Many people associate MLM (Multi-Level Marketing) with scams. So, what is MLM and is it just another scam or is MLM a real business opportunity? Let’s discuss.

Many people have the misconception that MLM is actually Pyramid scheme. Seriously speaking, both have similarities. For a start, both are selling products and recruiting people to sell products.

What is MLM?

MLM stands for Multi-Level Marketing or Network Marketing. It is referral program of using independent representative to refer customer to the company (that sells product) based on commission structure. And when representative recruit new representatives to sell the product from the company, they are in fact growing their own businesses without needing to create a product to sell. MLM is NOT a Pyramid Scheme (or scam). Although there are similarity between MLM and Pyramid Scheme, in Pyramid Scheme, the originator is usually the ones that get paid whereas in MLM, everyone gets paid for referring a customer to the company. However, it is very similar to Affiliate Marketing except that the referral commission goes beyond the first or second tiers. That means that if your representive that you recruited (your downline) secured a sale, you will also get a portion of that sale.

How MLM works?

Two groups exist in MLM. Your Upline and your Downline. Upline refers to the person that recruited you and downline is those representatives that you recruited. When you made a purchase from the company, your upline or Sponsor will usually get a commission on your purchase. When your downline made a purchase. You, as an Upline, will automatically get a part of the sale as a commission. Likewise, your Upline will also get a cut on the commission. In short, when you get commission from your downline, your upline gets a commission, your upline’s upline also get a commission. It depends on how many layers/levels this commission is based. Therefore, if your downline recruited new representatives and they made a sale, your downline will get commission and so will you. Can you see the trend by now?

How People earn from MLM?

By selling products and services from the company to earn commission. By referring people to the program and when they sell products and services from the company, you can earn second tier commission. These people are your downline. When your downline recruited more people to sell products and services, you can commission for every sale although the commission is smaller than you make direct sale.

What is the company earning if everyone is taking a commission?

Normally, MLM is limited to 5 tiers. That means that beyond the 5th tier, you will not get any commission from the sale. The percentage of commission from these 5 tiers will normally NOT add up to 100%. That means that the company still earns some money despite the fact that your downline and upline are enjoying the commission.

Many people will be wondering that if they join this program late, they will not be able to make any money. However, let’s look at MLM companies are selling. If they are selling legitimate products that people want and need, there are no worries that no one wants to buy them. The market is so big and there should be enough space for anyone or everyone.

What are the reasons for failing in MLM?

There are many reasons why people fail. They are as such: -

1. Not focus on MLM business.

Although MLM is a real business, joining the program is normally free. When things are free, people tend not to put in effort in it. They will gradually fall off from the enthusiasm and motivation. Finally, they will be out of the MLM game and complain to the world that MLM doesn’t work. (just imagine if you need to invest a huge sum of money into MLM, would you mindset be more focus and motivated?)

2. Want to see Fast Results.

People cannot wait to see results. They have been misled that MLM is a “Get Rich Quick Scheme” and results must be almost immediate. This is often not the case. A MLM business has to be planned and nurtured (like in a real business).

3. Your downline is not motivated.

They do not know or want to sell. They are often not motivated. This scenario may happen if the upline did not guide them well. Most of the time, if downline is motivated, residual income will trickle in.

Overall, MLM is a long term business that has to be planned. Trust and coaching to your downline is very important. I must say that sometimes it is more important than selling. When your downline is motivated to sell and coach people, you, as an upline, will reap the fruits of your success!

By: Joe Teh

What’s so wrong with MLM? There are a lot of people who won’t get involved
with MLM plans because they lack the deep down enthusiasm that’s needed for
the long term in a MLM environment.

A lot of people who want to try a product being sold by MLM sometimes get
turned off because of the “networking/business” aspect of MLM. Why can’t I
just be a consumer without becoming a “network” participant, without being
assigned to a marketing level.

MLM businesses can be better off if only they advertise their product and
have less emphasis on recruiting their downline.

In fact, I never see advertising for products _ just the invitation to
join someone’s downline. It’s because most MLM organizations are set up
with “money” being the deriving force in their business.

They make more money by recruiting people into the program and the purchase
of marketing materials and sales aides. While this is not true with all MLM
companies _ it is true for most of them.

Did you ever get one of those announcements in the mail for free tickets
to a seminar that claims to set you up in business? Have you ever attended
one? Well let me tell you _ the speaker is trained to push and motivate
their audience. Most people are hit with such a sales pitch that they
almost run each other over buying the starter kit for $349.95 at the end
of the meeting. Then, when they get home they want to shoot themselves for
buying something that still doesn’t put them in business. It’s sad for the
average guy or gal who really just wants to make some honest money in a
business of their own.

Wouldn’t it seem logical _ if someone put together a catalog of products
that other people could purchase WITHOUT joining into a MLM program? In
fact, they could generate some sales for their products instead. What
holds them back from doing so? It is the fact that the organization wants
people to sell the $349.95 package today because the $5.95 order for the
product itself doesn’t make them any money?

Please understand that I’m not talking about every company out on the
market. Watkins, NuSkin, Nutrition for Life and Golden Pride/Rawleigh
each have catalogs of products you can buy without joining their program.
The only problem is that you don’t see very many ads for them. Instead you
find ads that state “Make money with me and increase your income.” or
“Earn a new car within the next 24-hours!”

Back in the 1940’s if you picked up a mail order magazine you saw REAL
products you could order from REAL people. If you wanted a saw blade for
your saw, you sent in a check and ordered one. You didn’t join downlines
to sell the saw blades to others in your area. Now _ if you want a blade
for your saw you’d have to either wade through so much hype and bull that
you may never find one. Instead, you just rely on Montgomery Ward or Sears.

See people _ money is being lost in the regular world of mail order simply
because their are no REAL ads being run for REAL products. Pick up a mail
order tabloid and you’ll see immediately what I’m talking about. Why is
everyone selling everyone else’s stuff? What happened to our individual
creativity? Most of the answer lies in the fact that so much hype is being
pushed on the general public it is ridiculous. People come on TV and tell
you that you can make millions of dollars by running tiny little classified
ads. They show you scenes of people relaxing on their yachts and making
huge bank deposits. Society makes the mail order business world look like
something easy, carefree and non-tiring!

But perhaps, if I purchased a REAL product and loved it so much I might
be enthused enough to join the MLM concept later on down the road Wouldn’t
the ultimate goal of building a downline be accomplished also while at the
same time selling the product?

By: Jimmy Waller

People usually get confused with the term multi level marketing and take it in a negative way but the fact is that it actually describes the marketing strategy. To make income online multi level marketing, you need to take care of the few things that are very essential for a great success. Well, you will like to know that it is very easy to start up making money online multi level marketing for beginners. All you need to do is to decide the name of your multi level marketing and choose a domain name which is available for you so that you can purchase it. After choosing your domain name you can move further to find a right hosting service for your website. It is very necessary to have a website as it allows other people access your company’s website and learn about it.

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By: Mark Wadinski