The popularity of MLM business is on the rise. It works in favor of those who are looking for means to earn passive income.
Multi-level marketing, or MLM, is a business that runs through network marketing, direct selling, and referral marketing.
It involves selling products or services via a network of distributors.
The more people join you, the stronger your network gets, and the more the income.
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MLM business works on a simple model. As a sales promoter, you need to get more people to join you.
When a new person joins the business, they get added to your downline, and you earn a certain percentage of the sales generated by them.
This is the basic idea of an MLM business. However, it has got different types of MLM Plans based on variations in the model.
One such popular type is the Single Leg MLM plan. This article will discuss the single leg MLM plan in detail — how it works and its compensation structure.
What Is a Single Leg MLM Plan?
Single Leg MLM Plan, sometimes referred to as a monoline plan, forms a single chain of reference.
The main idea is to gain profit from a single line.
The first member who joins is the upline member, and they are followed by the straight-line members (who form the downline).
Also, Read: A Beginner’s Guide to Crowdfunding MLM Plan
The initiator of the chain gets the greatest benefits of commission.
The best thing about the monoline plan is that it enriches everyone that comes under you. It’s not necessary that the person needs to be referred by you.
It forms a single line irrespective of who hires it (known as the spillover concept).
Thus, everyone stays equally dedicated to the growth of the company.
Single leg MLM plan was first introduced in 2008. Since then, it has evolved to become one of the most demanded plans in the industry.
It targets a huge user base to sustain the market and enables a farther reach for every user.
Some of the key points of the single leg business plan are:
- It is easier and simpler to understand as compared to other business models
- If you are starting a new business, the single leg MLM plan is the fastest way to build your stand in the market
- There is always a chance of income in a single leg plan when new members get hired downline to other members
Now that you know the basic structure of a single leg MLM plan, let us understand how the compensation system works.
Understanding the Single Leg Compensation Structure
The single leg compensation structure works on a first-come-first-serve basis.
In this, you get rewarded for the sales generated by you and for the sales generated by the promoters in your downline. You get a certain percentage as commission from their sales amount.
Although there are no mandatory rules, some companies have certain conditions to be fulfilled before you can start forming your lineage.
Let’s say, you are on the top of the chain. You will get automatically paid for every member below you irrespective of whether they are referred by you or are a spillover.
However, some company decides to make it a requirement to sponsor at least 2 individuals before you start getting paid.
In such cases, you get a slightly higher percentage of their earnings than the rest of the downline.
This is known as a forced matrix MLM plan where a particular number of slots is mandatory to be filled before you start earning.
Let me explain this to you with an example.
Instead of building your own legs in the downline, the whole company is a single-leg. All the newly joined distributors are placed in the same line.
After you become a representative of a company, all the other people who join after you will be in your downline.
Now the company has this policy that only after you have hired 3 representatives of your own, you will start getting 10 percent of their earnings. And for the rest of everyone in the downline (which you didn’t hire personally), you will get 5 percent of their sales value.
This is the basic compensation structure of any single leg MLM plan. However, it may differ from company to company on different levels.
Pros and Cons of a Single-Leg MLM Plan
Before you decide to create a network strategy for your own company, you need to equally weigh the advantages and disadvantages associated with a particular plan.
Also, Read: 7 Best Online MLM Software to Streamline Your MLM Plans
Like any other method, a single leg MLM plan has its own pros and cons too.
Pros of a Single Leg MLM Plan
1. First-Cum-First-Basis
In a single leg MLM model, more distributors mean more compensation. Whenever a new distributor is introduced to the company, the member who gets in the company first gets the benefits.
However, the lower member also starts earning as and when the chain begins to grow. Thus, every member gets the opportunity to earn well.
2. Passive Income
It is a highly recommended plan because it gives the passive income opportunities for all members. Besides, it doesn’t limit the earning possibilities. Members are assured of some income when a new member gets added in the line ( including spillovers).
3. More Focus on Sale
Generally, every recruiter has to only recruit one distributor directly under him. Thus, it gives them more time to just focus on the sale of products rather than worrying about filling slots.
Cons of a Single Leg MLM Plan
1. Breeds Laziness
The biggest disadvantage is that this single plan MLM model can breed laziness.
Since members get benefitted from everyone else bringing people in, they might take advantage and not put in the extra effort.
This is why many companies chose to set up a requirement before members can start earning. This ensures that everyone has contributed their share of hard work before sharing profits.
Wrapping it up
The monoline MLM plan is one of the most effective multi-level marketing business plans for network marketers.
Promoters get free training from the company, require low start-up costs, and grasp advertising benefits.
It gives the opportunity to earn more by encouraging people to join and convincing them to buy a product.
Altogether, the single-leg MLM compensation plan is a highly recommended MLM Plan for 2020.
Chirantan Patel is the Product Manager at Softwaresuggest & Callhippo, an Inc. 275 company that researches and analyzes software to educate, advise, and connect buyers and sellers of business technology.
