What is Multi-Level Marketing (MLM) and how does it work? (MLM)
MLM, or multi-level marketing, is a business approach employed by direct sales businesses to encourage “distributors” or “independent business” owners to recruit people into their business or downline.
Distributors or independent business owners are compensated based on the sales or referrals of their recruits. It's a contentious marketing method and business activity that's frequently chastised and derided by others due to the fact that the great majority of people who join MLM firms lose money.
The Multi-Level Marketing Business Model
Although the multi-level marketing business strategy appears to be complex, it is actually rather easy. The majority of them are made up of “distributors” or “independent business owners.” The names are frequently used interchangeably.
People are frequently recommended into the business by someone who uses basic sales strategies like asking you to:
- Start your own company.
- You can be your own boss.
- Promising a limitless source of income
- Assuring financial independence
- Creating your own schedule
- Ability to assist people
People who work for multilevel marketing companies make money in one of two ways:
- Commission from the business owner's sales
- People they referred to start their own business under them paid them commissions.
People who refer others to the “business opportunity” form a downline.
Terminology Used in Multi-Level Marketing
The terminology that is frequently used to either attract people or introduce them to the business is one of the most unique and evident aspects of multi-level enterprises. If you are ever approached by someone from an MLM firm, some of the most typical words you may hear include:
- Possibility for business
- a source of passive income
- Owner of a company
- Distributor on their own
- Downline
- Upline
- Commissions
- Enroll
- Levels
- Leads
- Compensation Strategy
- Kit for Distributors
Multi-Level Marketing Company Examples
Herbalife is a multi-level marketing company that is both controversial and well-known. They are one of the most well-known multilevel marketing firms, and they are even listed on the stock exchange. With over 750,000 global distributors, they market weight-loss and nutritional goods.
Several public cases have been filed against the corporation and its business methods over the years, but the FTC has concluded that they are valid.
