The concept of Multi-Level Marketing, also known as MLM ( Network Marketing ), has been around for many, many years.
There has always been confusion over how MLM actually works in the business arena, and this is mainly due to a lot of companies using the wrong principles to how it was intended to be used. This has created a very negative experience in the eyes of many.
To give you an example of familiar companies who use MLM, which are now household names ( to help you understand ), you need look no further than Kleeneze and Betterware. Now, these are an examples of how MLM can, and does work - and very well.
The idea behind the concept, in it's basic format, is to generate as many people ( resellers ) as you possibly can, reselling the company's products ; and receiving a commission from each and every sale these resellers make. The more sales your 'team' make, the more money you earn as a commission.
Example :
You view the business package, and reseller plan from an MLM company. The company will have an array of products ( or services ) which are intended to be resold. Most MLM companies will expect you to sell the products yourself, and then for you to 'recruit' a 'downline' ( an army of resellers ) to sell the products for you. You then receive a 'cut' or percentage of your reseller's profits.
The advantage to the company, is that of course, they end up with many, many resellers promoting their products. The advantage to you, is that if you can create a large enough 'downline' ( army of resellers ), then you will make a certain amount of profit from their efforts.
This may sound easy. But, like any business opportunity, any success will highly depend on the amount of resellers you can 'entice' into the business opportunity, who in turn will also be expected to recruit resellers of their own - who you also make profits from.
The difficulty, and where this system breaks down ( from the resellers point of view - not the company's ), is that by having to recruit other resellers, you are actually having to find, and build a team of people who also need to have a vested interest in creating a business - not easy !
When explaining the concept of MLM, it will always sound enticing. Here are the products ; sell a few ; get a few other people to sell a few, and you will be making X amount per month. Easy - not so.
The biggest problem with MLM, is that although you may use a large amount of energy, and resources creating your downline, the majority of such a downline may not be as enthusiastic as you. Therefore, you are relying on the fact that you will ALWAYS ( nearly always, unless selling £5 notes, for 20 pence ) have to keep on recruiting, because just as quickly as you can recruit, the members of your downline will drop out, because they themselves, do not have the ability to recruit their own resellers - hence they will not make money, and drop out of the system.
What happens then, is that even if you are making a certain amount of revenue, if your downline are quitting, then unless you are a dynamo in recruiting, your income will stagnate, and eventually fall to zero - if all your downline suddenly disappeared overnight.
Another main problem with MLM, is that you are always relying on other people's business ambitions for your own success. And, if you have been in business any length of time, you will already know, that most people only 'try' to make money, rather than going after the revenue they seek, with a white - hot burning desire.
The conclusion, is that unless you are highly skilled in recruiting people to resell for you ( and very few people are ) then there are definitely more viable business opportunities for you to become involved in.
But is MLM a scam ?
What i can say is this all depends on how the company using MLM portray the opportunity. For example, in the early nineties there were very many companies who started a 'pyramid scheme', which gets confused with the concept of MLM.
Pyramid schemes nearly always involve money changing hands between members, where there is not an actual end product. For example, one particular company in the nineties offered such a scheme, whereby their members had to find other resellers, to find other resellers, to find other resellers, etc ... There was no product. If you found a reseller, the company simply paid you a certain amount of money ; say $125. To join the scheme, it cost $195.
Therefore, what you were actually doing, was trading in money, and from the company's point of view, they relied up on all resellers, finding other resellers to pay the $195 joining fee - so they could pay other resellers.
In many country, the Department of Trade and Industry ( DTI ) closed down hundreds of these companies - and rightly so, because the main problem was, that ALL resellers were relying on another reseller joining up to pay money, for no end product. That was the problem, there was NO end product - hence classed as a pyramid scheme.
Like we say, MLM, providing you research and start with the right company, it actually CAN work and it is a very good business opportunity. Although the world has moved on since those early MLM days, and there are now many, much easier ways to start a business and create a second, or even full-time income, being your own boss.
To Your Success
Wingcent Ning
Success-Biz Marketing
wingcent@gmail.com
http://mysignaturebusiness.blogspot.com
Singapore
P.S. : I had go through this great resources on How Network Marketing Works, to learn more, visit this site here ... It might help you a lot on your MLM success.
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