Having been involved with network marketing for about twelve years and with marketing on the Internet for about two years, I have been asked several times to explain network marketing (MLM) and downline clubs (DLC).
My specialty for the last twelve years has been writing software for MLM companies, especially compensation plans.
In the non-cyber world there are a great many different types of compensation plans. Some, like break a way plans, can be very complicated.
On the Internet you usually see only three different types of compensation plans. These are the forced matrix, a two up system, and a uni-level program. Of these the forced matrix is by far the most common.
Forced Matrix Programs
A forced matrix is a program where each member can have only a certain number of members on your first level. This number is usually between two and six with three being the most common. When the number is three, it is called a three-wide matrix.
The lower the number, the more likely it is that you will receive spillover. As an example, suppose you are in a three-wide matrix program and you have three members on your first level. When you sponsor another member that new member would have to be placed somewhere below one of the members on your first level. This is called spillover. Most companies want to be able to advertise that you will receive lots of spillover, so they make their matrix with a small width.
The other factor in a forced matrix is the number of levels on which you will be paid. This usually varies from three to 20. If the number is low then you will not have very many people in your matrix before it is filled. If the number is large, like 15, then chances are that you will never get your matrix filled. My personal preference is a program that pays on six to eight levels. If the program is three wide and pays on seven levels then it would be called a 3 X 7 matrix.
An important thing to look at is the percents that are paid on each level. Some put large percents on the first or second levels. Others put the large percents on the lower levels. With the high payout percents on the higher levels you are likely to be breaking even or making money fairly fast. With the high payout percents on the low levels it will take longer before you make any money, however the income potential can be fairly large. I like the higher amounts on the upper level as this favors the person that does not sponsor very many people, which is the majority of the members.
A uni-level program is very similar to a forced matrix. The difference is that with a uni-level there is no limit on the number of members you can have on your first level. Uni-level programs are commonly used with free or very low cost programs. Many of the traffic and surf programs are uni-level. The philosophy appears to be that if it is free or very inexpensive then it is easy to recruit people.
The third type is a 2-up system. These are harder to explain. Like the matrix and uni-level, these have their roots in the non-cyber world of network marketing. Originally they were called the Australian 2-up or Aussie 2-up. Unlike a matrix where several members receive commissions from one member, with a 2-up system exactly one person receive commissions from a member.
With a 2-up program you must recruit three members before you make any money. The commission from the first two you sponsor goes to someone up-line from you. You receive all the commission from the third person you sponsor, and from each person you sponsor thereafter.
You also receive the commission from the first two sponsored by your third sponsored member, and the commissions from the first two sponsored by each member after your third. Basically, you receive commissions from the first two sponsored by anyone that you received commissions from. This makes the program an infinite deep payment program.
Though 2-up programs are used with monthly pay programs, they are most popular with one-time pay programs where the payment is fairly high
A downline club is a program that many members can join and they all enter a MLM program together. Most downline clubs are free, but some do charge a small fee. Most downline clubs will not join a program until they have at least 1,000 members. Some were created with the intent of joining one specific program. Others will join several programs over a period of time. Some of the downline clubs that join several programs will do something to ensure that their members join the programs in different order each time so that everyone has a chance to make money.
Which is Best
So should you join a MLM directly or join a downline club? This depends a lot on you. Are you a heavy hitter? How experienced are you with Internet marketing? How much freedom do you want in choosing programs to join? Most downline clubs join only forced matrix programs.
The advantages of joining a MLM directly is that you know what the product is and what the compensation plan is before you join. You can estimate how many members you need to sponsor before you make money. When you estimate how many you need to sponsor do not count on spillover. You may never receive any spillover. You should only join a program if you like the product and intend to use it.
The disadvantage of joining a MLM directly is that you will have to sponsor several people, maybe many people, before you start making money. You will need to market the web site they give you. This could take time and money.
The advantage of joining a downline club is that with 1,000 or more members joining a forced matrix as a group it is much more likely that you will receive a commission check the first month. The downline club should continue to bring members into a program after the initial group joins, which should create some spillover. With a downline club there is much more of a team building spirit.
The disadvantages of joining a downline club are that you usually have no or very little control over the programs that the club will join. Usually they are not announced until shortly before you are to join the program. You may not want or like the product. You may not like the compensation plan.
What is my recommendation? Do both. If you find an MLM that has a good product that you want to use and you like the compensation plan, check it out. Is it fairly priced? If it has an “About” page, read it to learn what you can about the owners. Read the frequently asked questions and the terms. If you still like it then join it. If you are new to network marketing, then it may be better to start with a downline club.
When you see an interesting downline club try to determine what types of programs they will be joining. Will they join the various programs in the same order or is there some plan for joining in reverse order on the various programs. Do you have to sponsor in order to have a downline in the programs they join? If they have already joined a program(s) do you like them?
Network marketing is the least expensive business that you can get into and be able to make a good income.
It is possible to make a great deal of money in network marketing programs. Those that make money know that the beginning will be slow. They advertise and market the program(s) they have joined. They are patient and do not give up. They adopt a winning attitude.
You too can be a winner in network marketing.
Albin Dittli has been writing software for the network marketing industry for 12 years and marketing on the Internet for over two years. Please visit his web site at http://www.The-Home-Business-Center.com. You can subscribe to his free ezine, eBiz Marketing Tips, by sending an email to firstname.lastname@example.org.
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