The Misconception of Multi-Level Marketing

Have you ever wondered why people are so turned off at the mention of Multi-Level Marketing? Is it legal? Is it a pyramid? Where does the money flow? In this article we will examine basic differences between Multi-Level Marketing and a Corporate Structure.

Let's take the corporate structure first. Almost all of us work in this type of hierarchy everyday. A CEO heads the corporation or company. Below him/her are upper management people i.e. Vice President, Controller, Senior Sales Exec...etc. Below them are middle management people i.e. Department Heads, Retail Directors, Consultants and various Supervisors.

Finally we reach the Sales Representatives, Customer Service Representatives, Stockers, Cashiers, Cleaners, Drivers, etc.

So who makes the most money in this type of structure?

If you were to draw a flowchart this, it would look like a “Pyramid” The CEO makes the most money as he/she sits at the top. It is the person at the “top” of this “pyramid” that makes the most money, because in this type of structure, you are paid based on “where you are” in the structure. The only ways you can truly increase your earnings are if someone in the structure is promoted, gets fired, dies, or quits. As a result, everyone in the structure can move up. Let's take a look at a Network Marketing Structure and then compare. On the surface, both structures are mirror images of each other. BOTH look like a “Pyramid” structure. Flowchart it out again. An affiliate will sponsor someone, they sponsor more, they sponsor more...etc. But...who makes the money here? The worker at the top? Wouldn't it seem fair that if you do more work, you should get paid more money? This structure is simply a structure of business owners. Pay is based ONLY on what you do, not your position within the network. This is what differs Network Marketing from a typical “Corporate Structure Job”.

In the MLM structure YOU are in control of your income. In the corporate world, someone else will always be in control of your income. Always!

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MLM compensation plans

Compensation plans in network marketing / MLM vary from one company to the next. It is up to you to ask questions when evaluating any company’s pay plan. Some are front end loaded or they maybe back end loaded.

There are some plans out there that payout more
then 100% fortunately these companies don’t last long but
do end up hurting individuals and give the network marketing industry
as a whole a bad name.

As a general rule of thumb anytime
you see a payout of more then 60% be suspect. It generally indicates
that:

• The products are grossly overpriced, unless it is a unique
product or a exclusive patented product.
• Qualification/Quotas most well established companies will
have some volume or monthly quota that each individual representative
must maintain.
• Breakage/Break away several of the most popular programs
out there use this one. Imagine after all your hard work you
miss your quota for the month only to have all your hard work
building an organization disappear.

Most compensation plans fall into binary, breakaway,
matrix, stair-step or uni-level plan but there are other plans out
there as well.
Network Marketing Binary Plan:
First level is limited to two with infinite depth.
Network Marketing Breakaway Plan:
Unlimited first level width, usually with a finite depth 10 to ?
levels deep.
Network Marketing Matrix Plan:
First level width 2 to 7 usually 5 to 50 levels deep.
Network Marketing Unilevel Plan:
Unlimited first-level width with a depth of usually 5 to 10 levels.

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MLM companies

MLM companies have been a frequent subject of criticism as well as the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price-fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging if not requiring salespeople to purchase and use the company's products, potential exploitation of personal relationships which are used as new sales and recruiting targets, complex and sometimes exaggerated compensation schemes, and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion.

In contrast to MLM is single-level marketing, where the salesperson is rewarded for selling the product directly to the consumer.
International markets are tricky. The global frontiers afford fertile opportunities for companies that are forward-thinking and who will pay the price of preparation.
A strong, well-formed international network marketing growth plan will dramatically increase your success rate; the long-range risks and opportunities are far too great to not properly plan. Mastering the marketing plan, establishing the operations and service infrastructure, refining product formulations and service delivery systems, and refining support technology are best accomplished in a central location, followed by duplication and adaptation in foreign markets as the core operation gains strength and stability. Importantly, distributors who first focus their efforts in one market are categorically more effective and successful than those jet-setters who need a reason to travel the globe but who never settle down long enough to build anything lasting.
Conventional wisdom is to progress from the United States to Canada, Europe, Australia, Asia, Mexico and South America, Pacific Rim, China. Many believe that the Internet has made international expansion an instantaneous business.

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The Benefits of Multilevel Marketing

Multilevel marketing is picking up a lot of steam. This is due to the large amount of people online that are hyping multilevel marketing and all of the profits that go along with it. And if you are interested in this business, you should not have any problem finding information online to help you get started. The bottom line is that multilevel marketing makes you money too. As soon as a decent amount of people started to cash in on it, the number of interested parties began to increase. And with this has come the notion that multilevel marketing is not going anywhere.

If you are not familiar with the business, you should bone up on the details as soon as possible. Generally speaking, it is a way to make money when you sign people up for a certain service or product. And to take this a bit further, with this business you can also make money when the people that you sign up recruit members of their own. So in general terms, you will make money with a pyramid type effect.

For people that are interested in multilevel marketing, the best place to start searching is online. There are hundreds of companies that you can sign up with in order to make money. There are a lot of busineses out there that are not legal in the majority of the states. You can avoid this without any complications by getting hooked up with a campaign that is run by a reputable company.

If you are not sure if this opportunity is right for you, look into the benefits that it offers. There are many online forums devoted to multilevel marketing. By becoming a member you can ask questions to more experienced marketers.

Multilevel marketing is definitely here to stay. There are enough people out there making money with this opportunity that the popularity will always be high. For people that are searching for a way to make cash online, multilevel marketing is always a good option.

Overall, check it out if you are interested in a new way to make money online.

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Multi Level Marketing

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation. Some people use "direct selling" as a name for MLM, although MLM is only one type of direct selling, which started centuries ago with peddling.
Multi-level marketing is an enterprise system which puts emphasis on recruiting distributors. In some cases, this is also used to indicate that there are links of product suppliers enabling distributors to offer a broader selection of products.

In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business.

In a legitimate MLM company, commissions are earned only on sales of the company's products. No money may be earned from recruiting alone ("sign-up fees"). Some less legitimate companies produce revenues primarily by attracting new participants or selling them marketing services, as opposed to selling actual products. One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from new-recruit bonuses or business support sales.

Multi-level marketing has a recognized image problem due to the fact that it is often difficult to distinguish legitimate MLMs from illegal scams such as pyramid or Ponzi schemes. MLM businesses do operate legitimately in most countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid and Ponzi schemes try to present themselves as legitimate MLM businesses.

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. Ponzi schemes, however, is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.

Most of these schemes take advantage of confusion between genuine businesses and complicated but convincing moneymaking scams.

Multi-Level Market scams generally have extremely elaborate marketing materials, such as professionally directed and produced audio-video tapes to show potential commissioned sellers, conventions with "guest speakers" who offer testimonials about how much they have made on the scam and how wonderful the product is, and awards and prized for the commissioned seller with the most sales. To embellish the act, most such scams will have fake referrals, testimonials, and information.

The scams that have mushroomed have been very damaging to legal MLM companies. To avoid illegitimate multi-level marketing, we should be wary if the start-up cost for the investment is too expensive. Know the consumer market for the products and its officers. If the company seems to be making money by recruiting alone, there certainly is a bluff. And the surest way to distinguish false MLM companies is to contact your local business bureau.

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Multi Level Marketing Plan

Multi-level marketing is an enterprise system which puts emphasis on recruiting distributors. In some cases, this is also used to indicate that there are links of product suppliers enabling distributors to offer a broader selection of products.

In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business.

In a legitimate MLM company, commissions are earned only on sales of the company's products. No money may be earned from recruiting alone ("sign-up fees"). Some less legitimate companies produce revenues primarily by attracting new participants or selling them marketing services, as opposed to selling actual products. One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from new-recruit bonuses or business support sales.

Multi-level marketing has a recognized image problem due to the fact that it is often difficult to distinguish legitimate MLMs from illegal scams such as pyramid or Ponzi schemes. MLM businesses do operate legitimately in most countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid and Ponzi schemes try to present themselves as legitimate MLM businesses.

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. Ponzi schemes, however, is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.

Most of these schemes take advantage of confusion between genuine businesses and complicated but convincing moneymaking scams. The essential idea behind each scam is that the individual makes only one payment, but are promised to somehow receive exponential benefits from other people as a reward.

Multi-Level Market scams generally have extremely elaborate marketing materials, such as professionally directed and produced audio-video tapes to show potential commissioned sellers, conventions with "guest speakers" who offer testimonials about how much they have made on the scam and how wonderful the product is, and awards and prized for the commissioned seller with the most sales.

The scams that have mushroomed have been very damaging to legal MLM companies. To avoid illegitimate multi-level marketing, we should be wary if the start-up cost for the investment is too expensive. Know the consumer market for the products and its officers. If the company seems to be making money by recruiting alone, there certainly is a bluff. And the surest way to distinguish false MLM companies is to contact your local business bureau.

Read More