The dread pyramid scheme is what keeps people away from multi-level marketing (also know as network marketing). A pyramid, first of all, is illegal. It involves selling its products primarily or exclusively to the people it recruits - this basically means that it makes money by recruiting. Lots of people have been stuck buying inventory upfront that is not later resold. A legitimate company will not make money through recruiting. Any cost to join, should be going to real start up costs such as licensing.
What Is MLM?
1. Legal. It is a method of distributing products and services. You may rest assured that MLM is indeed a very legitimate way of doing business since many very large and successful companies use it to distribute their goods. Citi Group is part of the Dow Jones Industrial Average and it's Primerica is the company who coined the phrase "buy term and invest the rest". MLMs offer a wide range of products and include companies such as: HerbaLife, Excel, Mary Kay, Nu Skin Enterprises, Usana, Market America - to name just a few.
2. The reason why many people shy away from MLM is because of the emphasis that has been placed on selling and recruiting to your "warm" market. Distributors (as MLMers are called) have been known to overwhelm their prospective customer/recruit with enthusiasm that can border on fanaticsm. It is beyond a doubt the biggest reason for the perception of MLM as nothing but hype or a scam.
3. But MLM has come a long way since its infancy about 30 years or so ago - having gone through litigation and regulation to straighten it out. Big companies are now recognizing what a dynamite model it is - one that greatly reduces the cost of product distribution and allowing more money to go into a creating a better product at a better price.
Leverage
This one word sums up the key advantage of network marketing. The oft cited quote that sums up network marketing is the following and is credited to J. Paul Getty. He said,
" I would rather make 1 percent on the efforts of 100 people than 100 percent on my own efforts".
The MLMer's goal (multi-level marketer):
Earn lots of override commissions on the sales of lots of people that you have recruited to be your "downline".
Your "upline" includes the person who recruited you. The goal is to build a big organization that is essentially your own business. This means when you retire you will have residual income coming in - the size of that income is dependent on the size and strength of the organization that you have built.
But How Do You Build a Strong and Lasting MLM Empire?
This is where the hard work comes in. It is not enough to just recruit, recruit, recruit anyone who will get momentarily hyped up about your MLM opportunity. MLM as an industry has a 90% drop out ratein the first year. This is what creates a negative image.
What You Need
1. What is really required is a marketing plan. This is just as true in MLM as it is in any business.
2. One should recruit a downline the same way that you would recruit in a traditional business -that is interview the person to determine his/her suitability for the tasks of selling, marketing, recruiting and running his/her own business.
3. You need a system of operating that can be duplicated by everyone you recruit. When I say a system that can be duplicated, I do not mean sales scripts that you must recite and repeat as a robot. People see through scripted sales presentation and it breeds suspicion and resentment. Prospective customers and recruits will feel as if the scripted sales person is trying to manipulate them. The best way to sell is not to sell. There is a wonderful book by Michael Oliver called "How to Sell Network Marketing - without fear, anxiety or losing your friends" (see Getting Started page). The whole book is devoted to selling naturally - which is basically conversing with people and naturally uncovering what problems they have and if you have a genuine solution to one of their problems. It is pain free for all parties involved because there is no over coming objections, coercion and winning - all of which leads to buyers remorse. The book addresses the very heart of network marketing. In order to be successful, you must cultivate real relationships. Thus, it definitely is a business where you can greatly expand your circle of friends, as well as your earnings.
4. You need to be able and willing to train and do follow up with your people. You also need an upline that will do this for you - if the upline will not do this then it is better to start elsewhere (perhaps with a different company if this appears to be the company standard).
5. What anyone serously interested in networkmarketing needs to do is to download the free ebook that is provided in this link:
http://2blondesandabusiness.com . It is very enlightening and very useful.
6. You need a good company that you can believe in and that will be there in the future.
7. You need a product that has a large and growing demandin the market place. You do not want to base your great empire on a product that is passed peak.
What You Do Not Need
1. Lots of money. There are usually no big start up fees (varies with companies - you may have to pay for your own training materials, star-up kit licensing and so forth).
2. No assigned territory.
3. No minimum quota.
4. No special educational requirements - there are some exceptions where licensing may be required (e.g. insurances, mortgage broker license, securities license - see blog).
Is Network Marketing a Get Rich Quick Scheme?
No. While there are many, many people who have become financially independent through MLM, they certainly did not do it quickly or easily.
MLM is a way for people to go into business for themselves without the expenses usually associated with starting a business (rent, worker's compensation, liability insurance, payroll etc.) yet still receive the support of a parent company without them dictating where and when or even how hard you work.
There is no short cut. Your income depends on how hard and well you work. Most complaints on the internet about MLM companies are from people who were expecting an easy income without putting a lot of effort into it. Like anything else, you get what you are willing to put in to it.
Serious money has been made by loads of people in it. It is being viewed as a viable profession by many high paid executives who are tired of the corporate world. Best of all - you can always start out with MLM as a part-timer, since you decide your own hours. Again, I urge you to check out the link on this page for more great information if you are interested in MLM. http://www2blondesandabusiness.com
Additional Information
Compensation plans are structured in various company specific ways.
Unilevel or stairstep breakaway plans are the oldest and most often used. Pay plans are dependent upon manger or non-manager status. Base shop overrides are paid to managers over non-managers. Generational overrides are for managers over the baseshop managers. Executive bonuses are for sales managers who exceed a certain sales amount. The percentages paid on these overrides increases as you advance up the hierarchy.
Matrix plans limit the "width" that a distributor can have underneath him/her. The excess number of recruits gets "spilled" beneath a recruit who has too few recruits for him/herself.
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