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Coded Bonus for MLM Compensation Plans
The use of an MLM coded bonus has increased of late. The coded bonus is an upfront bonus type of instant money, and is a bit of a take off of the Australian 2 up compensation plan.
The difficulty with MLM coded bonuses are they mean something different to everyone you talk to. So the simple term Coded Bonus is very unspecific, as there are so many different ways of doing a coded bonus, yet most members do not know this and they assume every coded bonus is the same. They are not.
The setup of the coded bonus for MLM Compensation Plans or Commission Plans is very similar to the 3 Level Roll up QEB. The calculation of how to set the amounts and points is the same.
The 3 Level rollup Quality Enroller bonus method is a bit different in that it doesn’t normally split between members.
The big difference is in the execution of the bonus.
When a member A joins at the $500 Level they are coded with a coded bonus at the $500 level. Every time they enroll someone at the $500 level, that person is coded to them and forever they earn a particular coded bonus on that members purchases including their initial package.
If member A joined at the $500 level and signed up B for $1000, B would get coded to the first person above A that is coded at $1000 and earn the coded bonus.
While initially coded bonuses look great, normally members quickly begin to resent the people they lost to higher codes in a coded bonus plan. Not as bad when the code can be purchased like in the example above, but more so when there are also qualifications to reach a higher code.
It effectively would mean as you are working hard bringing on your A team, all of your A team is getting coded to someone that is not YOU! Normally you can never recover them either.
The supposed up side is as you advance, all those below you end up giving their leaders codes to you now so it all works out.
We have found MLM’rs egos to prevent this from seeming right for very long.
You can often tell if you have it wrong as right from day 1 your “Leaders” will be begging you to “Gift” them the higher code in order to come onboard. If you have to “Gift” all your leaders the higher code, this should be a warning sign that your Coded Bonus method is not right and likely not sustainable.
As a result of the downsides, we always recommend coded bonuses be used in conjunction with a normal matrix/binary/unilevel so that the matrix plan, binary plan, or unilevel plan can create enough excitement and income that by the time the coded bonus negatives get to big, nobody is overly concerned with it as they are earning nicely in the main plan at that point.
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