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The Three Proven Commission Plans – Part 3: Hybrid Uni-level

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Most of the MLM commission plans that are called Uni-levels today are actually Hybrid Uni-levels. Typically, the Uni-level Plan is the backbone and then other commissions like fast starts and/or pool bonuses are added to increase earnings. So, this Plan features a level commission as the primary commission. Some of the common additions to the level commission include:

  • Fast start commissions.
  • ”Mini-barrier” Plans that have everyone sign up as preferred consumers and then automatically advance to distributors when they qualify.
  • A small differential or single-level commission on the front of the Plan.
  • Level commission percentages, which change as a distributor’s rank changes.
  • Pool commissions for the top ranks.
  • Infinity commissions for the top ranks.
  • Conversion from a level commission paid on personal volume to a level commission paid on group volume. This can make a tremendous difference in earnings.
  • Dynamic compression.

 

Compression: A mechanism for bypassing unqualified or inactive distributors when determining payout so that the upline is paid on the number of active levels. Only active distributors count as levels in the commission plan.
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Figure 1. Example: Unil-level With 4 Ranks.

In a Uni-level Commission Plan, everyone is a distributor. You get paid on your distributors down X number of levels, and the company tries to get extra money to you by creating a different kind of differentiation besides sales force classifications.

Caution: With a Hybrid Uni-level Commission Plan, make sure to note how the different types of commissions in your mix interact. You might find some conflicts or opposing forces at play. Eliminate them quickly!

Many of the new Hybrid Uni-level Commissions now have a fast start commission, The challenge is to create a segment of your downline that you can make a higher percentage on. Without a good fast start program, a Uni-level Plan will stay close to the 5% earnings line. A fast start could bump earnings up to 7-12%.

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Table 1: Example – Fast Start

Fast Start Program

A good recognition and reward method to build into a commission plan, especially for the new recruit, is a fast start program, which is a different commission schedule paid on new distributors for the first one to three months after being sponsored. The basis for this program is time instead of rank. So, when I sign you up, I make more on you when you come on board and less later. When a distributor signs up a new recruit, that distributor is compensated for certain products, product packs, or a specific amount of product the new distributor initially sells under a special Fast Start Commission Plan instead of the standard commission plan. The purpose of the fast start is to get higher sales commissions to the upline on the first few sales as well as to newcomers to the program. More money goes to the sponsor and less to the upline on each new recruit’s sales. Distributors can earn fast start commission each time they recruit someone for as long as they are in the company, but it’s only paid for the first few months or on a certain amount of a recruit’s sales volume. Another variation is for the company to pay half of the new recruit’s volume under the fast start and half under the standard commission plan.

Strengths of Fast Starts

  • The advantage of the fast start is that it not only gives sponsors incentive to work with new distributors to build their business, but also incentive to work quickly because they receive this commission for only a limited time. Three months is common.

Weaknesses of Fast Starts

  • If someone comes in and recruits a lot of people in the first three months, in the fourth month, that individual’s commission can drop by as much as 75% as these recruits move back to the standard commission plan. This drop in income can be very discouraging. Distributors seem to feel that the company has taken something away rather than paid them a bonus for three months. A commission plan can solve this problem somewhat by having the fast start phase out over time rather than abruptly ending.
  • In some plans, after the three-month period, the amount a distributor makes on a consumer can be so little that it no longer makes sense to spend time taking care of that individual. Additionally, fast start programs are vulnerable to some forms of manipulation. Distributors can put all of their volume under their new distributors in order to receive the higher percentage.
  • Creating big-paying, fast-start commissions has not proven to create long-term growth. A moderate fast start can work well. However, if a company makes it extremely easy to generate a lot of extra commissions initially, distributors seem to remember the negative impact generated by the loss of those commissions long after they’ve forgotten the exuberance over originally receiving the money.

Successful Uni-levels The most successful Uni-levels of our day, i.e., Meleluka, Xango, Tahitian Noni, all of them have some way of dividing up a group of people, typically based on chronology rather than on performance.

Hybrid Uni-level and the 5% Plus Theory MLM companies build commission plans by dividing up their downline and deciding how much to pay each division. The purpose of the 5% Theory is to provide a standard for companies to allocate commission money. Most commissions today are built on the theory of the 5% plus curve. This theory says each upline distributor that receives commissions will receive at least 5% in order for the commission plan to be viable. For further explanation of the 5% Theory, see “Determining MLM Compensation,” by Mark Rawlins. How does a Hybrid Uni-level Commission Plan create the above-referenced 5% Plus Commission? With Hybrid Uni-levels, there are only customers and distributors. With customers, you can receive retail commission if they’re first level to you, but that’s true in all plans—you can receive retail commission, theoretically. With distributors, you receive Uni-level commissions. When a distributor moves up in rank, he doesn’t receive a new type of commission. The commission you get is not based on what rank he is, like in a Breakaway Plan (if you are a sales leader).

Strengths of Hybrid Uni-levels

  • Because of the many variations, companies truly can create a unique commission plan for themselves.

Weaknesses of Hybrid Uni-levels

  • Distributors may be expecting one result and have something totally different occur. This often requires a company to spend more time training distributors on the commission plan.
  • People expect this type plan to be simple and easy, yet many are complex and difficult. This can create distributor frustration.

Summary

If you’re thinking about starting an MLM company using this type commission plan, spend the time and energy to create realistic data models with lots of variations of the plan. Do dozens of commission runs before you decide on a final commission plan so you know exactly what you have when you’re finished. This will enable you to confidently tell your distributors how the plan is going to pay.

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