What is MLM

Shane Woods
 


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MLM or Multi Level Marketing is a pattern for business that fuses the principles of direct selling with franchising. More often than not, it involves direct person to person transactions.

In another sense, it is a system of selling products by recruitment, motivation and training of individual distributors. It’s like you’re building an army of distributors and your distributor will build an army himself. It’s also like you’re building your own business and helping others build their own.

It is often mistaken for the Pyramid scam since they have so many features in common. However, a true MLM company gets most of its revenue from actually selling its products, not by recruitment.

The Federal Trade Commission issued a cautionary statement that any company who’s offering higher rewards for recruiting than actually selling should be considered carefully. You might be involving yourself in a scam.

How it works: Upon signing on with the company as a distributor, you are then awarded a starter kit that contains materials pertinent to starting your own business. The kit usually contains sample products, literature, price lists and a manual.

If there are products involved, the company usually encourages their distributors to try it themselves. If the distributors have tried it and believes that it’s truly effective, it makes for a more convincing sales pitch.

After all, if a friend tells you, ‘Try this, it works!’ Wouldn't you be encouraged to do so? This is how most MLM companies build their market. By counting on the personal testimonies of their personnel.

After trying the products, the distributor can now start the sales process as well. Most company allows their distributors to buy bulk quantities for a lower price. The distributors in turn, will retail these products to potential customers at a reasonable profit.

There were claims against some companies because their distributors were not earning at all. This is because they buy stocks from other distributors, which results to process going higher and higher. Therefore, by allowing its personnel to buy directly from them, they prevent this scam from happening and goods get sold for a lower price.

If the person retailing the products has enough experience, he or she could try to recruit and train other distributors as well. Not only is he or she imparting knowledge, they also earn money since they get a percent off the sales of the people they have trained. This is called royalty.

The retailers also wear some kind of button or pin as part of their advertising scheme. This is so that while walking around a mall or the streets, others see their buttons, become curious and ask about it. This results to more exposure for the product and an opportunity to sell.

Aside from the products, most MLM companies also offer training and workshops to their distributors. Some are free and some are at the expense of the trainee. They are mostly about marketing techniques and how to develop skills in sales.

These training offers are also one of the things why MLM flourishes. They offer such attractive packages that people find hard to resist. Some trainings may even involved going to a high end vacation spot or another country.

Other companies use the internet to market their products. This is called Online MLM. With the vast number of individuals logging on. Recruitment, transcations and product selling all via the internet.

Article written by top MLM Internet Marketer Shane Woods, to learn more about Shane Woods please visit MLM Success Coach if you're looking for more information about working from home please visit The MLM Reporter

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