The term multi level marketing or MLM is commonly used by certain companies to promote their products or services. It is also commonly referred to as ‘network marketing’ or ‘referral marketing’. The strategy employed by individuals employing this system is often called ‘word of mouth’.
The structure is primarily designed to generate a force of representatives who promote the company products and are compensated through a commission scheme through sales. These distributors can also recruit other members into the business, creating their own ‘downline’ or reps from whose sales they will also gain a small commission.
These representatives do not get paid in a salary or wage by the company, but through a commission structure set out by the business. Not one will you get paid commission based on your own personal activities in gathering customers and selling products, but also through the actions of those you have recruited. The more you recruit, therefore, the more you can earn.
Commission are paid out through the companies compensation plan which will reward busy and hard working distributors with bonuses and different promotional ranks. These will depend on their level of activity and will help offer incentives to help new distributors get off the ground.
There have however been numerous skeptics towards the activities of multi level marketing companies. Often these companies are seen to have a greater view on recruitment rather than on sales, and are thus viewed in a negative light. They are also often compared and related to pyramid selling. This is however a common misconception and an unfair comparison. Pyramid selling itself is illegal and there are actually no products that change hands. It merely involves the recruitment of other sellers who have no tangible product to sell.
Furthermore, negative light is shone on MLM due to the essence of selling primarily to ones close friends and family. This is viewed as hassling your loved ones, yet it is usually used for a distributor to kick start their own activities. For many people, it can be a useful source of supplemental income and can often lead to great wealth if pursued in the correct manner.
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