MLM or multilevel network marketing is a marketing strategy in which the distributors are earning income not only for the sales they personally generate as well for the sales of their recruit. The recruits are also distributors and sometimes referred as dealers (down line). Independent non-salaried participants referred as associates, independent business owners, dealers, franchise owners, sale consultants, dealers are authorized to distribute and sell products or services. They are given price mark-up or profit and additional commission through a multi-level marketing compensation plan which is based on the volume of products sold through their own sales efforts as well from their down lines (recruits).
Independent distributors create their sales teams (mostly distributors) by either building active consumer network who buy direct from company or by recruiting an independent distributors who also build a consumer network base, this in turn expanding the overall organization. Distributors can also earn profit by directly selling products they purchased from the company at wholesale (discounted) price.
All down lines also generate income through direct sales of products to customers. An example of company that utilized this marketing strategy is Amway a well-known direct-sales company. MLM multilevel network marketing is a legitimate business strategy though has lot of news of employing pyramiding scheme which use money from new recruits to pay the people at the top or often taking advantage of people by pretending to be engaged in legitimate multilevel network marketing.
Most of the time they call it Pyramiding due to some companies destroying the image of MLM marketing business. You can easily determine a pyramiding scheme (a company that has greater focus on recruiting rather than selling products). An example is requiring prospect to pay for high membership fee with no apparent or justifiable reason and encouraging to recruit members rather than selling products.
Government agencies reminding that not all multilevel network marketing businesses are legitimate. Some are pyramid schemes. It is best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit rather than on your sales to people outside the plan who intend to use the products.
Inteviews also conducted to some mlm members and those who attended the marketing presentations, suprisingly they all have comon reason. Below we listed common reason why they wanted to join multilevel marekting are just basic.
1. To be financially free: Earn unlimited income, they don't want to be tied to receive fix salary and required to work 8 hours a day. In multilevel marketing you are the boss, you can choose how many hours to spend in marketing and finding people to purchase your products and possibly join your network (team). They set their hours, write the rules! - this is probably the number one reason why lots of people joining multilevel marketing. It gives them the opportunity to create their own schedule and freedom to market and sell products.
2. Source of residual income: People who recruit others into MLM - multilevel marketing business are earning commissions from the sales of their recruits as long as the recruits use and sell the products that's why people who joining multilevel marketing companies go into business full time and recruit as many people as they can, because the more distributors joining their team the more sources and higher residual income they will earn.
3. Online based: Everything can be automated. Initially there is hard work involved, but after a few months of marketing the products through blogs, articles, and even videos can create massive traffic to attract people to join their network.
4. Low start up cost: Compared to putting up a traditional business you will need at least several thousand dollars, for multilevel marketing business you can easily start your network marketing with at most few hundred dollars.
5. Product benefits: Multilevel marketing companies mostly sell health and beauty products, these benefited their members as well by consuming the products you gain good health, convenience, free seminars, incentives, trainings, tours and many more.
To be financially free is the most desire as to why people are engaging themselves in multilevel marketing. Multilevel marketers can earned thousand of dollars even to million of dollars by expanding their team networks in selling products. Most of companies truly adopt this marketing way.
Many people argue about the existence and difference between Direct Selling and Multilevel network Marketing. Some people agreed that multi-level marketing is part of direct selling while others believe that these two are completely different, yet still there are lots of verdict about it. Foremost what we need to understand is that direct selling is not a component of multilevel marketing as these two terms are kept apart from each other.
Direct selling depend all on the seller sales - a seller based approach, it means you cannot earn commissions as distributor from your employees. Direct Selling primary intention is to offer products which generate income only for a particular sale. In this case residual income is not applicable as compare to multi-level marketing.
Residual income? - this can be termed as seller commission or the royalty in some instances. You can earn long term residual income by maintaining a team manager ( an up-line). In Direct Selling, you have to focus more on sales rather than residual income while multi-level marketing relies on residual income.
Products they sell? Direct selling focus mainly upon resalable products that can be used or consumed by customers. Mostly the range of these products is much lower as compared to multilevel marketing, whereas multilevel network marketing depend on consumable products that are repeatedly bought by their consumers. These products are ranging mostly higher than direct selling.
Source of earnings. The primary source of MLM earning is based on residual income while for Direct selling - is taking advantage of selling products to get large percentage of commission.
Organizing team. In Direct selling market is dependent over a single person, as in centralized structure where one person manages the gross revenue, while in multilevel marketing it’s a decentralized social organization that implies every single person to work as distributors.
In direct selling, products are being developed to gain larger sum in the onset of sale, while in multilevel network marketing - building up a long term relationship with consumers by presenting a good sale in terms of quality. Subsequently we can evaluate that multi-tier marketing is associated with direct selling in many conditions.
The main key difference is that in multilevel marketing, products are sold to consumers by recruiting and to resell products - while in Direct selling organizing team based on a single individual