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MLM Basics – The Multi Level Marketing Business Model

MLM Basics – The Multi Level Marketing Business Model

MLM, also known as Multi Level Marketing, can be a wonderful method for achieving your personal and financial dreams when combined with the power of the Internet.

My goal in this article is to briefly explain what this business model is and what it is not since it is used by hundreds of companies to move their goods and services from production to the end consumer.

With the information I will provide here, you will be able to make an informed, educated decision as to whether or not this business model is right for you.

Multi Level Marketing is nothing more that a business model that uses independent distributors with a multi level commission payout plan to move products from production to the consumer.

Some people believe that Multi Level Marketing companies are nothing more than scams or illegal pyramid schemes. However, for true MLM companies, nothing could be further from the truth. These people simply do not understand how Multi Level Marketing companies work.

First you need to know that Multi Level Marketing companies are 100% legal and many large multi-million dollar companies employ this business model to move their products from production to the consumer. The pyramid shape associated with MLM companies is the same shape as almost all non MLM companies. There are always more workers in the lower ranks than there are senior managers, Vice Presidents, and CEOs. If companies were not of this shape, they would collapse.

Many Multi Level Marketing companies have been around for decades. Some of the better known MLM companies are Shaklee, Tupperware, Mary Kay Cosmetics, Amway, A.L. Williams (Insurance), Princess House (a subsidiary of Colgate Palmolive), Melaleuca, MCI, U.S. Sprint, and NSA.

MLM is an explosive growth field and there are hundreds more MLM companies that, just like other companies, include some that are good and some that are not so good. Today, more and more Fortune 500 companies are even embracing Network Marketing for a portion of their marketing portfolio!

No matter what some MLM recruiters would like you to believe, Multi Level Marketing is not a get rich quick scheme and work is certainly involved if you want to build a long-term stable business. So, why are MLM companies and programs so popular? It is because the Multi Level Marketing business model presents an excellent opportunity for the “little guy” to start, on a part-time basis, a business that has a large residual income potential.

The magic of MLM is that independent distributors earn commissions not only for their own efforts, but also on the efforts of other distributors that they recruit into the business. Earning 1% of a hundred peoples efforts is always better than earning 100% on your own efforts, as John Paul Getty noted.

The term “multi level” comes from the process where by one distributor recruits other people to become distributors and the new distributors are placed under them in what is known as a downline. Each distributor is paid a retail commission on the products they sell themselves, and a wholesale commission on the products their downline sells (down to some designated level).

The larger downline a distributor can recruit, the larger will be his or her commissions as they will earn a wholesale override commission on all the products moved by their downline organization down to the designated level. These commissions can add up quickly for distributors with large downlines.

Thus if a distributor can teach his or her downline members to be successful, then then they will be rewarded by increased earnings themselves. To paraphrase what Zig Zigler once said, you can get anything you want if you help enough others get what they want. By helping others succeed, a distributor helps themselves.

In addition to selling products directly, recruiting, training, and retaining others becomes the key to earning a large stable residual income with Multi Level Marketing. It is not easy, but it is very rewarding.

Millions of people are discovering the advantages of being their own boss and working from home with the MLM business model. A basic computer, telephone, fax machine, a HUGE ambition, and the knowledge of how to proceed to grow your business are all it really takes!

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