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MLM

WHAT IS MLM

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.

  • Compensation plan pay out to participants is derived from two major Revenue streams. First stream of plan is paid by the commissions of sales earned by participants to their retail customer.
  • Second stream is paid out from commissions based on sales earned by other distributors below the participant who recruited them in business.

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
  • Main goal of sales of MLM companies to distributors are not selling products and services. The company products and services are peripheral to basic MLM model.
  • The MLM model rarely gives value to extreme likelihood of failure or financial loss from members in MLM.
  • A good direct selling company gives disclaimer facts to their fellow members.
  • It clearly states participants should not rely on earning values of other participants shown in highest level of MLM pyramid model.
  • It gives indication to participants about what they should expect to score or earn from their business plan.
Participant work together

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.

  • Revenue and profit is highly produced from participants within MLM pyramid who are working as both distributors and consumers.

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