Monday, July 16, 2012

What is MLM? - Multi-level marketing (MLM)

What is MLM?

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation. Other terms for MLM include pyramid selling, network marketing, and referral marketing.

Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing. Some people use direct selling as a synonym for MLM, although MLM is only one type of direct selling, which started centuries ago with peddling.

MLM companies have been a frequent subject of criticism as well as the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging if not requiring salespeople to purchase and use the company's products, potential exploitation of personal relationships which are used as new sales and recruiting targets, complex and sometimes exaggerated compensation schemes, and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion.

MLM Business
Nearly everyone has heard the term MLM business; but there are an extremely small percentage of people that actually know what it is. Some think of it as some glamorous method of getting rich ultra-fast while others see this dark cloud that hovers over the term. However, if you ask both groups of people, what MLM business is, they probably couldn’t even begin to tell you.

MLM Business – The Basics
Simply put, MLM business is a strategy where a sales forced is created. These individuals don’t only make money on their sales though, they also have the responsibility of recruiting, because their personal recruits also make them money, as well as the person they are under.

Therefore, when you create your own pyramid over a period of time, you end up with a small army of salespeople that are earning you a nice residual income while also making money for themselves.

Why You Need a Team
You can be the greatest salesperson in the world, but you will never reach your full income potential without a team. You can sell all day long, day after day, but why would you want to? Doesn’t it make more sense to recruit a team and train them to sell so they can also make you money? Then, they do the same and the cycle keeps repeating. At this point, you spend your days doing whatever you want while everyone else earns income for you.

Getting Started in MLM Business
The biggest mistake you can make is to jump in and get started with the first MLM business you stumble across. Although there are a few exceptional ones, there are also those that you want to stay clear of. Therefore, the first thing you want to do is dig a little. Take the time to research the MLM business you are interested in. Keep in mind that nearly everyone will have at least a few complaints made by people who expected instant network marketing success and didn’t get it, but when you find nothing but complaints, there is a problem.

You will want to explore what the product is and if it is safe. If it is something extremely popular, you need to consider it may fizzle out soon. You really don’t want to get involved with an MLM business that’s been dominating the market for a while because something else will likely become popular before you have had time to create a solid team.

You also need to make sure you fully understand the payment scheme and be aware of any restrictions so you don’t violate them. The more time you invest exploring the company, the better position you will be in to make an educated decision.

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