MLM Commission System Using Product Codes for Social Network Integration
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Solution Overview
Problem
Current multi-level marketing (MLM) systems do not effectively incentivize users to promote products outside their own networks without contractual obligations, minimum purchase requirements, and do not utilize social networks efficiently, leading to limited consumer engagement and product promotion.
Innovation Solution
A system where buyers receive commissions and referral fees for purchasing and promoting products, with an administration network generating codes that link users who purchase the same product, allowing for a dynamic commission structure and social media connections, enabling users to earn commissions through a 'single product tree' structure.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If MLM systems use contractual obligations and minimum purchase requirements to ensure participant commitment, then participant loyalty and product sales are improved, but system accessibility and user engagement are reduced
Solution Approach 1:
The patent extracts the commission payment mechanism from the traditional MLM contractual framework. Users can participate without signing exclusive contracts or meeting minimum purchase requirements. The system only requires product purchase codes to be entered, allowing free participation while maintaining commission incentives through code-based tracking rather than contractual obligations.
Solution Approach 2:
The patent introduces product purchase codes as an intermediary mechanism between users and the MLM system. These codes serve as a neutral mediator that tracks referrals and commissions without requiring contractual commitments. The codes enable the system to identify referral relationships and distribute commissions automatically, replacing the need for contractual binding while maintaining system reliability.
2Productivity
If MLM systems focus on recruitment-based commission structures, then sponsor income is improved, but legitimate product sales and consumer value are reduced
Solution Approach 1:
The patent inverts the traditional MLM approach by making product purchase the primary driver of commissions rather than recruitment. Users receive commissions for referring others to purchase products, and the system tracks these through product codes. This reversal ensures that commission payments are directly tied to legitimate product sales rather than mere recruitment, eliminating pyramid scheme characteristics while maintaining sponsor income opportunities.
Solution Approach 2:
The patent implements a feedback mechanism where commission payments are directly linked to verified product purchase data. The system tracks product codes through the supply chain and provides transparent feedback on commission eligibility based on actual product sales. This ensures that sponsor income is generated from genuine product consumption rather than recruitment fees, creating a sustainable and legitimate business model.
3Stability of the object's composition
If MLM systems require exclusivity contracts prohibiting alternative goods or services, then brand loyalty is improved, but consumer choice and market competition are reduced
Solution Approach 1:
The patent extracts the loyalty mechanism from exclusive contracts and transfers it to the product purchase code system. Users can freely choose which products to purchase and which referral codes to use without being bound by exclusivity agreements. The system maintains brand loyalty through the commission incentive structure tied to product purchases rather than through contractual restrictions on consumer choice.
4Device complexity
If MLM systems use static commission structures, then system simplicity is improved, but user engagement and promotional effectiveness are reduced
Solution Approach 1:
The patent implements a dynamic commission structure where commission rates and eligibility can vary based on product type, purchase volume, and referral level. The system automatically adjusts commission parameters through the product code tracking mechanism, enabling flexible incentive structures that adapt to different promotional scenarios while maintaining operational simplicity through automated code-based management.
Data Source
AI summary
The present disclosure is directed to a system and method to allow sellers of products to establish individual products in a multilevel marketing (MLM) commission system, where the product is offered and sold to a first purchaser—who then actively by requesting a code, or passively, through the purchase of the product, becomes a user of the commission system. This user is provided a code such that the code may be passed onto followers of the registered user. The registered user will be allowed to advertise the product to a second purchaser and the second purchaser will be allowed to purchase the product and provide advertisements to other purchasers. Commissions paid to respective downline purchasers for a single product may be limited by a preset number of defined levels. After a product is purchased, commissions are paid out to each respective purchaser according to the commission plan. The system may identify users that are connected within the system and who use the same social media site. The system may then suggest that these users connect on the social media site based on their existing connections within the system.