You will hear many promises that with Multi-Level Marketing or MLM you can become very rich, very easily.
Does Multi-Level Marketing work? Is it good or bad?
Firstly let’s define what multi-level marketing really is. Wikipedia provides this definition; Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation. Other terms for MLM include network marketing, direct selling, and referral marketing.
You will often hear these schemes called pyramid selling which in most countries are illegal because they simply revolve around recruiting people into the pyramid to fund the ones above with no real product or benefit other than making those above very wealthy. These schemes ultimately collapse as people at the bottom can no longer sustain the business.
For a multi-level marketing business to succeed it needs several things. A good product that people will use, a compensation plan that allows everyone in the business to earn from being in it and a product that is not overpriced.
Many MLM companies are sailing close to the wind as far as the law on pyramid selling is concerned so if you are approached by an MLM company please pay close attention to the above principles. Do not be fooled by hype that you can earn a fortune and all you have to do is recruit a few people who in turn recruit a few and without selling a single thing you will be a millionaire. That does not work, it is a pyramid style hope and possibly scam. Each distributor needs to be able to continually distribute a product of some kind if it is to work. The business needs genuine sales.
Avoid companies that require you to purchase sales kits and DVD’s to watch and learn how to be good at MLM. The kits are the earner for the company.
MLM is it Creditable?
In principle if a company sets up the scheme in the right way using MLM is a creditable way to distribute goods and services. It would be little different from the usual line of distribution. A manufacture to wholesaler to retailer to consumer and possibly a few agents in between. Distributing goods is expensive. Some items that cost pennies to make have a final mark up of several thousand per cent! This leaves plenty of room to have a MLM network to distribute a product with so much margin built in.
There are some very well known MLM companies that provide many people with income and some do very well. I will attempt to review a few of these in the future.
Your Experiences with MLM
It would be good to hear from people that are or have been involved in MLM. Please leave your comments both good or bad in the box below. Please tell us why it works or why it doesn’t. I would ask you not to use this as advertising! Only give details if you personally can substantiate the claims from your own income and not that of someone else.
The Entrepreneur Club