MLM or DLC
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.
Uni-Level Programs
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.
2-Up Programs
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
Downline Clubs
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