What is MLM?
We’ve heard the term a million times, we’ve watched the info-mercials and have possibly even come within inches of jumping onboard, but do we really understand the concept and the ins and outs of Multi Level or Network Marketing?
Amway seminars immediately come to mind and most women these days have been approached at least once by an independent consultant for Mary Kay Cosmetics. For the majority of us, the reality is blurry, buried in the back of our minds just in case we ever muster the courage to take the plunge.
Multi Level Marketing (MLM) is one of the fastest growing businesses today. In truth, it is not an industry but simply a marketing method for moving product from Point A to Point B. The concept spread like wildfire through the 80’s, picked up a little negative press in the early 90’s and has rebounded in the 21st century as the wave of the future.
Many people tend to confuse MLM or Network Marketing with Pyramid Schemes. Pyramids are actually illegal. The easiest way to identify a Pyramid Scheme is to ask yourself two simple questions. (1) What is the product? And (2) where it is going? Something has to move!
Multi Level Marketing moves product on various levels hence, it’s name. Here’s how it works. In MLM you are in business for yourself. You purchase products directly from a wholesaler at wholesale prices.
Product moves from Point A to Point B. You can, if you wish simply use these products for personal consumption or you can resell them at a retail price to make a profit. The most common misconception, however, is that you have to sell retail to be successful. Not true depending on the company you’ve chosen to work with.
In the majority of MLM programs, the true success comes from building the organization or your downline. Your sales will come as a result. Getting a little nervous? We mentioned the word sales.
That word will generate a negative response in almost 95% of the people who hear it. If you’re seriously considering Multi Level or Network Marketing as a career, the first thing you need to do is instantly replace the word sell in your vocabulary with the word share. We all love to share and we were actually taught that skill when we entered kindergarten. If you can share, you will be successful in this business.
When you build your organization or your downline, what you’re actually doing is building a network or a funnel for your product or service. The sale of a product comes when distributors share that product with family, friends, coworkers and/or neighbors. Now, visual a single thread from a spider’s web.
As the spider continues to expand his web it continues to grow and reach in all directions. This is exactly how MLM works. As you meet people who are interested in doing what you’re doing, you recruit them. You become responsible for their training, helping them to build a business of their own just like yours.
From that single thread becomes a massive web. Each thread that makes up that web ultimately leads back to you. Each thread is moving product from Point A to Point B either through their own personal use or the sharing of the product with their friends, family, coworkers and neighbors.
As your web expands you become the person at the top, the business owner who is successfully directing potentially hundreds or thousands of people who are busy moving that product or service from Point A to Point B.
Depending on how your particular program is set up, you are financially compensated for every person and the product they move. The most obvious difference between MLM and a Pyramid is that anyone can come into a network-marketing program and end up on the top. In a pyramid scheme, however, the top remains the top and very few people actually make any money before it collapses.
The products and services currently being sold via Multi Level Marketing continue to increase. Corporations are beginning to realize that the dollars they spend on advertising their products and attempting to identify their markets are better spent on the consumers themselves. Who do you prefer to purchase your consumables from, your best friend or the big chain down the street that doesn’t pay any attention to you when you walk in the door?
Multilevel Marketing is one of the fastest growing yet most misunderstood methods of moving products in use today. It has been termed by many as the Wave-of-the Eighties.
But, it will go far beyond that. By the 90’s more than 100 billion dollars woth of products and services has been moved through Multilevel Marketing companies. As we are in the 21st century watch out !
What is MLM ?
This question is quite frequently in response to a button we often wear or we have seen wearing by others.
Let’s explain it .
1. Marketing simply means moving a product or service from the manufacturer or provider to the consumer.
2. Multilevel refers to the system of compensation provided to the persons who are causing the product to move or the service to be provided.
‘Multi’ means more than one.
‘Level’ means generation.
There are really 5 basic methods of moving products :
ex. the drug store, the department store,….
You go into a store and buy something.
2. Direct Sales.
ex. Tupperware, Avon, …..
3. Multilevel Marketing.
This should not be confused with retailing and Direct Sales which commonly is.
4. Mail Order.
This can be an MLM but mostly is included in the Direct Sales category.
5. Pyramid Sales.
This type of Sales is to often confused with MLM.
The fact is, Pyramides are illegal. The main reasons they may be illegal is their failure to move a product or to provide a valid service.
If a product doesn’t move, how can you even call it ‘marketing’, let alone ‘Multilevel Marketing’. Multilevel it may be, but Marketing they are not !!!
Now, most objections that people have about getting into Multilevel Marketing are due to not realising the difference between MLM, Pyramid Sales and the Direct Sales methods of marketing.
This is understandeble because most reputable MLM companies belong to the Direct Selling Association.
We have been conditioned to think of MLM as door to door direct sales programs because our first encounter with them was when a distributor knocked on our door to sell us something.
Anyway, there are some features that differentiate MLM from Retail and Direct Sales companies and on very significant difference is that in MLM you are in business for YOURSELF but not BY YOURSELF.
Being in business for yourself means you are buying the products WHOLESALE from the company you are representing. This means also that you can use these products for your own consumption at WHOLESALE PRICES.
Since we are buying products WHOLESALE we can, if we wish, sell these products at RETAIL and make a PROFIT.
The most common misunderstanding about MLM is the notion that you HAVE TO sell retail to be successful.
You may sell if you want to or have to due to your particulare program procedure, but in regard to making the larger sums of income, the real success is in building the organisation.
Let your sales come as the natural result of building the organization.
The word ‘selling’ triggers negative thoughts in the minds of about 95 % of the people.
In MLM you don’t need to ‘sell’ the products in the traditional sense of the word.
However, the PRODUCT DOES HAVE TO MOVE or NOBODY GETS PAID.
When you build an organization, you are actually building a network through which to channel your producths or services.
Retailing is the foundation of Network Marketing. Sales in MLM or Network Marketing come from distributors SHARING with their friends, neighbours and relatives. They never have to talk to strangers. Network Marketing or MLM is building an organization in which a lot of distributors all retail a little.
So, you see, its not going door to door every day calling on strangers.
Another point that differentiates MLM from Direct Sales is the SPONSORING of other distributors. This is called RECRUITING.
When you SPONSOR someone, you are making a COMITMENT to TEACH them how to do what you are doing, building a BUSINESS OF THEIR OWN. Sponsoring is what makes a Multilevel Marketing business so different an makes it grow.
As your organization grows, you are building toward becoming an INDEPENDANT SUCCESFULL BUSINESS PERSON. You are your OWN BOSS.
With Direct Selling companies you work for the company. If you decide to quit that company and move to another area, you end up having to start all over again.
In almost all of the MLM Programs you can move to another area of the country and sponsor people without losing the volume generated by the group you left behind.
In MLM Programs you can make a lot of money by building an organization as your primary function.
A Multilevel Marketing Organization is not a pyramid scheme.
The pyramid is built from the top down and only those in at the very beginning can ever be near the top. And the pirce of the products or services get every step higher and higher, leaving the people at the bottom broke.
In the MLM Marketing everybody starts at the bottom and has the opportunity to build a large organization, even larger than his sponsor’s organization if he wants.
MLM Marketing is the solution to the distribution costs of the most companies because there will be nomore channels between the producer and the consumer. And the most part of the benefit can be paid to the distributors.