, ok? You will end up in a direct sales model, you will not get this type of growth. You will only get growth here. So, it’s literally one level, ok?

Now that brings us to our friend MLM. Now ideally, an MLM company would use all of these channels to build this structure, because the bigger the structure grows the healthier the company is and the more money that each individual can make.