The Basics Of Multi Level Marketing System

Multilevel Marketing System is a type of business where sales representatives do a double duty: selling products and recruiting new sales representatives like them. The incentive for selling is the usual profit out of the sales.

On the other hand, recruiting additional sales personnel is sometimes more lucrative than the product selling itself. The recruiting salesman will get a commission out of the revenues of the sales people he recruited (usually called a “downline”).

The setup is repeated when these new recruits do their own recruitment of more sales people. The original recruiting sales guy will still get an additional overriding commission on the revenues generated by this second generation of sales people (still part of the “downline” of the original salesman-recruiter), albeit on a reduced scale.

MLM appeal

Also known as network marketing, direct selling and person-to-person marketing, multilevel marketing (MLM) is already an entrenched industry and one of the most lucrative in the world. (Some of the biggest corporations in the world are MLM companies, or companies who utilize the MLM sales concept.)

Multilevel marketing appeals to a wide variety of people (wives, mothers, students, laid-off workers, etc.) because the work can be done part-time and the schedule is really flexible.

They also attract people who are dissatisfied with their present work situation. A writer once called it ‘the least expensive, lowest risk, fastest path to achieving the American dream.’ He also called it the “core of the exploding E-home-based business’ segment of the economy.”

Incentives

Aside from the relative independent quality of work efforts and time (consumer products are sold usually in customers’ homes), the multilevel company usually encourages the salesman to build and set up his own sales force.

The salesman can recruit, motivate, supply and train newcomers to sell the company’s products or services. Compensation is usually based on the sales efforts of the new army of salesmen, plus the originating salesman’s personal sales.

Criticisms

The bulk of the criticisms hurled against multilevel marketing stemmed from past pyramid schemes that used network marketing techniques. The illegal rip-offs had participants expect huge amounts of monetary returns from substantial initial investments while doing little work.

The people who started the scam were paid off by those who came and joined later. Soon, many participants were not paid at all.

Today, the complaints on MLM are mostly on being pressured to join parties where participants are coerced to buy products of questionable qualities, and being bombarded by proposals to join the downline.

MLM benefits

One of the biggest reasons people sign in to multilevel marketing is flexibility. Sales people may work only on part-time and set their own choices of working hours.

Research had shown that 90% of MLM sales representatives work less than 30 hours a week, and 50% even work less than 10 hours per week. Moreover, multilevel marketing businesses do not tie their sales people to long-term commitments.

Another basis for the appeal of multilevel marketing sales model is that it enables people to start their own business with only a modest investment. (The average investment is around $100.)

Like any other enterprise, going into the multilevel marketing system still needs the salesman’s mastery of retailing techniques, establishing goals, and having plans to execute them.