Commission management plays an important role in the functioning and success of multilevel marketing. This is because MLM is a business model in which independent distributors earn commissions from direct sales as well as the sales generated by the distributors they recruit into their downline.
When it comes to handling complex commission structures, MLM companies employ various types of MLM commission management systems. Each type serves its purpose and empowers distributors to create a great impact in the business environment.
Beginning with personal sales commissions which focus on managing commissions earned by individual distributors based on their personal sales effort. In MLM companies, the percentage to be paid can be either total sales or the product price sold. Whichever the payment method, distributors are often rewarded with commissions for direct sales they generate. This is independent of their downline.
So how do downline teams get recognition for their sales effort? This is taken care of by MLM companies by employing downline commission management. It is purely based on the performance of downlines. In the hierarchical structure, uplines receive a percentage of sales made by their downlines.
Apart from that, leadership bonuses are implemented by companies though they differ according to different MLM companies. However, most MLM companies have a specified percentage of the total Commissionable Volume (CV).
Another important type of MLM commission management is the rank advancement bonus. In this, a particular criterion is fixed for the distributors to climb up the network. As distributors achieve higher ranks, the bonus also increases accordingly.
