What’s a Unilevel Plan?

If you’ve been involved in the MLM (Multi-Level Marketing) industry, you’ve likely come across the term “unilevel compensation plan.”

Many direct selling companies utilize this commission structure, and it’s popular for good reasons: it’s flexible, motivating, and straightforward. But what exactly defines a unilevel plan, and why does it outshine other models that didn’t succeed?

In this article, we’ll break down the essentials, explaining how a unilevel plan operates, highlighting its strengths, and pointing out its weaknesses.

What is Unilevel MLM Plan?

The Unilevel MLM compensation plan is a straightforward concept. In this plan, there’s only one business level, and all the people you personally sponsor as a distributor are placed directly on your first level.

Unlike other MLM plans, there’s no spillover in the Unilevel plan. This means that every effort you put into recruiting new members directly benefits you. It’s a widely used plan and can be found in various compensation structures.

In fact, when you see a distributor’s sponsorship tree in any MLM compensation plan, it’s usually represented using a Unilevel plan. That’s why it’s often referred to as a “universal plan.”

Companies looking for a simple compensation plan often opt for the Unilevel model. It’s free from complications like spillover or complex criteria, making it easy to explain to potential members.

However, for MLM companies to run smoothly and make consistent progress, they often rely on data-driven MLM software to manage their business processes effectively. This technology helps streamline operations and ensure long-term success.

Read more: What Is an MLM?

How Does the Unilevel MLM Plan Work?

Imagine a plan that’s as simple as it sounds – the Unilevel MLM plan. It lives up to its name because it operates on just one business level. Unlike other plans with multiple levels for member placement, the Unilevel plan places all the new members (sales referrals) made by a sponsor on the same business level, one after the other.

Here’s a straightforward example to make it crystal clear. Let’s say ‘Distributor X’ joins the business and sponsors 5 new members. These 5 members all go into the same business level, which is level 1. That’s why it’s called a ‘unilevel’ plan!

The most remarkable feature of the Unilevel plan is that it allows distributors to add an unlimited number of members on a single level. This is why it’s also known as a ‘single level plan.’ There’s no limit to how wide your network can grow, and this directly boosts a sponsor’s compensation. As the sponsored members are placed directly on the same level, the sponsor benefits immediately.

But what happens when Distributor X’s network starts bringing in new sales?

Let’s say ‘Distributor 1,’ who is under ‘X,’ recruits new members. These new referrals are placed directly under Distributor 1. All members referred by this distributor go on the same level. This means that the Unilevel plan maximizes a distributor’s compensation for their efforts.

In addition to direct compensations, there are other compensations available, often extending up to 5-10 business levels. In this case, Distributor X benefits from the downline recruits up to 5-10 levels, as determined by the company.

This is how a Unilevel tree is constructed!

To become part of the Unilevel plan, a distributor needs to purchase an enrollment package. After enrolling, the user becomes a ‘distributor’ and is added to the genealogy tree under their sponsor. The distributor then takes their place as a downline on the tree, positioned underneath their sponsor.

Unilevel Compensation Structure

In the Unilevel compensation plan, a distributor’s eligibility for earnings is typically limited to 5-10 business levels, as determined by the company’s rules. The commission payments vary depending on the business level. Here’s a simplified breakdown:

  • Level 1: You earn 10% of the sales volume as a direct bonus.
  • Level 2: You earn 5% of the sales volume.
  • Level 3: You earn 4% of the sales volume.
  • Level 4: You earn 3% of the sales volume.
  • Level 5: You earn 2% of the sales volume.
  • Level 6: You earn 1% of the sales volume.

Keep in mind that network marketing companies may include certain criteria, such as capping the distributor’s earnings at 200% of the enrollment fee or basing compensation on ranks, to regulate the plan.

Similar to the binary income plan, the Unilevel plan keeps distributors active and motivated within their group. However, the compensation amounts are generally lower compared to other plans because there’s no spillover process.

Let’s delve into some popular bonuses and compensations within the Unilevel plan:

1. Direct Sponsor Bonus: This bonus is earned by referring new members to the Unilevel tree. For instance, if a distributor sponsors 5 new members who each choose the $100 enrollment package, and the company sets a 10% sponsor bonus rate, the distributor receives $50 as a sponsor bonus (10% of $500).

2. Matching Bonus: Distributors receive a percentage of the sponsor bonus earned by their downline members. For example, if Sponsor A refers users 1, 2, 3, and 4, and User 1 later sponsors new members x, y, z, User 1 receives $30 as a direct sponsor bonus. Sponsor A also receives $1.5 as a matching bonus (5% of $30).

3. Fast Start Bonus: This bonus is awarded when distributors meet specific criteria within a set timeframe after joining the Unilevel plan. For instance, if Distributor X refers 10 new members to the tree within a month, and the bonus is set at 5% of the commission, the distributor receives $50 as a fast start bonus (5% of $1000).

4. Rank Advancement Bonus: Distributors receive this bonus when they advance to higher ranks by meeting certain rank criteria established by the company. For instance, if a distributor in ‘rank 4’ refers 25 new members, leading to advancement to ‘rank 5,’ the distributor receives a $10 rank advancement bonus. This bonus encourages distributors to become leaders in the network.

5. Leadership Pool Bonus: A percentage of the total business turnover is pooled, and distributors can qualify to receive a share of this pool based on specific criteria. For example, if ABC MLM company adds 10% of total sales revenue to the pool and sets the eligibility criteria at reaching ‘rank 2’ status, 10 distributors meet the criteria. They each receive $300 equally (1% of $300,000 total sales revenue divided by 10) as a leadership pool bonus.

Pros of Unilevel Plan

1. Dynamic Network Building

Unilevel plans are a recipe for success because they naturally inspire distributors to build organizations that are both deep and wide. Deep organizations with numerous levels enhance earning potential as distributors climb the ranks. More levels mean more sales dollars, leading to higher commissions when distributors advance.

On the flip side, wide organizations with many people on each level maximize distributor paychecks by increasing the number of sales generators. These higher volume numbers also fast-track their qualification for new ranks. Building both deep and wide benefits distributors while strengthening your company’s sales volume foundation.

2. Flexible Commission Structures

Unilevel plans offer unparalleled flexibility in commission structures. Distributors have the freedom to build their networks deep, wide, or in any other way they prefer. This adaptability is generally a positive trait, allowing for various strategies. However, it’s essential to be aware of potential downsides (check out the Cons section).

Moreover, Unilevel plans can adjust to different commission sizes, making them suitable for various positions within a compensation plan. Whether integrated as a core commission or for specific distributor groups, Unilevel plans are versatile and can be tailored to align with your company’s goals and compensation structure.

3. Simplicity

Unilevel commissions were developed as a simpler alternative to breakaway plans. They were designed to be easy to understand and explain, making them more successful.

Over time, as MLM plans evolved to meet global market demands, their details and rules grew complex, much like modern breakaways.

Fortunately, the core Unilevel model remains straightforward, making it generally easy to convey to potential recruits who want to join.

4. Sales Focus

One of the top reasons for the ongoing success of Unilevel plans is their remarkable ability to encourage sales. The hallmark of any prosperous compensation plan is a well-compensated group of salespeople, including mid-level distributors and their immediate leaders.

Unilevel plans excel in rewarding individuals who have both a reasonably sized downline and a talent for sales. Since Unilevels pay distributors based on levels, they naturally reward those who excel at generating sales, creating a win-win situation for all.

Cons of Unilevel Plan

1. Stacking

Stacking ranks high among the drawbacks of unilevel plans. It’s an unethical method of building an organization that diverts commissions from a distributor’s upline leaders and disrupts the company’s payout structure. Here’s a simplified example of how it works:

  • Unstacked Downline: In an unstacked group, Distributor A earns a 5% commission from the sales of her first-level distributors. If each generates $100 in sales, she receives a $20 commissi
  • Stacked Downline: In the stacked group, Distributor A enrolls four false (or co-conspiring) distributors between her and genuine recruits, creating artificial layers. Real commissions are funneled through these fake accounts, boosting her earnings from $20 to $100.

Distributors may be enticed by stacking for quick commission gains, but they often fail to grasp its detrimental impact on their upline. As they “beat the system,” their upline distributors become too distant from real sales to profit and may discontinue providing mentorship and support.

This can hinder future progress and deprive them of the benefits of a deep and wide organization, potentially limiting long-term earnings.

2. Needs Commission Supplements

Unilevel plans, when used as the core commission structure, may not inherently reward new or high-earning distributors adequately.

Beginners may struggle to see a substantial return on the time invested in growing their organization until they have at least 2-3 relatively full levels.

Conversely, high-earning distributors can outgrow the plan. For example, in a 5-level unilevel model, sales beyond the sixth level are out of their reach.

3. Age-Related Drawbacks

Unilevel plans, while not as old as some compensation models, can still show signs of aging and may not remain engaging to target distributors.

There’s a potential risk in relying on a “safe” commission structure at the core of your MLM plan, particularly if it hasn’t been updated or doesn’t align with the interests of your intended distributor audience.

It’s essential to periodically assess the effectiveness and relevance of your unilevel plan to ensure it continues to attract and motivate distributors effectively.

The Bottom Line

The Unilevel commission plan presents a promising option for your MLM strategy, given its proven success and adaptability. However, it’s crucial to be mindful of the associated drawbacks and have strategies in place to mitigate them.

If you seek a tried-and-true payment structure that fosters sales and injects flexibility into your compensation approach, the Unilevel plan can be a match for your business.

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