No, multi level marketing is not synonymous with pyramid scheme. I think something about the “multi-level” part just conjures up that will image of a pyramid and that’s in which the association begins. I know it do in my case. More about that afterwards
But on to the answer you’re looking for…
What is multi-level marketing?
Multi-level marketing, also known as network marketing or MLM, really simply refers to a business model which is part of the direct selling category. So , instead of appearing in stores, the multi-level marketing and advertising product or service is sold directly by the MLM distributor. Some examples of well-known multi-level marketing companies include Avon, Jane Kay Cosmetics, Pampered Chef, Herbalife International, Tupperware, Arbonne International, MonaVie, Shaklee, and Southern Living at Home, just to name a few of literally thousands around the world. Products and services that do well in an MLM model are those that require some explaining in order to convey their correct value. That’s where the network marketer comes in. This person will answer queries, provide demonstrations, host events, etc ., in order to explain the full benefits of the MLM products/services they market, plus interact directly with the consumer.
The particular multi-level marketing model works such as this. You join, usually for a relatively small fee, and you are then granted commissions on the products/services that you market, and on the people that you bring in in your sales force, and on what they sell. This is when the “multi-level” part comes in… A good MLMer has levels of distributors over him, and levels of distributors beneath him within his or her organization (which, by the way, is no different than the framework of most organizations–what is different is that your spend will be affected by the levels below you).
Each MLM business has a different pay out plan or structure and these plans vary widely from MLM in order to MLM. While you should understand your own MLM’s compensation plan, don’t get too caught up in it, because how prosperous you become really doesn’t depend on how the pay plan works. It has much more to do with the products and services you sell, how many you can sell, and how well your MLM business management and also you yourself can recruit, motivate, and train your team members.
What multi-level marketing is not
Network marketing is NOT the get-rich scheme. Like any other business, it takes work, dedication, and skills that more often than not must be learned on the way. The truth is that network marketing has the possible to make you a lot of money very quickly, although not if you are just starting out and doing it just part-time, or just a couple of hours a week. Once you do build up your business, you can then function less and still make the same quantity, or more, money, but this uses you’ve put in your due diligence.
Legitimate Multi-level marketing businesses are not pyramid or Ponzi schemes. MLMs and pyramids schemes are often confused, understandably so in some ways. First of all, pyramid techniques cropped up just shortly after the multi level marketing model was born in the mid-1900s–in reality, they were created by unsuccessful network marketers who decided to make things easier by doing them the illegal way! Before the government caught on, thousands of people had fallen prey to these types of schemes. And that is why the FTC is now very quick to clamp down on pyramid and Ponzi schemes. This is furthermore why multi-level marketing companies are under extreme scrutiny.
Here’s how you can inform a pyramid/Ponzi scheme from a legitimate network marketing, MLM, or multi-level marketing company.
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The legitimate MLM offers products and services. The scheme does not. Therefore , if you run into a company that is providing you a commission just to recruit various other members into the business, then this is a pyramid scheme. Network marketing companies will also offer you bonuses or commissions if you recruit members into your team, however the business is based on products and/or services, not only upon recruiting team members.
Multi-level marketing is not for everyone.
Anyone over 18 may join an MLM business and the start-up fees vary from company to company. But whilst anyone who can invest the start up fee is able to join an MULTILEVEL MARKETING, not everyone is suited for this business. Actually more than 95% of those who join network marketers end up quitting. there are several reasons behind this. One is that, often , brand new MLMers are lead to believe that the network marketing business is a get-rich quick chance and it can be done without putting a lot effort into it. Also, many people leap into MLM because they are told that anyone can do it. While this holds true in a way, to be successful in MLM, you choose to do need to know about sales and marketing. Can you learn it? Of course. Will you do well without having sales and marketing and advertising knowledge? Probably not. Finally, while many brand new network marketers are dedicated and ready to learn, they are not being trained properly. Luckily, there is a substantial amount of trustworthy MLM training available both on the web and offline today, and it is suitable for all network marketers in all MLM companies.
Precisely why Join a multi-level marketing firm?
when you join a network marketing business, you are essentially in business for yourself, and you could make of that business what you want. Multilevel marketing is by far the most affordable way to start your own business. You don’t have to come up with a service or product. It is there for you. You don’t have to generate marketing materials. They are also at your fingertips. Typically also offer you a corporate website that you can send customers and prospects in order to. And often, you don’t even have to hold inventory.
It is the dream of financial freedom, especially during this economic downturn, that causes people to seek out non-traditional business opportunities. Network Marketing businesses are especially appealing because the initial investment is extremely reduced and the potential for gain is extremely high.
Residual income is the coveted jewel of multi-level marketing–the ability to be paid even when you are not actively functioning. As a successful network marketer, you leverage the time of others, after you have put in time training them. Once you have an established network (the people in your team who also you have recruited, or who have been hired by others under you), they will go on to train others as you have trained them (hopefully), leading to a lot more profits for you without you investing any extra time or effort. It is not a coincidence that the most effective MLM business owners are also the best instructors.
Another great draw of multi-level advertising is that representatives can work from home (or anywhere else) and establish their very own schedule, goals, plans, etc ., rather than those of their bosses.
Many begin on a part-time basis to replace a second job–working a “night-shift” at home on your own computer, rather than at a manufacturer, all-night supermarket, etc ., is relatively appealing.
There is an undeniable surge on the market towards entrepreneurship and home-based business. Because the current economy is eliminating conventional nine to five jobs, the amount of multi-level marketing corporations and those who else represent them is also on the rise. Some of the most recognized advocates of the MLM business model are Donald Trump, Robert Kiyosaki, and Bill Clinton.