During the presentation, you may hear from the reps how you get paid using the following terms:
- You get three.
- Then your three people get three
- Then these people get three, etc.
- When you reach the seventh level, you will get 7% on all customers at that level.
- So in the above example, if 2187 level 7 reps have 3 customers each, that equals 6561 customers.
- If those 6561 customers have a monthly subscription of $25 per month, that equals $164,025
- You will receive 7% of $164,025, which equals $11,481 per month.
Another example is
- You receive two
- Then your sponsor receives two
- Then these two people get two each.
- When you reach the sixth level, you will receive 1% on all members of that level, which equals (so and so) dollars per month.
- So in the above example, if 64 level 6 representatives each have 3 customers, that gives 192 customers.
- If those 192 customers have a monthly subscription of $100 per month, that equals $19,200.
- You will receive 1% of $19,200, which equals $192 per month.
The MLM company sets your compensation as they see fit. Each company pays differently and may adjust compensation as the company grows and expands into different markets.
Bonus for direct sponsors
Although you may not be paid primarily for introducing others to the business opportunity, there may be bonuses for adding people to your downline. For example, your company may say:
For every three people you personally refer, you will receive a $100 bonus.
Downline commission
Then there's the downline commission. These are commissions you receive when people in your downline introduce the product to others and receive a commission for their sale.
These commissions are usually not very high until you have grown your team to a significant number of people.
Example: If you are in a network marketing company that charges a monthly subscription for a particular product, you will receive a small percentage of the sales each time the customer pays the monthly subscription.
Sponsoring more than 3 people in the Matrix compensation plan?
Since the number of people you can add to your team is limited at the first level, what happens if you have more than three people interested in your opportunity?
After the third person signs up, each additional person who signs up will be placed under one of the three people you have already created. In this case, the industry refers to this as "spillover" because your additional people move to the next level.
Advantages of the MLM matrix plan
The benefits of the matrix compensation plan are that once you have introduced the required number of people to the business opportunity at your first level (whether 3 or 5 sponsors), you can focus on turning your frontline distributors into leaders. This will help you double down and grow your business faster.
Another benefit is that people are encouraged to help each other. This is because they know they are increasing each other's business when spillover occurs.
Disadvantage of the MLM matrix plan
One disadvantage of the matrix compensation plan is that the method contributes to those at a higher level receiving more money than those at a lower level. For example, if the people at levels 2 and 3 introduce the business opportunity to others (OR), each of those people at levels 2 and 3 will only receive credit for two sponsors each, but the person at level 1 will receive credit for four.
This is probably why uplines are only paid to a certain depth. The less you are allowed at the first level, the deeper you can build your team. For example, if you are only allowed two on your frontline, you may only be able to get paid 12 levels deep. If you only allow three on your frontline, you may only be able to get paid seven levels deep, and so on and so forth.
