MLM word stands for Multi-Level Marketing. MLM is also known as Network Marketing or Direct Selling Business.
Lets understand the meaning of each of their name:
Multi-Level Marketing- It is known as multi-level marketing because in this you have to build the chains. And each part of the chain has its own chain which creates multiple levels in it.
Network Marketing- It gets the name network marketing because in this you have to build the network. The more broad your network will be, the more benefit you will get.
Direct Selling Business- In this, you have to be the independent representative and sell the product directly to the end consumer.
But what is it exactly?
Multi-level marketing is a different way to sell products or services. In this companies not sell their product in brick-and-mortar stores. Instead, they use sales representatives to distribute and sell their products.
The important part here is, they are not working as employees. These sales representatives are running their own business. They have to recruit and train another representative to start their own business.
As recruits make sales and recruit their own representatives, each person above them earns a commission.
In MLM you earned in two ways, the first income is from the sales you made and the second income is from the commissions you earned by other recruiter sales, hire by you.
How MLM works?
If you are in MLM then you are definitely be recruited by someone who is already in that business.
When you want to join the MLM Company, you have to sign the contract and buy inventory. Once you have done this you can get started.
Let’s understand some basic terminologies of MLM:
The Plan: This is the overall program, how the company works, their marketing technique, compensation plan, etc.
Sponsor: This refers to the representative who directly recruits another person in the business. Like Member A recruits another Member B then A is the sponsor of B. Sponsor is responsible for the training of the new member he/she recruited.
Recruit: Also known as the team member. It is a person brings in the business by the sponsor as a new member and get the training from their sponsor. He/she can also recruit other members below them.
Downline: These are the new recruits brought in below you by your recruits and the recruits of your recruits.
Upline: These are the sponsors who came before you and hire you. It also includes the sponsor of your sponsor.
Compensation plan: This includes all the ways a representative earns money in a business. Instead of the money earn by you and your team, some companies also provide bonuses and also increase the commission splits.
Is Multi-Level Marketing Worth It?
This is the most common question in people’s minds. Is MLM worth or is it safe or legal?
So the answer is it is legal, safe, and worth it, but simultaneously it is unsafe, illegal, and not worth it.
Now, you may think how is this possible.
Any company is safe and legal if it must follow 3 thing:
- Sell genuine and quality products or service
- Income earned from sales of products or services
- Focus more on sales and not on recruitment.
Fraud MLM companies earned money by selling non-quality products to their sales representatives. They focus on hiring more and more recruits by showing them the bait of money.
Real MLM company earns money by selling their products or services instead of hiring representatives.
Conclusion
In this post you learn about the what is MLM and how it works.
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