Multilevel Marketing – How it Works
Multilevel marketing companies have a network of independent distributors, which serve as the means to get their products or services to customers. A good MLM company will have low startup costs and will provide you with the requisite training that you need for success. They take care of most of the advertising requirements and give a good service or product lineup for sale. They let you appoint distributors from your end, and you get commissions from the total sales made by the distributors that you recruit.
What The Federal Trade Commission (FTC) Says About MLM
The Federal Trade Commission (FTC) of the United States recommends that you conduct thorough research before you decide to join an MLM company. No business venture should be undertaken without prior research having been done first.
The FTC warns against joining companies engaged in “pyramiding”, which is illegal. This refers to paying just for recruiting distributors, and not commissions on their total sales generation. The FTC also cautions against signing an agreement with an MLM company under pressure. They recommend that you take time to think over all the aspects of the business that you intend starting, before finalizing the formalities of any agreement.
This page provides comprehensive information and instructions related to joining MLM companies, and gives a list of eight checkpoints which everyone should conduct before they go ahead with the process of joining.
There is a host of information available on the Internet when you conduct a search under multilevel marketing. Most of this is from people who have had a bad experience being an MLM distributor, along with government agency and general information sites.
Pros and cons of MLM
To summarize the benefits of a good and reputable multilevel marketing company, it would have a product line or service, which has a ready and fast market; and it would constantly try to add similar, fast moving products to their existing list. It would not indulge in pyramiding, making new distributor recruitment a streamlined process. A new distributor would not be required to possess earlier experience and the company would cater to all the training needs and related materials, including resource material to help with product sales, and fresh distributor recruits as well.
The initial costs to start would be low. There would be dynamic leadership, providing motivation and catering to healthy team competition. They would have a successful marketing plan and a strong support system. There would be attractive incentives and bonus plans for those who excel.
Every business has its strong and weak points. Some of the drawbacks in MLM can be:
(a) Getting attached to a disreputable MLM company
(b) Creating a network or downline may be more expensive than you realized
(c) There may be a lot of money spent on outside meals, fuel, hotel accommodations etc.,
(d) Actual success in sales may be hard to come by
Because seventy-five to eighty percent of your contacts may result in rejections, you must be able to not take rejection personally.
When done the right way, MLM can be an extremely profitable and rewarding experience. Just make sure that you have done thorough research before embarking on this venture.