MLM also known as Multi-Level Marketing is a marketing strategy to sell your products and services. The return of investment in this company is gained from workforce called as distributors or participants. Its marketing strategy follows a Pyramid shaped system. The distributors and clients earn their commission based this pyramid model only. Each and every company is has its own Compensation plan for payout of earnings to distributors. Though compensation plan differs from one company to another, it has common feature among all.
It forms an organizational hierarchy of direct selling business and these participants are known as downline distributors. The MLM participants are expected to sell products directly to end user of retail customers. They do this by means of building relationship referrals and word of mouth marketing. They are enables to recruit others to join in the concern as fellow distributors. These newly recruited distributors become their downline participants.Goals in business plan
The participants move in upward direction is the key factors determining between MLM and traditional pyramid schemes. This action improves overall growth of business by featuring actual sales and validating efforts and investment of participants.Consumers and Participants
End user retail customers are non-participants of network marketing business and they are known as consumers. However, Majority of consumers in MLM Company are participants who are recruited by fellow participants above in pyramid scheme.