Dynamic compression is a method of distributing commission to members in the MLM business plans. Understand how the method works, its advantages, disadvantages and alternatives available to this method.
MLM business plans are constantly evolving. Compression, a technique, specific to MLM businesses, refers to a method that keeps inactive and non qualified distributors from being a part of the payouts in the level commission plan. This method has been effectively put to use and brings about fairness in the entire process of an MLM business plan.
Dynamic compression is a variant of standard compression which is more complex than the standard method. In a standard compression method, the commission amount in not paid fully but dynamic compression provides a different take on it. It becomes applicable to the distributors who are in a premium position with four or five levels of distributors under them.
In the other method, it is not only the inactive or the non qualified distributors who do not get the commission, but also those who do not qualify for a specific level of commission. This specific level is enjoyed and passed on to the real working distributors and the others are ‘compressed’. The commission is paid to their up line using certain MLM commission calculator and yet the ‘non deserving’ get compressed, with no impact on the active and deserving ones.
The biggest and the foremost advantage of this model is that the leader gets paid by the company even for the deepest down line. If any of his distributors, no matter where in line they are placed, are active and qualified, then a portion of the commission is enjoyed by the leader too. MLM commission calculator is set as such that the commissions are distributed as per the model.
The main disadvantage of this method of commission is that the basic qualifying level may be difficult for distributors to reach and there could be many distributors who lose out down the line. The qualification clause becomes difficult to reach and therefore, some may get the feeling of losing out on money. Also, in this system there may be a case when someone on the first level of the distributor qualifies and the entire income moves up to the distributor. This member can then experience a sudden fall in the earning and may feel that he has not earned the deserved commission.
Dynamic compression may not be the most effective way to get the full payout only for the active distributors. The model is created in such a way that while the inactive members will be sifted out, the active members also may suffer in the process. Hence, this method must be avoided by companies that are looking at a long term and successful MLM business plan execution.
The best solution to this problem of fair distribution of commission is using an effective MLM software. MLM software solutions in India is provided by companies like DNB MLM Software Solutions that create software that has built in algorithms for calculation of commission. You can either use the standardized MLM software or get the flexibility to modify the same to suit to the needs of your business. Modification and scaling up of software is inevitable, and therefore, you must always opt for experienced and seasoned professionals in the business of MLM software solutions in India.