MLM or Network Marketing is a form of business or service distribution whereby promotion is done mainly through word of mouth by distributors or reps. These distributors or reps work on a self employed basis earning commission when they sell the MLM companies products or services. Whilst there are companies who use self employed people on commission only MLM companies are different in that the distributors or reps can build their own businesses by introducing new distributors or reps whilst receiving payments from their sales as well as their own. The "Multi Level" term comes from the fact that reps can introduce, or recruit, other reps who can them go on to introduce their own reps, and so on and so on down to many or often infinite levels.
MLM Promotion
The original rep will then go on to be promoted depending upon how many customers they have together with how many other reps have been introduced to their "team", any rep who has been introduced either by themselves or by reps introduced by these reps already introduced all form part of the original reps team, down to many levels. To put it simply you introduce 3 reps who go on to introduce 3 reps, who each go on to introduce 3 reps means you now have 39 reps in your team, 3 on the 1st level, 9 on the 2nd level & 27 on the 3rd level. Over time if everybody goes on to duplicate you & introduce 3 reps then you would end up with a very large team!
Of course not all MLM businesses will work exactly like this, for instance not everybody in the team will introduce 3 reps, some will introduce none or 1 or 2 some will introduce a lot more, but I think you get the picture now. The beauty of this system is that "you" at the top of the diagram carries on doing the same amount of hours work on a consistent basis, however the total actual hours going into your business is the sum of all of the people in the diagram! John Paul Getty a US Oil Billionaire was quoted as saying "I'd rather have one percent of the efforts of 100 people than 100 percent of my own efforts." Don't make the mistake of thinking that you have to join a MLM opportunity on the "ground floor" ie be 1st in to do well, "you" could be anywhere in that diagram with the same structure below you. The above is a very simplified view of a MLM structure, some companies "compensation plan" ie how you get paid can be very complicated even for those who are actually involved in that particular company. There are many different MLM compensation plans; Stair step breakaway plans, unilevel plans, binary, forced matrix etc. I won't go into all of these plans now, however if you want to know more just do a Google search on each of them.
There are also many positions within a MLM compensation structure, usually they go along the lines of; Reps/Distributors, Team Leader, Group Leader, Senior Leader, Senior Group Leader, Regional Group Leader, National Group Leader. For each level generally you will need a certain number of customers & a certain number of people at each level below you in the plan.
MLM Customers
Speaking of customers, no business can survive without customers...MLM businesses are the same. In order for anybody to grow their MLM business they must attract customers, everybody ( other reps ) must do the same. In order for this to happen the company must have an excellent product or service. This product or service has to be excellent because the only way that sales grow is by word of mouth, anything less than excellence, generally people will not give recommendations. In mainstream businesses customers are attracted by some form of advertising ie TV, Newspaper, Magazines, Leaflets, Flyers, Billboards etc etc with the big companies spending millions of pounds of year to promote their products or services. In MLM companies there is generally no, or very little money spent of adverting, the promotion is done by distributors or reps using product demonstrations or home meetings with potential customers. These reps rely on referrals from customers to build their distribution chains, so having an inferior product or service will mean no referrals, meaning ..... eventually no customers.
MLM Promotion
The original rep will then go on to be promoted depending upon how many customers they have together with how many other reps have been introduced to their "team", any rep who has been introduced either by themselves or by reps introduced by these reps already introduced all form part of the original reps team, down to many levels. To put it simply you introduce 3 reps who go on to introduce 3 reps, who each go on to introduce 3 reps means you now have 39 reps in your team, 3 on the 1st level, 9 on the 2nd level & 27 on the 3rd level. Over time if everybody goes on to duplicate you & introduce 3 reps then you would end up with a very large team!
Of course not all MLM businesses will work exactly like this, for instance not everybody in the team will introduce 3 reps, some will introduce none or 1 or 2 some will introduce a lot more, but I think you get the picture now. The beauty of this system is that "you" at the top of the diagram carries on doing the same amount of hours work on a consistent basis, however the total actual hours going into your business is the sum of all of the people in the diagram! John Paul Getty a US Oil Billionaire was quoted as saying "I'd rather have one percent of the efforts of 100 people than 100 percent of my own efforts." Don't make the mistake of thinking that you have to join a MLM opportunity on the "ground floor" ie be 1st in to do well, "you" could be anywhere in that diagram with the same structure below you. The above is a very simplified view of a MLM structure, some companies "compensation plan" ie how you get paid can be very complicated even for those who are actually involved in that particular company. There are many different MLM compensation plans; Stair step breakaway plans, unilevel plans, binary, forced matrix etc. I won't go into all of these plans now, however if you want to know more just do a Google search on each of them.
There are also many positions within a MLM compensation structure, usually they go along the lines of; Reps/Distributors, Team Leader, Group Leader, Senior Leader, Senior Group Leader, Regional Group Leader, National Group Leader. For each level generally you will need a certain number of customers & a certain number of people at each level below you in the plan.
MLM Customers
Speaking of customers, no business can survive without customers...MLM businesses are the same. In order for anybody to grow their MLM business they must attract customers, everybody ( other reps ) must do the same. In order for this to happen the company must have an excellent product or service. This product or service has to be excellent because the only way that sales grow is by word of mouth, anything less than excellence, generally people will not give recommendations. In mainstream businesses customers are attracted by some form of advertising ie TV, Newspaper, Magazines, Leaflets, Flyers, Billboards etc etc with the big companies spending millions of pounds of year to promote their products or services. In MLM companies there is generally no, or very little money spent of adverting, the promotion is done by distributors or reps using product demonstrations or home meetings with potential customers. These reps rely on referrals from customers to build their distribution chains, so having an inferior product or service will mean no referrals, meaning ..... eventually no customers.
