Multi-level Marketing (MLM) is a marketing strategy where products or services are sold using a network of distributors. The terms direct sales, referral marketing, and network marketing are also used to refer to MLM.
How Does Multilevel Marketing Work?
The individuals who sell the product or service of an MLM company go by many names. They are called participants, associates, consultants, contractors, distributors, or independent business owners. They do not receive a salary from the company. They earn through a commission system that is called pyramid selling.
The concept of recruitment is central to multilevel marketing. Distributors are invited to join the company’s sales force by another distributor. Sometimes a well-advertised meeting is held for the specific purpose of recruiting distributors.
A distributor of a multilevel marketing company earns by selling the company’s products or services. He is expected to recruit other distributors. When his recruits are able to generate sales for the company, the recruiter/distributor gets a fraction of the income generated. When his own recruits are able to get other distributors to sign up for the company, they, in turn, also earn money when their own recruits are able to sell.
If you become a distributor, the people you get to sign up, as well as the people your recruits are able to recruit in turn, are referred to as your downline. The person who got you to sign up and the people above him in the chain is referred to as your upline.
A distributor is expected to help his recruits to get started. Help usually includes training about the company and its products or services.
What Accounts for the Immense Popularity of Multilevel Marketing?
Most people who join network marketing are attracted by the prospect of a simple, and convenient way to make big money. There is no ceiling to how much money you can earn, providing you are able to recruit a lot of people who are also able to generate a huge amount of sales. If you have a good downline, you can sit back and still earn from the sales that your recruits make.
Moreover, it does not require much money to be a distributor. It costs much less to join an MLM company than to get a franchise or start your own business.
Are Multilevel Marketing Plans Legal?
MLMs are legal in the US. The Federal Trade Commission regulates their operations. In Canada, Multilevel Marketing companies are legal provided they comply with the Competition Act.
In most countries, the operations of MLMs remain by and large mostly unregulated. There is still a need for laws to clearly define how MLMs should function and operate.
If you are interested in joining a Multilevel Marketing company, you should approach it in the way you would a business venture proposal. You need to examine the opportunity being offered to you thoroughly. There are many legitimate MLMs. You just have to ensure that the one you are joining is the right network marketing company for you.
How to Choose the Right Multilevel Marketing Company
If you want to make money by joining an MLM company, stay away from start-up companies. Choose one that shows a solid degree of stability. Look for one that has been around for five years or so.
Choose a company that is well-capitalized. It should have the resources to grow, sustain a rock-solid infrastructure, sustain a strong management team, keep up with the latest technology, and allow its distributors to earn good money.
Look into the products and services that the company offers. Are they exceptional and unique brands that will attract people and generate sales? Are they of real and lasting value to prospective customers? Is there a real long-term need for them? Is there a market you can tap for these products and services?
Can you enjoy immediate income from selling the products and establishing your downline? Will you be able to enjoy a long-term residual income from being a distributor?
Is the individual sponsoring you committed to helping you succeed? Do not make the mistake of signing up with a distributor who is simply interested in getting as many recruits as he can. Sign up with somebody who understands the value of helping his downline succeed as best as he can.
Can you build your business with the company efficiently? Does the company have the automated systems necessary so you can grow your business quickly and competently?
What are Some MLM Companies Worth Looking Into?
Avon Products, Inc. is a network marketing company engaged in the manufacture and marketing of beauty, skin care, personal care and allied products like color cosmetics and fragrances. It also sells watches, fashion accessories, footwear, apparel, decorative and gift items, and nutritional products, among many others.
Avon was put up in 1886. It sells its products through network marketing by its representatives. It now has over 6.5 million distributors across the world, including Europe, Africa, North and South Latin America, the Middle East, and Asia Pacific.
American Way or Amway started doing business in 1959. It uses multilevel marketing to sell beauty, wellness, food and beverage, and home care products. It has more than 3 million distributors worldwide.
Herbalife Ltd. promotes a healthy and active lifestyle through its products which include snacks, fitness and energy drinks, protein shakes, nutritional supplements, and vitamins. It also has a line of personal care products and cosmetics.
Founded in 1980, Herbalife is now a globally-known company with close to 3 million distributors.
You CAN make money – even if you do not have the capital to start a business. Do a due diligence search and find an MLM company to work with. Once you find the right MLM business with the product that you can be excited about, you have bright prospects for earning well for a long time in the future.