Multi level marketing is a term used to describe the marketing strategy of certain companies as a part of their overall marketing structure. The term ‘network marketing’ can also be used to describe this strategy.
The structure is primarily designed to generate a force of representatives who promote the company products and are compensated through a commission scheme through sales. These distributors can also recruit other members into the business, creating their own ‘downline’ or reps from whose sales they will also gain a small commission.
It is these un-salaried, independent distributors who represent the company products and are solely responsible for the sales that the business generate. They can develop their own organizations within the business by building their own team or downline as well as their own active customer base. Loyalty will often lead to repeat sales, therefore good communication and inter-personal skills are key o the success of any independent representative.
This arrangement is largely similar to a franchise arrangement. Commissions are paid out to the distributors by way of a compensation plan. This will often provide bonuses and different promotional levels depending on the size of ones active customer base and the size of their own distributor downline.
However, there are those who see the companies who employ network marketing in a negative way, believing them to be overly driven by recruitment and not by actually sales. Yet for many companies, this form of recruitment will generate great sales depending on the products and services they offer. There are also unfair comparisons to pyramid selling which offers no tangible products whatsoever. For these reason MLM has often received negative attention.
Furthermore, negative light is shone on MLM due to the essence of selling primarily to ones close friends and family. This is viewed as hassling your loved ones, yet it is usually used for a distributor to kick start their own activities. For many people, it can be a useful source of supplemental income and can often lead to great wealth if pursued in the correct manner.
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