A Quick Guide to Multi-Level Marketing

A marketing strategy which financially rewards an individual for the transactions they make, as well as any made by recruits is called multilevel marketing. There are many umbrella terms used which also refer to this type of marketing strategy. Affiliate marketing, multi-level marketing (MLM), and network marketing are all terms which mean essentially the same thing.

In this system, those recruited by the individual (often referred to as "downline") may also utilize their personal network to add members. The original individual who recruited continues to benefit from the sales of those recruited by downline and those recruited by their downline, etc. As a result, there is great income potential possible for individuals with large "downline" organizations. You should click here to learn more about MLM.

Sales for these organizations usually come from members' personal networks and word-of-mouth marketing.

Profitability

There are many names for participants in MLM organizations. Participants might be known as independent business owners (IBOs), franchise owners, independent agents, associates, or a number of other titles. These individuals are unpaid for membership and receive no guaranteed annual rewards. Membership, under whatever title, does allow them to distribute the wares of the company they have associated themselves with.

Personal sales by these participants result in immediate retail profit, in addition to an incentive (such as a percentage of sales) from the organization. Individuals may also create profit by having products on-hand and selling them for a price that is increased from the wholesale rate they paid originally. Specific reward values and calculations vary between organizations, but in multi-level marketing organizations, members are also rewarded for the total sales of their entire organization of downline. In order in increase the latter opportunity for creating income, participants in MLM organizations grow their downline network to increase the selling potential for their overall organization. With such powerful incentives for salespeople to increase the number of downline in their personal organizations, the number of people in the organization increases and, consequently, the amount of overall sales within the entire MLM organization increases.

Differentiating MLM

You might be wondering, what is mlm? In describing multi-level marketing organizations, many different names and terms were developed by the organizations themselves in attempts to distance themselves from illegal and illegitimate entrepreneurial enterprises such as Ponzi schemes, internet scams, and other fraudulent businesses. It is hardly surprising, then, that there is often confusion about MLM and related terminology.

MLM utilizes direct-selling, however it is only one of many types of systems which do so and should not be confused as a synonym for direct selling. In reference to MLM organizations, direct selling and network marketing are simply the manner in which products and services are supplied to consumers. Multi-level marketing refers to the structure of the aforementioned compensation plan. Single-level marketing is also different from MLM in that it does not reward salespeople for the sales of others, only for personal sales. Many organizations have transitioned from a single-level marketing compensation plan to a multi-level marketing plan and have found success and an increase in sales.