|
Home / Business / Network Marketing
What Is MLM Marketing - Important Stuff You Must Know
By:Lubano Lim
There have been many questions that revolve around the MLM business. One of the most common questions is "What is the difference between MLM and pyramid scheme?"
Since you are reading this article, I assume that you are thinking whether to go into an MLM business. Therefore, I shall go through several FAQs in this article. Hopefully, by the end of this article, you will have a much clearer picture of the MLM business.
1) What is MLM?
MLM stands for multi level marketing. Some people also refer to is as network marketing. Traditionally, when companies want to sell their product, they will need to go through various stages. Cost is incurred on advertising, retailing, employees etc. In other words, a product has to pass through various stages before the product reach the hand of the customers.
In MLM business, consumers can get their product directly from the warehouse. Therefore, all the cost incurred in the various stages is eliminated. That is why MLM companies can afford to reward their distributors with more commission.
Generally, MLM companies depend on their distributors to distribute their products. Distributors not only earn a commission when they sold a product, but they can also recruit other distributors and earn a percentage of commission from their effort. This can go on for several levels depending on the compensation plan of individual companies. Over time, the commission earned by distributors can be increased to a sizable level.
2) What is the difference between MLM and pyramid scheme?
A common misconception is that MLM is just another pyramid scheme. This misconception probably arises due to some similarities in the recruitment and referral process.
However, MLM is a legitimate business. So how can you differentiate an legitimate MLM business from a pyramid scheme?
Well, in a pyramid scheme, the company does not have any real products to sell. Commission is earned solely through recruitment of new members. Therefore, the people at the top will earn the most commissions.
On the other hand, a legitimate MLM company has their own products to sell. Commission is earned through the sales of product. That is why it is possible for a downline to earn more than his sponsor.
If you find a company that does not have any real product to sell, then run away as fast as you can.
3) How do people make money from an MLM business?
When you first joined an MLM company, you earn your commission through the sales of products. Over time, you will recruit more distributors under your network. When your distributors sell more products, you will also earn commission from their effort. Let's use a diagram to illustrate.
You : 40%
1st Level: 20%
2nd Level: 10%
3rd Level: 7%
4th Level: 7%
As demonstrated in the figure above, your downline can also recruit their own downline. You will also earn a commission from their effort all the way till the 4th level. Perhaps, you are wondering why the company can afford to pay you so much commission.
Well, if you add up all the 5 levels, you will realize that it is 84%. This means the company still earn 16% of the sales. Don't underestimate the 7% on the 3th and 4th level. Overtime, they can add up to a nice 5 to 6 figure residual income.
Digg
del.icio.us
Blink
Stumble
Spurl
Reddit
Netscape
Furl
Article keywords: what is mlm marketing, mlm marketing, what is mlm, mlm, network marketing, home business, home biz
Article Source: http://www.articles2k.com
Lubano Lim is fun loving entrepreneur with a passion for helping others succeed in their business.
Want to know more about what is MLM marketing? For a very limited time, discover the secret system used by many ordinary people to generate thousands of targeted prospects without cold calling anyone... on complete autopilot.
Visit http://residualincomecash.com now for a free 12 days eCourse.
|
|
| Top Network Marketing Articles |
|
|
|
|
- 3). Why Network Marketing is So Easy By : Daegan Smith
Being successful in life takes a lot of sacrifice. This will mean long hours in the office and a lot of work to be noticed by people higher up the corporate ladder before the person will get promoted.
|
|
|
|
|
|
|
|
|
|
|
|
|
- 10). The Long and Winding Road to Network Marketing Success By : Daegan Smith
Fame. Fortune. Wealth. Good health. Is that success to you?
In reality, the definition of success may vary according to the kind of gratification a person gets from a certain thing. For example, if a person wishes to have a happy family, regardless of their financial status in life, then, he may already regard himself as successful.
|
| New Network Marketing Articles |
- 1). Evaluating The Multi Level Business By : Dustin Cannon
If you think that an MLM business might be for you, you will probably need some guidance in deciding which firms are legitimate and which multi level marketing companies are really disguised fraudulent pyramid schemes. Here are a few questions to ask yourself, to separate the good business opportunities from the bad.
|
|
|
- 3). Network Marketing Success By : Dustin Cannon
Anyone can make a success out of an online network marketing business if they have the instructions laid out for them. The biggest problem with getting the information you need to do this is that most successful network marketing owners want to keep their secrets to themselves rather than helping others to succeed.
|
|
|
- 5). An MLM Opportunity May Be Your Ticket To Success By : Dustin Cannon
Are you interested in changing careers? Have you wondered how you could afford to be a full time stay at home parent? Do you want to set your own hours, career goals, and salary? MLM, or multi level marketing, just might be the ideal path for you.
|
|
|
|
|
|
|
|
|
|
|
|
|
