Generation Plan MLM

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MLM Generation Plan Overview : What Is It Exactly?

A Generation Plan is a systematic organizational structure that is established by Multilevel Marketing (MLM) companies and is the most popular marketing compensation plan. It helps to manage Generation networks such as to keep track on down line’s incomes and expenditure. It reduces the manual works done by the MLM companies. It is quite popular among companies, part-time professionals, network marketers, and all the other members who wish to set up an MLM business. Consequently, the members are supposed to add only two forefront members.Structure grows faster in this plan which is beneficial for a business to earn and grow quickly.

How It Works

In Generation Compensation Plan one member can recruit two people to the first level. This means that the sponsor can make only two distributors underneath, i.e. Left Leg and Right Leg. It is also referred as Power Leg and Profit Leg. If member sponsors more than two new members, excess members are placed at down line below the sponsoring member's forefront. This 'spill over' is an attractive feature that appeals new members, since they only need to sponsor two members to participate in the Generation compensation plan. That is why it is often termed as Generation Spill over MLM Plan. Earnings in Generation plan is always calculated on matching volume of sales done from both legs. And unmatched business volume gets carry forward for next payout. Matching volume may vary such as 1:1, 1:2, or 2:1. MLM Generation Plan software can also be combined with Level or Forced Matrix that results in hybrid software MLM plan.

Commission Calculation Example

Let’s Understand Generation MLM Plan with an example that is based on 1:1 ratio concept. Suppose a company has decided the package amount of Rs. 500 and Generation matching percentage is 5% of the package amount (5% of Rs.500). Sponsor A, can have only two direct members; B on its left & C on its right. B will have two members as D on the left side and E on the right side. C will have members as F on the left side and G on the right side.

For income calculation, we divide this tree in two parts as Left and Right.
  • For A Matching Volume is Rs.1500 and the remaining Rs.500 will be carry forward. Income for A will be 5% of Rs.1500 Rs. 75.
  • For B matching volume is Rs.500. income for B will be 5% of Rs.500 that’s rs.25
  • For B matching volume is Rs.500. income for B will be 5% of Rs.500 that’s rs.25

Generation / Stairstep Plan Income Types

Quick Start Bonus
Quick Start Bonus

It is the profit gained after recruiting new members in the downline. For each direct referral, the recruiter gets a referral bonus that is calculated depending on the percentage of the present amount.

Performance Bonus
Performance Bonus

The member is paid a percentage of the group volume of each breakaway below the downline to a decided number of generation. On successful completion of the level, the company sets certain percentage of amount for each members of the genealogical tree.

Director Bonus

The member is paid a percentage of the group volume of each breakaway below the downline to a decided number of generation. On successful completion of the level, the company sets certain percentage of amount for each members of the genealogical tree.

Travel Bonus

This is given to the person after completing the specific tasks that is positive for the development of the company. When members achieve set target within the pre- set time, they get reward bonus.

Points to Consider About Generation Plan

  • 01

    Each member can have two front-line distributors (legs) directly under him.

  • 02

    The balance between these two legs holds great importance that also affects the results while members try to earn largest income.

  • 03

    Generation Spill over are appealing and play a crucial role in building the income of members.

  • 04

    With each of the newly added member, all the members in the up line avail some amount of monetary benefits.

  • 05

    The focus of each member is on the profit leg as the income is more dependent on this leg. And with members from spill overs being placed in the power leg.

  • 06

    The plan depends on team effort. With sales from up line members offering some benefits to the downline members, differentiates it from other MLM programs.

  • 07

    This MLM plan supports unlimited depth while the width remains constant. The plan focuses on matching business volume while allowing the network to grow on an infinite level.

  • 08

    Compensation given to the members depends on the ratio of sales between two legs established in the network directly under a member. This increases the importance of maintaining balance between the legs.

  • 09

    Compensation given to the members depends on the ratio of sales between two legs established in the network directly under a member. This increases the importance of maintaining balance between the legs.

  • 10

    In fact, some of the companies may carry forward their extra sales to the next commission duration. In order to increase the stability in the Generation chain system, such companies may limit the payout to a capping limits.

  • 11

    On applying condition on Generation plan, a 3rd sub-node is formed. For this, no matching pair is needed for compensation. This is referred as Conditional or Australian Generation Software Plan.