Multi Level Marketing (MLM), also known as network marketing, has many faces. For some it is equivalent to the Tupperware party; for another it is “having to bother your family and friends”; yet another runs away screaming from the pyramid model; there are also people who enjoy drooling; and then there are those who have heard the famous bell ringing, but really have no idea where the clapper hangs. What exactly is MLM?
MLM as a distribution method
MLM is nothing more and nothing less than a distribution method that can be used by companies to sell their goods or services. The traditional route for product sales is, roughly speaking, as follows: manufacturer supplies to importer supplies to wholesaler supplies to stores supplies to customers. In between, transporters fly, sail and/or drive to move the goods, there are depots and/or warehouses where items are (temporarily) stored, and shelves that are ultimately filled in the shops with the products that you and I can buy there. Just to name a few intermediaries. And then we haven’t even talked about money-consuming advertising campaigns. All these activities cost money, including all the puppets involved that have to be paid for. That’s why some products cost 20x more to retail than it cost to make them.
Direct sales to end user
MLM is a form of direct sales. Products or services are delivered directly to the end user, without the intervention of others. Consider, for example, Dell Computers, or some insurance companies, which no longer have stores or agents. Employees of such companies have direct contact with the customers for both sales and service. The advantage is obvious: fewer intermediaries = lower costs for the company = lower prices for the consumer.
A nice extra income, and products at purchase price
MLM goes one step further. By engaging distributors, the company can not only save on the costs of permanent employees, these distributors are also guaranteed customers. For example: a distributor orders and pays for a quantity of Aloe Vera products directly from Forever Living Products. These products are delivered to his/her home by post, where the distributor can use the products themselves, or resell them at a profit, or a mix of the two. In the first case you receive the products at purchase price, which can sometimes result in a discount of up to 30% on the sales price; in the second case you can put the difference between purchase and sales price directly into your own pocket. If you do this consistently and often enough, it is a nice way to pay for that luxury holiday, or to get through the month of December without any damage or debt, or even to have a complete income.
MLM sales methods
There are several ways to do this: through a Tupperware party, or showing your friends and family the benefits of the product or service, or standing at markets and bazaars, or handing out samples or sample packs left and right, or a lot of word-of-mouth advertising, or advertising anyway. Or, of course, a mix of these methods. It just depends on what you are good at and what you feel comfortable with.
Recruiting new distributors
Selling products or services is one method of making money in MLM. Another, controversial way is through the introduction of new distributors. Controversial, because this is the area that provides ample opportunity for the shadyness to which network marketing owes its bad name. And not without reason, because many companies calling themselves MLM ultimately turned out to be nothing more than a pyramid in disguise. These companies may be destroying themselves, but the damage to those involved, AND to their image, has already been done.
Make money from the sales of others
The bona fide MLM companies have an often complicated structure of graduated commissions available to reward distributors for introducing new distributors. The more people you recruit, the higher the reward. Not earth-shattering news in itself: there are plenty of traditional companies that reward their sales managers above average for the results of their regional sales leaders, who in turn benefit from the work of their subordinates, the ordinary salespeople on the road, who also receive a commission on their orders received (what do you mean, pyramid…) What gives the dirty edge to MLM are the sales techniques and recruitment methods that many distributors with dollar signs in their eyes use.
High income, but you have to do something for it
This does not alter the fact that people with a large social network, who are not afraid to open their mouths, have the necessary dose of charisma (and preferably some integrity), energy and perseverance and (preferably) a thick skin. you can earn a great living by building a large team of distributors. When you say big, you should think of thousands rather than hundreds. Although you don’t have to find them all yourself (if all goes well, the people you bring into your team will in turn do the same, according to the age-old principle of 4 people each recruiting 4 people = now you have 16 people in your team, they each recruit 4 = 64, they each recruit 4 = 256 and so on and so on), but it is hard work to be among the top. If you are willing and able to do so for 5 – 7 years, there is a real possibility that you have created a sufficiently consistent income stream to make a living from it.
MLM is not for everyone
It all sounds very nice and simple on paper, and it is of course very attractive to earn a living from home, but it is a hard existence to earn a good income from network marketing. MLM isn’t for everyone, so – as with any regular job – you should think carefully before committing to a career in network marketing.