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MLM Basics - The Multi Level Marketing Business Model
MLM, which is an acronym for Multi Level Marketing, is a powerful success formula for working from home, using the POWER of the Internet and achieving your personal and financial objectives!
There are literally hundreds of companies that use this business model to move their products from production to the end user and my goal in this article is to provide you with the simple facts on what this industry IS and what it is NOT!
You can only make an informed educated decision as to whether or not this business model if right for you if you have the necessary information upon which to make your decision. I hope to provide some of that information in this article.
Multi Level Marketing is simply a business system for moving products and services from production to the consumer using independent distributors with a multi level commission payout plan. Since distributors can recruit other distributors and establish teams that work together, this business model is often also called Network Marketing.
There are many myths about MLM companies, including that they are scams or illegal pyramid schemes. For true Network Marketing companies, nothing could be further from the truth. Unfortunately, those who believe these myths, simply do not understand how MLM companies work.
First you need to know that Multi Level Marketing companies are 100% legal and many large multi-million dollar companies employ this business system to move their products and services from production to the end user. The pyramid shape associated with MLM companies is the same shape as almost all non MLM companies. There are always more workers in the lower ranks than there are senior managers, Vice Presidents, and CEOs. If companies were not of this shape, they would collapse.
Many Multi Level Marketing companies have been around for decades. Some of the better known MLM companies are Shaklee, Tupperware, Mary Kay Cosmetics, Amway, A.L. Williams (Insurance), Princess House (a subsidiary of Colgate Palmolive), Melaleuca, MCI, U.S. Sprint, and NSA.
There are hundreds more MLM companies and just like other companies, some are good and some are not so good. But MLM is certainly here to stay and it is an explosive growth field! In fact, increasingly you will find more and more Fortune 500 companies employing the Network Marketing business model for some portion of their marketing portfolio!
No matter what some MLM recruiters would like you to believe, Multi Level Marketing is not a get rich quick scheme and work is certainly involved if you want to build a long-term stable business. So, why are MLM companies and programs so popular? It is because the Multi Level Marketing business model presents an excellent opportunity for the "little guy" to start, on a part-time basis, a business that has a large residual income potential.
The magic of MLM is that independent distributors earn commissions not only for their own efforts, but also on the efforts of other distributors that they recruit into the business. Earning 1% of a hundred peoples efforts is always better than earning 100% on your own efforts, as John Paul Getty noted.
The term "multi level" comes from the process where by one distributor recruits other people to become distributors and the new distributors are placed under them in what is known as a downline. Each distributor is paid a retail commission on the products they sell themselves, and a wholesale commission on the products their downline sells (down to some designated level).
The more recruits a distributor can get under them, the larger their downline and therefore the larger their total commissions. How many levels a distributor can earn commissions from in their depends upon the particular company's compensation plan. Five to seven or more levels is not unusual.
A strong incentive is thus created not only for a distributor to recruit more distributors for their downline, but also to train them to move products as well. Thus a successful distributor will want to duplicate their success by teaching their downline members how to be successful. By making their downline members successful, they make themselves more successful.
In addition to selling products directly, recruiting, training, and retaining others becomes the key to earning a large stable residual income with Multi Level Marketing. It is not easy, but it is very rewarding.
In fact, millions of people are earning a solid income from the comfort of their own home while being their own boss. With MLM, you don't need an expensive office anymore. A telephone, basic computer, fax machine, a HUGE ambition, and the knowledge of how to proceed to grow your business are all it really takes!
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