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The binary MLM compensation plan is one of the most popular plans as it is optimized for group participation. Another attractive feature of the Binary MLM plan is that it generally offers weekly pay outs. As a result, the networks that offer Binary plans grow rapidly. As rapidly as they grow, such networks become easily prone to admin efficiency issues, commission pay out delays, and scalability challenges. Interestingly, blockchain-powered smart contract MLM software can prove to be an excellent way to overcome all the above challenges.
How does a Binary MLM plan work and how can it embrace blockchain?
In a Binary MLM plan, a participant is given two legs for his two frontline associates. Each associate has a left and a right leg. When the sales on the right and left legs match at an amount set in the program algorithm, the participant receives his commission payout. If one of the legs has some additional sales volume, it is carried over to the next period of commission payout. Imagine when there are millions of participants how difficult does the administration becomes.
Here is how smart contract based MLM can streamline the processing:
In most of the network marketing programs that are based on traditional centralized software, the positions of the new recruitments are fixed and rigid. However, by using spillover, the network marketing companies can provide participants an ability to have new recruitments placed under you by their uplines. While most of the network marketing companies use it as a marketing strategy, there are so many conditions applicable to this. Because of the centralized and transparency issues, the new recruitments are often not aware of these conditions.
By deploying the plan on smart contract based MLM software, both the company and the recruits can have transparent access to all the terms and conditions. This helps build trust across the organization.
Capped commission to protect the company payouts
The thumb rule is that a binary compensation plan pays a percentage of commission to the unlimited downline depth. This means precisely unlimited payouts to be made to the downlines. If this is the scenario, how can a network marketing company that implements binary plans stay profitable. The secret lies in using the capped commissions and smart contract based MLM can easily help companies implement the capped commission.
Let us understand how smart contracts can help implement capped commissions. Basically, the business logic of capped commissions is that the network marketing company cuts off all the payouts a budgeted amount. After that, it distributes a part of what they have earned. By implementing the logic in the smart contract, the companies do not have to keep a watch on this. The smart contract automatically distributes the decided percentage of the remaining amount once the capped commission is reached.
As these smart contracts cannot be tweaked, it protects the rights of both the company and the recruits.
Multiple business points
Each network participant stands as a business point in an MLM. As a result, for efficient administration, the company needs to maintain a close track of all the activities. When the network grows rapidly, the admin of such multiple business points becomes a big challenge. As blockchain is decentralized in nature, it helps companies operate in a more transparent manner without exposing its data to any kind of risk.
Overall benefits of Smart Contracts for an MLM Platform
1) Smart contracts are programmed contracts that execute automatically. As a result, they make the MLM platforms more reliable.
2) They help make the operations of an MLM platform more cost-effective. That’s because there are no middlemen reducing the middlemen cost and huge paperwork.
3) Smart contracts are highly efficient and increase the processing speed of an MLM platform.
When it comes to developing solutions using blockchain technology, Antier offers premium services. As our blockchain developers have mastered Bitcoin, Tron, and Ethereum blockchains, we help you make the most out of a smart contract based MLM platform.
We offer white label smart contract based MLM platforms to expedite deployment and alleviate the development cost. In addition, we specialize in the development of a custom MLM platform from scratch.
Schedule a free demo of our white label MLM platform or connect with our subject matter experts to share your needs for a custom platform built from the ground up.
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