MLM is the abbreviated form of Multi Level Marketing which is also termed as pyramid or leveraged based selling, referral marketing, network marketing, or direct selling. Many companies use different marketing structures as part of the overall marketing strategy. Different marketing structures help in creating a hierarchy of multiple levels of compensation plan that is multilayered and payouts for the downline distributors.
Multi level business opportunities are created with the promotion of products by different companies. Besides increasing sales a downline of distributors is also created. A sales and marketing force is created with a multi level structure that can grow wide and deep. Word of mouth marketing and relationship referrals help in marketing products as well as the company directly to potential business partners and consumers.
Multi level business opportunities are gaining a lot of popularity despite some MLM companies being a target of lawsuits and subjects of controversy. These reasons are mainly exaggerated methods of enhancing devotion and enthusiasm of enrolled members, high start up costs, new recruiting and sales targets, fixing prices of products, cult like techniques etc. Many of the MLM companies follow legitimate business practices. Multi level business opportunities are provided by a number of companies who want to be represented by their services and products by creating an enormous sales force.
You can become a distributor of the company’s products and services even if you are unsalaried or an independent salesperson or sales consultant, agents, franchise owners, dealers, business owners etc. Most MLM business do require some monthly financial commitment after joining, be sure you fully understand this before signing up. Also, most of them base their revenue on self consumption of the products being sold. Keep in mind the income tax incentives that are available to those that operate a home based business.
Based on the effort of the downline organization as well as your own personal sales efforts, you are awarded a commission accordingly (e.g., fast start bonus or monthly residual income) based on the efforts of others in your business hierarchy. It is the volume of the service or the product sold which determines the amount of commission, which can be fixed or a percentage. An active consumer base is built by independent distributors while developing their organization, thus helping in expanding the overall business goal. According to the company’s compensation plan, multi level marketing distributors are paid commissions based on the rank level they achieve.
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