Multi-level marketing (MLM) is a marketing strategy that some direct sales companies use in encouraging their existing distributors to make new recruits (distributors) by paying these existing distributors a percentage based on their recruits’ sales. This means that marketing and sales representatives not only receive some compensation for their own sales but also receive a certain percentage from the sales generated by another salesperson (commonly known as downline).
IMPORTANT – Multi-level marketers take the pains in distinguishing their businesses (which are totally legit) from the pyramid schemes (non-legit ones). In pyramid schemes, recruitment matters. People pay in order to participate and get rewarded after searching for others who are willing to pay and join. At a certain point, the supply of the much-needed new recruits will dry up, forcing the pyramid to collapse. Despite this vice, legitimate multi-level marketers stick to firms that target the sale of real products for income and not charging fees to new recruits.
MLM is an excellent way of advertising products to customers through target audience. Marketers are given the task to find leads. The generated leads will continuously find downline to be under them. Marketers, therefore, get a percentage of each sale under them. MLM is the reason as to why a lot of marketing professionals give up on their office jobs and switch to online companies.
How is Multi-Level Campaign developed?
In MLM, the bulk of selling is done by individuals or groups. MLM is highly focused on the presentation of a brand. At the corporate level, MLM professionals primarily develop an easily communicated mission and image that enables them to create resources that facilitate communication and sales. Effective MLM campaign focuses on data collection. With sales and customer data collected and processed at different presentations, companies can have a better understanding of what products to acquire or develop, based on demand.
The Multi-Level Marketing business Model
MLM is nothing more than a business model that makes use of independent distributors with multi-level commission payout plan to move products from production unit to consumer level. MLM companies are 100 percent legitimate, and many multi-dollar companies employ this model to move their products from production to consumer. The business model may utilize a combination of direct marketing and franchising. Primarily, individuals become associated with a parent company in an independent contractor relationship. Sellers get compensation based on their sales of a product or service.
Benefits of Multi-Level Marketing for Business
MLM programs represent a great marketing strategy to push companies to the next level, regarding leads generation and sales growth. Below are the marketing benefits to encourage you to recruit anyone in your organization.
(i) There are small amounts of risks involved
(ii) There is a network of marketing companies and individuals who are willing to promote your products or services
(iii) MLM gives you an opportunity to enjoy residual income
(iv) You can build a business from home, without employees. You only need individuals to market products and earn from commissions.
(v) There is no inventory required
(vi) Portability – the advent of Internet and technology have opened many opportunities for the success of this business.
In today’s MLM, modern companies are capitalizing on technology and tools to advance this industry. These tools include; Internet telephony, Internet marketing skills, drop shipping ability, consumer leads, conference lines, web conference and high-speed internet access. However, you may need to wait for some time to enjoy the perks of MLM. During this period, you need to utilize your skills sufficiently to get new prospects.