MLM Commission System with Dynamic Referral Codes
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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, exclusivity, and high minimum purchase requirements, and lack dynamic commission structures tailored to individual products, limiting user choice and flexibility.
Innovation Solution
A system where users can enroll products in a commission structure, generating unique codes for referrals, allowing commissions to be paid based on a preset number of defined levels, enabling iterative linking of users and remuneration for product purchases, with an administration network managing commission plans and charity donations.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If MLM companies require contractual obligations and exclusivity to pay commissions, then commission payment reliability is improved, but user flexibility and ease of participation deteriorate
Solution Approach 1:
The patent extracts the commission payment mechanism from the traditional MLM contractual framework, allowing commission-based referrals without requiring users to sign exclusivity agreements or meet minimum purchase requirements. This separates the beneficial commission incentive from the restrictive contractual obligations.
Solution Approach 2:
The system creates a universal referral platform that works across multiple e-commerce sites and products without requiring users to commit to a single MLM company. Users can participate in multiple referral programs simultaneously, making the system adaptable and versatile while maintaining commission payment reliability.
2Quantity of substance
If MLM companies impose high minimum purchase requirements, then commission pool funding is improved, but user accessibility and ease of participation deteriorate
Solution Approach 1:
The patent segments the commission pool funding mechanism into small, incremental contributions from multiple referred customers rather than requiring large upfront purchases from individual users. Each referred customer contributes a small portion to the commission pool, making participation accessible while still funding adequate commissions.
Solution Approach 2:
The system uses partial action by collecting small commission contributions from many referred customers rather than requiring full commission funding from each user's initial purchase. This accumulates sufficient commission pool funding through aggregated small contributions from numerous users.
3Device complexity
If MLM companies use static commission structures, then system simplicity is improved, but user engagement and adaptability to different products deteriorate
Solution Approach 1:
The patent implements dynamic commission structures that can vary by product, user level, and referral source. The system automatically adjusts commission rates and structures based on predefined rules and performance metrics, enabling adaptability to different products and scenarios while maintaining manageable system complexity through automated management.
4Measurement precision
If MLM companies track retail customer sales individually, then commission accuracy is improved, but data collection complexity and cost deteriorate
Solution Approach 1:
The patent uses e-commerce site data and referral codes as intermediaries to track and verify sales. Rather than directly tracking individual retail customer transactions, the system uses the existing e-commerce infrastructure and automated referral code tracking to accurately attribute sales to referrers, maintaining commission accuracy while minimizing data collection complexity.
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 assigned to the user. Users may be assigned or may be able to select their own commission plan. The system may assign or suggest commission plans to the used to optimize metric such as sales or profit. The user may elect to donate an amount of their commission to entities such as charities.