International network marketing also known as multi-level marketing, international direct selling or international referral marketing, is a term that means a unique marketing structure that is engineered to form a marketing and sales capability by providing compensation to promoters of company products and services. The most loved part is that promoters are given commissions not only for sales they helped generate but also for the sales made possible by promoters they have referred into the system thus creating a downline of promoters. The downline can be illustrated in pyramidal form to fully showcase the hierarchy of multiple compensation levels. Companies may use such technique as a mere part of their general marketing strategy or as the core of their overall marketing campaign.
An international network marketing company is represented by independent and unsalaried salespeople commonly known as distributors but are also sometimes referred to as associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, etc. they are not employed by the company the produces or provides the products or services they sell and therefore do not receive any time-based salary. The distributors only receive according to the quantity of products or services they sold by their own means and of course, the sales of their downline network.
International network marketing distributors grow their organization through the establishment of their own loyal and active customer base which is composed of consumers who buy straight from the company. Another way to expand is to recruit an efficient downline of able distributors who are also likely to build their very own customer base. There are also those distributors who buy products from the company at discounted or wholesale price and then they sell them at regular prices. This way, they get to earn commissions while at the same time earning the discount as extra profit.
International network marketing distributors receive compensation based on the company’s compensation plan.
1. Unilevel Plan
The unilevel plan is the most basic international network marketing compensation plan. Here a marketer is permitted to sponsor only one line of distributors which is called his frontline. The number of distributors one can include in his frontline is unlimited as to encourage people to recruit as many frontline distributors as they are capable of. The unlimited frontline is because the compensations are usually paid out on a limited depth only. A sponsor can normally receive compensation on sales five to seven levels deep.
2. Stairstep Breakaway Plan
The Stairstep breakaway plan’s distinguishing factor is the fact that t has representatives who are accountable both for personal sales and for group sales volume. Distributor recruitment and product retail is what makes up volume. A group leader will be selected depending on the sales performance with any representative with one or more downline recruits qualified. The group leader is entitled to different discounts and rebated depending on how well he performed. Once predefined personal or group target volume sales are realized a representative will move up to a higher commission level, such activity goes on until the representative’s sales finally reach the top or final commission level and eventually breaks away from his upline. He is then treated as no longer connected to the upline and his compensation end unless he agrees to start all over again. The uiplining continues until all international network marketing members have broken through.
3. Matrix Plan
The matrix plan is similar to the unilevel plan besides the fact that it only allows a limited number of distributors in the first level. Recruits after the limit are automatically places on lower level positions in the downline. Maximum width and depth is common in matrix plans. A new matrix is initiated whenever the current matrix reaches its maximum width and depth. International network marketing matrix representatives earn unlimited commissions on limited volume levels with very minimal sales quotas.
4. Binary Plan
An international network marketing binary plan permits representatives to have two frontline distributors only. Every time a distributor sponsors more that two distributors, the excess are placed below that distributor’s frontline. The primary limitation is that distributors must “balance” their two downline legs to receive commissions. Balancing legs typically requires that the number of sales from one downline leg constitute no more than a specified percentage of the distributor’s total sales.
5. Hybrid Plan
Hybrid compensation plans are engineered having elements of two or more kinds of compensation plans.