What is MLM or Multi-Level Marketing? Is It Really Bad?
MLM INTRODUCTION: What is MLM or Multi Level Marketing?
Multi-Level Marketing (MLM), also called Network Marketing, Pyramid Selling and Referral Marketing, is a business model which involves a pyramid structured network of people who sell a company’s products. The people in this network are usually remunerated on a commission basis. That is, people in this network get commissions every time when certain tasks are done, which are usually:
1. The person himself/herself makes a sale of the product.
2. Their recruits or team members make a sale of the product. This means anyone from their downline or team makes a sale of the product.
In simple words, this model involves a pyramid structure of non-salaried members who get paid whenever they or a person below them in the pyramid makes a sale.
SPECIFIC TERMS TO KNOW:
This is the shape of the Network. It is basically the team that you are in and the shape of the team that you will build.
The process of adding a member to your team or group. Adding a member to your Pyramid Network!
The people who are under you in the network. Downline is nothing but the team members who you have added to your Network. That’s it. The Downline is the most important part of this business model as your income will multiply based on the size of your downline. COMPOUNDING is the cornerstone of the Network Marketing business model. Have you learnt about the power of COMPOUND INTEREST?
4. COMPOUND INTEREST:
“Compound Interest is the Eighth Wonder of the world. He who understands it, earns it… he who doesn’t… pays it.”
– Albert Einstein
Network Marketing or MLM is built on the concept of the power of compounding. You will learn more on this as we get along.
LEARNING BY EXAMPLE:
Let us try to explain this with a diagram so that it will be easier to understand. In the diagram below, let us consider person “A” as yourself – Augustine.
- Now, you “A” – Jack, have recruited or added 3 members to your downline/team (on LEVEL 1) – “B”, “C” & “D”.
- “B” in turn recruited/added 3 members to his/her downline – “B1”, “B2” & “B3” (who become a part of LEVEL 2 on your downline),
- “C” recruited/added 3 members to his/her downline – “C1”, “C2” & “C3” (who become a part of LEVEL 2 on your downline),
- “D” recruited 3 members to his/her downline – “D1”, “D2” & “D3” (who become a part of LEVEL 2 on your downline).
In this example (above), we have shown 2 levels (“A” Jack who has, Level 1: B, C, D and Level 2: B1, B2, B3, C1, C2, C3, D1, D2 & D3).
Now You, “A” – Jack will get the commission whenever you make a sale
a part of B’s commission when B makes a sale
a part of C’s commission when C makes a sale
a part of D’s commission when D makes a sale
a part of B1’s commission when B1 makes a sale
a part of B2’s commission when B2 makes a sale
a part of B3’s commission when B3 makes a sale
parts of commissions from C1, C2, C3, D1, D2, D3 when they sell.
This goes on and on and on as per the defined MATRIX!
The matrix or levels of Pyramid Hierarchy differs from company to company. Some companies will pay up to level 2, some will pay up to level 3, some up to level 5, etc.
We will explain this more clearly in the next example.
In the example below, you have 5 members in level 1 of your downline. Each of the level 1 member has recruited 5 other members (5×5) to their downlines thereby adding 25 members to level 2 of your downline. Again, each of the level 2 member (25) has recruited 5 other members (25×5) to their downlines thereby adding a whopping 125 members to level 3 of your downline!
If you get $1 as commission from each of the member in your downline right up to level 3, in the example above you would be earning a commission of $155 ($5 + $25 + $125).
That should have made you understand the concept of Network Marketing or Multi-Level Marketing. Trust me, that is all that you need to know about MLM to make money. But we will provide much more information in order to equip you with the right understanding to help you master this business model.
- Multi-Level Marketing (MLM) is also known as Network Marketing, Pyramid Selling and Referral Marketing.
- The people in this network are usually remunerated on a commission basis.
- They get commissions whenever they themselves make a sale and/or when their recruits or team members generate sales.
- Familiarized the key terms used in MLMs – Pyramid, Recruit & Downline.
- Explained the business model through couple of examples.
Let us debunk some of the major myths on Multi-Level Marketing or Network Marketing
No other Work from Home business model is more misunderstood and criticized than Network Marketing or MLM. At it’s best, people think that it is a mommy business or housewife opportunity to make some extra cash or some strange guy trying to find his fortune on the internet. At it’s worst, network marketing is perceived as being full of greedy salespeople and failures in life who are trying to make some cash by fooling others! But once you get past these wrong attitudes and misconceptions, Network Marketing is a wonderful way to start your part-time home business or online business. The first step is to filter out the myths from the truth.
MYTH #1: Network Marketing Is an Illegal Pyramid
The shape of an organization structure does not determine it’s legality. If it did, all businesses and organizations, including the governments would be illegal because all have a pyramid organization structure. Look at any organization structure, you will find that the top position is usually a CEO followed by a structure of reportees which expand on every level – it’s pyramid shaped. An illegal pyramid scheme provides no products or services and pays according to the number of recruits.
Legal network marketing programs offer quality products or services that are sold to consumers. Recruiting new members allows for increased income based on the volume of sales.
“I am often asked if Network Marketing is a Pyramid Scheme. My reply is that corporations really are pyramid schemes. A corporation has only one person at the top, generally the CEO, and everyone else below.”
President of the United States Of America
American Business Magnate
Co-author of “Why We Want You To Be Rich”
- All organization structures are pyramid shaped and they are not illegal.
- Illegal Pyramid schemes provide no products or services but pays to recruit.
- Legal network marketing programs offer quality products or services.
MYTH #2: Only the Guy at the Top Makes Money
This argument more accurately describes a “Job” rather than Network Marketing or MLM. It is always the case that in any normal company or organization, the guy at the top makes the most money.
This myth suggests that only the people who get in early in Network Marketing make money, which isn’t true. In fact, in many MLM companies people who had joined years earlier make nothing while many who come in years later make a fortune. The truth is, in good network marketing companies, members can make any amount regardless of where they are in the organization. Income is related to effort, not position.
You get the chance to be the CEO of your own organization no matter which level in the MLM you are in! How cool is that?
- In MLM, income is based on effort and not on position.
- MLM actually gives you the opportunity to be the CEO of your own team.
MYTH #3: Eventually, the Program Will Get Saturated
Saturation is impossible in MLM because the world’s population grows every second. Every second new people are born or turn 18, thereby adding new potential network marketers to the business oppurtunity. Tim Sales, in Zig Ziglar’s book, Network Marketing for Dummies, offers the best argument against the saturation myth. He asks, “Do you know anyone who doesn’t have a refrigerator? No? That doesn’t stop GE from selling more of them.” Just think about it, is it not true? If such saturation occurs then none of the consumer products industry or businesses would survive.
- Saturation is impossible in MLM / Network Marketing.
- Every second new people are born or turn 18 who are potential prospects.
- Tim Sales, in Zig Ziglar’s book, Network Marketing for Dummies, offers the best argument against the saturation myth.
MYTH #4: Network Marketing Uses and Exploits People
People think that they have to start asking their friends, relatives and known people to join the MLM under them in order to succeed. They say that they don’t like the idea of “using” their friends and family to make money.
You don’t have to do this and I will show you how to avoid this pitfall.
Success in network marketing comes from helping others reach their goals. A person cannot earn income from the efforts of their recruits without investing time in assisting them to earn income, as well.
Unfortunately many network marketers see potential recruits as dollar signs, but those people are not as successful as those who are genuine in their effort to help their recruits do well.
- You don’t have to ask your family and friends to join your MLM organization.
- Network Marketers who view other people just as $ do not succeed in this business.
- You can succeed in Network Marketing only by helping others reach their goals.
MYTH #5: Network Marketing Does Not Work
According to the Direct Selling Association, in 2015 the direct sales industry, of which network marketing is a part of, grossed $36.12 billion in retail sales in the United States alone. The statistics are actually staggering. The following is taken from the MastermindEvent.com
Summary Of The Above Image:
2017 WAS A BREAKOUT YEAR!
THE NUMBER OF NETWORK MARKETING DISTRIBUTORS GREW TO 116 MILLION AND SALES GREW TO $189 BILLION – BOTH WERE RECORD HIGHS! – Art Jonak (Mastermind Event Founder)
Summary Of The Above Image:
Sales Represented in Billions From 2009 To 2017. You can see the steady and constant growth year after year!
Summary Of The Above Image:
NETWORK MARKETING IS GEARED FOR GROWTH
NETWORK MARKETING IS ON PACE TO GENERATE OVER 1.5 TRILLION DOLLARS IN SALES OVER THE NEXT 5 YEARS (2019-2024).
NETWORK MARKETING DISTRIBUTORS ARE ON PACE TO EARN OVER $400 BILLION DOLLARS IN COMMISSIONS OVER THE NEXT 5 YEARS (2019-2024)!
To download the entire report, please click here: mastermind_market_report
So I hope by reading this article, you would have been able to understand a lot about MLM or Multi-Level Marketing and Network Marketing.
There is a major different between MLM and Network Marketing though they are used interchangeably.
It is extremely important to know the difference because ALL MLMs are nothing but Network Marketing BUT NOT ALL Network Marketing Companies or Opportunities are MLMs!
If there is more than 1 level in selling a product and sharing it’s commission, then only it is called an MLM / Multi-Level Marketing. If a product is just sold by one person and the commission is solely for that single person then it is not an MLM but rather just network marketing or Affiliate Business. Basically you sell or promote products with an aim to earn commissions.
You have seen the HUGE POTENTIAL of Network Marketing in general and how the online business is growing at a rapid pace. If you want to get a share of this huge pie, then you better start now. There is never a better time than now.
What Is The Difference Between Network Marking / MLM and Affiliate Marketing?
The major difference between network marketing and affiliate marketing is that in Network Marketing or MLM, you will depend not only on your own efforts but also depend and benefit on the efforts of those under your team. But in Affiliate Marketing you are working on your own and you rely on your efforts alone for your success. The rest of the things including the advantages of Online Business remain the same with Affiliate Marketing as with the rest. In Affiliate Marketing also you will be able to leverage time because you actually end up building a business that will work on Auto-Pilot and generate passive income 27×7, 365 days a year non stop. Your business generates revenue even when you sleep!
Why Affiliate Marketing Is Better Than Network Marketing Or MLM?
Under Network Marketing or MLM, the commission will have to be shared with several people in the network and so the commission amount tends to be smaller. This will be an issue because if the people under your team or you don’t perform well, then you will not be able to make money! This works towards your disadvantage!
On the other hand, in Affiliate Marketing, you are the only one between the seller and the consumer and so the commissions can be big and you get the reward for your work! You don’t have to depend on anyone else! This is the BEST Online Business in my opinion because you work and get the reward for your actions. You build your Online Business and keep getting paid over and over again for work done once and the ability of generating a passive income on auto-pilot with recurrent commissions are some of the huge advantages of Affiliate Marketing!
So if you want to learn how to start your own Online Business and get into Affiliate Business, then there is no better place than Internet Business Magnates. It gives you step-by-step video lessons and gives you all the tools and systems that you need to get started right away!
So click on the link below to join Internet Business Magnates for free now: