What is multi-level marketing?

Multi-level marketing, usually abbreviated as MLM, is a smart marketing strategy in which a marketer is paid for not only the sales they make but also for the sales of the other salespersons recruited by them. Just like in affiliate marketing, multi-level marketing allows individuals who do not necessarily have their own products or services to promote and make sales on behalf of their partnering companies. The term multi-level marketing is often used interchangeably with network marketing or referral marketing. Don’t let this confuse you, they basically mean the same thing.

This marketing system involves the selling of goods and services through a network of distributors. The network comprises of a sales force created by an individual who recruits other salespersons to be part of their team. However, unlike in affiliate marketing where promotions are made online, multi-level marketing demands that individuals make sales directly to consumers by building relationships, making referrals and using word-of-mouth to make direct sales.

As a multi-level marketing salesperson, it is your obligation to not only sell the products and services but to also recruit others to join the company as distributors. The goal is to develop a large network of distributors for the company. It is a win-win arrangement for all the parties involved. The company eventually ends up making a lot of sales owing to the large network of distributors. The distributors, on the other hand, earn substantial income in the form of commissions. It works on the basis of revenue sharing between the company and the network of marketers.

Multi-Level Marketing Concept

Basically, companies encourage their distributors to recruit other new distributors in order to expand their network. As an existing distributor, you not only earn a percentage of your individual sales but also a percentage of the sales made by the recruits you brought in. Your recruits are usually referred to as your “downline.” Multi-level marketing, therefore, gives you income from two streams; your own sales, and your recruits’ sales.

How to Get into Multi-Level Marketing

If you want to get into multi-level marketing, you first have to identify companies with this marketing strategy. You also need to make sure that the company is legitimate to protect yourself from being scammed and wasting precious time. In determining their legitimacy, look at tell-tale signs such as the way they handle their products. Are their products just sold to their members or to consumers at large? Is their focus more on recruiting new members than making actual sales? These and other questions will help you evaluate the companies first before making an informed decision on whether or not to work with them. With a good partnering company, this marketing strategy can be quite a profitable venture.

An Example of Multi-level Marketing in Practice

John wants to get into multi-level marketing. He identifies a company with the opportunity, Digital Altitude (DA) and immediately joins it. DA specializes in eLearning services and events. As a new distributor, he sells some of their products and earns his commission. His friend, Sherry hears of John’s exploits as an affiliate and is keen to join DA too. John signs up Sherry on his team making her his “downline.” The terms of Digital Altitude specify the commission rates of 35% for every individual sale made and 15% for each sale made by referrals. When Sherry, for instance, finds a customer that makes a purchase worth $100, she earns her commission of $35, John gets $15 and DA pockets the rest, $50. A win-win situation for everyone. At the end of the day, everyone is happy that their efforts paid out. Sounds exceptional, doesn’t it? Now, imagine having a team of 10 people and you each make sales worth $100 per month. Let us do the math. You will, first of all obviously earn your $35 from your individual sale and an additional $150 from your team of salespersons. That translates into a cool total of $185! Good stuff, right? That is how profitable multi-level marketing can be. Do you wish to learn more? Well, for more insights on multi-level marketing, Box Dreaming is always here for you.