If you’ve heard the acronym MLM then you know that it stands for “Multi-Level Marketing,” or, as university settings, it is known as – Network Marketing. The notion of the idea lies in the name itself. But what is an MLM company exactly? An MLM company is a marketing concept that involves creating a multi-level organization designed to promote goods and services from producer to consumer, using direct human-to-human contact. Income is then distributed in the form of a commission, to all levels of the organization. Looking at this from a traditional retail situation, several sellers in a store work a whole day, usually not earning enough income than what the company is making.
With Multi-Level Marketing, many people are involved in what is called product distribution. As a result, each person does their best to promote the product. This comprises the marketing of the product, which consists of advertising, sales, and delivery. These are then carried out through multi-level organizations of people or networks. These people usually offer and share the product with other people, gain buyers for their company, and get involved in the business by teaching others how to build their distribution networks.
Something that people don’t know about MLM business is that communication occurs between those who get acquainted with the products and those who use the products and advertise information about it. In the MLM company, it is uncommon that the distributor initiates the first contact as a rule.
The activities of each person in network marketing are as follows:
- The dissemination of information about goods and services;
- The dissemination of information about business opportunities;
- Teaching other people the art of disseminating information.
Thus, MLM is genuinely a “folk” business. Companies that use MLM offer the opportunity to make big money to several individuals because the process is very efficient.
The MLM idea
The idea that you can use multi-level organizations of distributors to promote goods and services is significant. Many distributors will work remotely, which will be much more useful than sellers’ work in a store. What brought the MLM industry to a new level is the arrival of the computer. Computer technology has allowed companies to use accounting and control programs to promote goods to the consumer and guarantee that everyone receives their share of the income.
MLM’s spectacular growth in North America, where this idea was born, has affected other parts of the world in recent decades. This does not surprise people who are aware of MLM. They understand that the Potential of MLM is unlimited and that this business is open to many individuals.
MLM company: a stable business
Network marketing is one of the fastest-growing methods of distributing goods and services worldwide. The total sales volume of the MLM industry is $60 billion. Sales today are about $29 billion a year. More than half of the total volume of goods and services is sold through a network marketing system in America alone. About 1,500 MLM companies operate in the United States, some of which have multimillion-dollar turnovers. Companies like Coca-Cola, Colgate, Gillette, Visa, Upton, Ford, Canon, Sharp, Xerox, and many other world-famous companies use MLM.
Spreading about 30 thousand products and services worldwide, approximately 16 million people participate in this business. But the point is that millions of people realize the dream of a better life, but also that the number of products and services is continually growing, and the range is being updated through the use of new technologies. Since MLM is not tied to any particular product or technology, the upgradeability built in the concept itself allows the industry to fit into an ever-changing market flexibly. Thus, MLM is the future economic wave, a logical step in the free enterprise’s evolution.
Network Marketing in the business world today
The single most crucial element of an active business is the quality of the relationship between the people who participate in the business and the consumers. Network marketing is based only on sales through relationships between people, which is the highest-selling art today. Big and small companies in the country and worldwide understand that individuals who sell to their friends and colleagues through personal relationships make up the sales industry’s future. This is because the main element in buying or selling is trust. Network marketing allows you to put aspects of faith and functional relationships in the center of the business.
The shares of several MLM companies are highly quoted in the securities market. The real explosion in network marketing has not yet occurred because most network marketing companies have begun to realize that the Potential lies in expanding the range of products offered through distributors, not in the growth of a network of distributors.
The choice of the product or service
In most cases, the person interested in you in the MLM business has to introduce their company’s products and services. Since the products and services sold by the MLM system are usually of high quality, you might have tried it already, which means it will not be difficult for you to recommend it to people you know. If this chain is similar to your own experience, you will choose the right product you are currently using. When it comes down to it, the more you like the product, the more you will share it with others. And then the more comfortable it will be for you to talk about it with people. If you are a satisfied consumer, your enthusiasm will speak for itself (think about it from that perspective). The objective criteria that should be followed regarding determining whether or not to maintain business with an MLM company are that it does not make sense to list the requirements so that we will dwell on the most basic ones.
Ask yourself, is the product distributed by the company unique? The company’s products must be unique. If the product is not exceptional, but just right, you cannot deal with the company. So, what does a unique product look like? Well, these are not beauty products. In other words, the products have no analog world. This means that no other company in the world produces such products. If the product is not unique, it means that competitors can repeat it and, quite possibly, sell it at lower costs. Besides, the company must produce entire lines of individual products. If a company releases one “miracle product,” it should not be dealt with. The company should have the production capacity to create several lines of unique products. There should be a whole assortment so that they can lower the level of consumption to maintain the level of residual waste at a very high standard (provide maximum stabilization).
Relevance of products
The products that the company produces must be relevant to the business. You can’t sell everything to everyone. Particular demographic and psychographic market research is carried out, and its segment is identified, which has unmet demand. The actual products make it possible to continually replenish such unmet needs and maintain it for a long time at a very high residual consumption level.
Production of products
The company should be independently producing its products. This will help maintain competitive prices and allocate more funds to expand production and pay premiums to distributors. If a company simply distributes other people’s products under its brand, it should not be dealt with. This is an intermediary, and, of course, this will affect the price of the product and payment plan.
Form of ownership of the company
The company may be a corporation or a private company. A private company can allocate money that a joint-stock company cannot give. Joint-stock companies report to shareholders and cannot allocate extra funds. For example, to pay distributors, which will automatically lower the stock price. Only a private company with its means and free of debts and reports to anyone can allow you to allocate more funds for product development and distributors.
Using the MLM method as a distribution system
MLM companies usually avoid a large number of frightening expenses. Using the MLM method, there is no need to create and use a network of retail outlets. There is no need for advertising campaigns throughout the country. Since people in the organization act as independent entrepreneurs, there is no need to maintain many highly paid managers who supervise the work. In MLM, work is always monitored. Products that receive advertisements are sold and bought because people’s efforts are generously rewarded. Also, they are precisely rewarded because people work for themselves to have the freedom to enjoy life.
Criteria for legality and reliability of MLM companies
Network marketing, in itself, is a legitimate and respected business. However, inside this industry, along with well-known and stable companies, sometimes those whose activities may be questionable. So how do you distinguish the companies from each other? How do you choose for yourself and make the right decision? Network marketing has existed for more than 50 years. However, from legislation, it is still a relatively “young” industry.
Product and price
The company offers a high-quality product that is in high demand in the market. The price of the product is affordable and competitive; the product is guaranteed. People are interested in buying this product, regardless of their degree of participation in the program.
Suppose you use a company product and decide to participate in the program as a distributor. In that case, this will not require your investment, except for purchasing a distributor kit and demonstration materials from the company.
Requirements for the volume and availability of goods
The company does not make requirements to the distributor regarding the minimum volume of purchases or the obligatory availability of goods. However, the company usually puts forward specific employee activity requirements, allowing you to maintain a distributor’s status.
A commission is paid only for the actual purchase of goods or services and for maintaining intranet management. The product should not be deadweight; it has a real value and is intended for the consumer.
The company pays due attention to real sales and brings the project to the final consumer, i.e., people who are not participating in the network marketing program. The company can demonstrate a commitment to this principle. The distributor must have specific requirements regarding the volume of purchases required to receive a commission and bonus.
The provision of the contract concluded between the company and the distributor requires the latter’s active participation in the construction and management of their organization. The distributor must also conscientiously fulfill its functions of distributing the goods to the final consumer. Some companies include clauses in the contract according to which a minimum level of business activity is established, which allows maintaining a distributor’s status. Pay attention to these clauses of the agreement.
Statements regarding income
In its literature (methodological developments and recommendations), the company avoids any statements regarding distributors’ potential income.
The prices of MLM companies products
This is one of the most challenging questions. Products of a similar purpose may have a retail price lower or higher. Full analogs, as a rule, simply do not exist. If you understand that the product’s price includes multiple pre- and after-sales consultations, delivery to the desired address, the stability of the subsequent receipt of the product you like, service and quality assurance, and the price of goods and services of network marketing companies is much lower if you compare mechanically by price tags, then, possibly, in some cases and above.
Marketing plan: one of the tools of a network marketing company
A marketing plan is one of the tools of a network marketing company. This is a document according to which the company pays money to an independent distributor. The marketing plan contains a list of conditions for receiving distributor’s commissions and bonuses. It is usually described graphically with the necessary comments. In MLM, the so-called commission remuneration that the distributor gets to buy goods in bulk or sell at retail price. Bonus is a remuneration that the company pays to distributors per the compensation plan, either according to the sales results made by members of the distributor’s organization or depending on the number of structure levels built. According to the marketing plan, you can understand a lot about its policy and its relationship with distributors at different promotion stages. Before signing a contract, try to study carefully and understand the marketing plan. Do not skip on asking questions – because answers will be given with pleasure!
Source of information about an MLM product
The best source of information about a particular product is the person who will provide it to you and the company manufacturing the product. When a person signs a contract to distribute a product or service, they receive a set of information from the company. The kit usually contains basic information about the company and the necessary specific information about the products. Of course, nothing can replace your own practical experience. Therefore, it is so vital that you continuously use the product yourself. The knowledge gained from books and booklets is critical. Your expertise and experience will replenish you with the enthusiasm and excitement necessary to inspire confidence in the product’s quality for the people you turn to.
The forms of participation in MLM
Someone that you know has shared with you the feeling that they experience when using a product or service. They also shared with you an extraordinary MLM lifestyle. You will never come across MLM in a television commercial or listening to the radio. This always happens in direct contact with another person who is faced with something interesting, unusual, and useful in life or wants to share their joy with others. It is as natural and straightforward as human nature. When you meet MLM, decide how much you will be involved in this business. At the very least, you can make a purchase and try the product. Admittedly, it will be the highest in quality and affordable in the price – then you will become a friendly enthusiast – a buyer. Maybe you want to be involved in the business. In this case, you can receive a product at a discount and earn income, making it available to your friends and family. You can even decide on the next step and maximize your revenue by sponsoring the others and teaching them how to build their distribution network. Whether you are a user of a quality product or head of your private MLM organization, in any case, you will not lose
The amount of the entry fee in the MLM business
The entry fee in the MLM business is much less than you think! The amount of the MLM business’s entry fee depends on the particular company that you choose for cooperation. Sometimes, the number of products and services offered to the distributor reaches several tens, so the contract’s cost can vary from $5 to $ 150. Each company has its product and marketing plan. Some companies will not require an entry fee. It will still be necessary to purchase a distribution folder and an initial product kit (distribution kit, from about $100 to $1,500); in others, it will take some money to start. Still, this amount will include a folder and, sometimes, various product samples.
When you compare the initial costs in a traditional business (rental and maintenance of an office, equipment, inventory, hiring staff, etc.), MLM will demonstrate itself as a fascinating and profitable opportunity compared to a standard and expensive business approach.
Earnings in MLM Company
The beauty of MLM is that only you can know the answer to this question. This is not a cop-out; it is just the point. In contrast to many types of work, where someone else decides how much to earn, MLM people do their own business. And only they determine their earnings. In particular, the answer to this question also depends on the degree of your involvement in the industry. If you choose to sell products to friends and relatives, your earnings will be modest. If your intention is simply to have a few hundred dollars a month, this approach works. But if your goal is to earn serious money, so much as to live in comfort and do things that you have dreamed about all your life, MLM will help you realize this. To achieve this level of reward, you must build your MLM organization.
Ways to make money in MLM
How to make money all depends on the type of income. There are two ways to make money in MLM. The first is from the dissemination of product information (direct sales). Each direct sale brings you a commission. In most cases, you buy a product from a company at a discount and earn money by selling it at retail to a customer. The second way to make money in MLM is the so-called “reward,” it will take a little longer to prepare, maybe from 3 to 6 months, but the payments are incomparably more. When you make money from direct sales of a product, you get some money from each transaction. To have more money, there must also be many transactions. If you don’t already know, MLM products sell well. But there is a better way, and here it is. If you work hard and understand how to engage and train potential distributors, tell them about this UNIQUE opportunity, a certain number of people will naturally want to enter the business, and they become part of your NETWORK. In turn, they will lead even more people to the company, and the process will be repeated from level to level. Whenever someone at the status of your structure makes a sale, you receive a reward in the same way as your sponsor when you make a sale. Thus, your ability to make money thousands of times is multiplied.
Network marketing or “Scam pyramid”: all the truth
Multi-level marketing is a legitimate way of doing business. As in retail, in MLM, goods and services are produced, sold, and bought, and commissions are paid only from the sale. Essentially, this is the only way to make money in this business. Network marketing is not a letter that you have to rewrite 40 times. It is not a joint-stock company where dividends are received due to the geometrically growing influx of fictitious stock buyers. This is not due to investments in production, etc. “Scam pyramids,” which are not based on traditional values and market principles. In MLM, all people benefit from getting a high-quality product and deciding for themselves: to disseminate information about products and business or not to do it.
The training system of the MLM company
Almost all MLM companies provide assistance and training to distributors. Most companies offer their distributors with detailed information about products and services. Nearly all companies give a perfect distribution kit, but very few pay attention to such things as setting goals and the ability to answer questions. You have come to this business, revealing your potential, the art of communication and involvement, tools for managing time, people, tasks, the concept of “leadership position,” and “teamwork” – the training system will teach all this in MLM.