The MLM Business Model.
I have written much on MLM’s in this blog. Essentially Multi Level Marketing is a strategy that sell products through a non salaried workforce.
Payment is by a pyramid shaped commission system.
It is also known as a referral marketing or network marketing.
The Rules Governing Multi Level Marketing.
Multi-level marketing is a diverse and varied industry, employing many different structures and methods of selling. Although there may be significant differences in how multi-level marketers sell their products or services, core consumer protection principles are applicable to every member of the industry.
You can see more At the FTC website Here.
How does Multi Level Marketing Work.
To join a MLM company you have to first sign up under a someone else selling the companies products, then outlay some money of your own for a cross section of products.
Here are some Pros and Cons of MLM.
- Companies can gain a large consumer base in a wide geographical area with multi level marketing
- It allows distributors to make extra income working their own hours.
- Lower ranked distributors tend to work harder, and earn less than ones in the upper tiers, who receive a share of lower ranked members commissions.
- Some sales people are unscrupulous, and can give a product or company a bad name.
- You may not have good customer support, should any one using products bought from you have a complaint.
- Need storage space for products
- You need a good bookkeeping system
- You will need to cover expenses for your vehicle and other promotional literature.
Often Multi Level Marketing is confused with a pyramid scheme, which are illegal.
How do you get paid with MLM
It is a commission based structure. Whereas an affiliate marketer gets a % of each product the MLM payment model is much more complicated.
If you are just reselling product you buy at distributor rates and sell at retail. However. things can get a little complicated if you sell over a certain amount, recruit others, split downlines etc;
It pays to have a complete understanding of both the product and the rules before signing up to a MLM.
Usually this will be a face to face meeting with a distributor (who could be a friend or relative), so you should feel free to ask questions.
If you are good enough to move into the higher tiers you are able to earn passive income, and this is a big drawcard for recruiting members. It is achievable with a very good product, but it still requires great effort.
Do you Need a Website to be Involved with Multi Level Marketing
Short answer is No.
However the majority of MLM’s have a website for their members, where you can download brochures and other sales literature, order forms for product, and details of your sales, earnings and position in the tree.
How do You Gain product knowledge
Unlike affiliates who will most likely know something about what they are selling, because that is a niche they have an interest in.
The MLM marketer is probably confronted with the “Next greatest thing”. So you should have access to research, and end user testimonials.
As well, you will need professionally written content or sales copy (see my ad above), which anyone serious about this as a business should read up on, to help press home the main benefits of the product.
The Winner of Affiliate Marketing vs MLM is…
Which ever way you look at it there is work involved.
The answer would be I guess which do you enjoy more. Writing content about something you like doing. Or doing a lot of salesy talk trying to convince someone, you have something they need that could make them rich.
I have a lazy streak, so will stick with affiliate marketing. A few hours doing some research and writing, and my time is my own. I don’t want to be bothered with complaints about product, delivery issues and cancellations.
“til next time
All the best from Colombia.