"Multi-level marketing (MLM) also referred to as Network Marketing is a business distribution model that allows a parent multi-level marketing company to market their products directly to consumers by means of relationship referral and direct selling.
Independent unsalaried salespeople of multi-level marketing referred to as distributors (associates, independent business owners, franchise owners, sales consultants, consultants, independent agents, etc.), represent the parent company and are rewarded a commission relative to the volume of product sold through each of their ndependent businesses (organisations). Independent distributors develop their organisation by either building an active customer base, who buy direct from the parent company and / or by recruiting a downline of independent distributors who also build a customer base, expanding the overall organisation. Additionally, distributors can also earn a profit by retailing products which they purchased from the parent company at wholesale price.
Distributors earn a commission based on the sales efforts of their organisation, which includes their independent sale efforts as well as the leveraged sales efforts of their downline. This arrangement is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager. Commissions are paid to multi-level marketing distributors according to the company’s compensation plan. There can be multiple levels of people receiving royalties from one person's sales."
Pretty dry stuff huh? But, there are some interesting statements in this definition. Let's take a closer look shall we?!! Now, it may get a little complicated, but so is marketing on the internet these days. Stick with me on this there is a method to the madness.
Now, as I read this definition, there are two parts to Internet Marketing one, is the attempt to build what we call a down line or in my line of work i call them "reps". A rep actually works for a larger company on a commission basis only if and when they generates sales. The other, is becoming a distributor where you can sell multiple product categories on a volume basis to create residual income and profit.
Let's focus on the first part of this definition for a moment. If you Rep a product, usually the company has multiple product categories and you can obtain distribution on a bulk basis in order for them to retail it in business outside of the internet. So you are selling many products on a commission basis to your distributors or "down line" for them in turn to retail. However, on the internet, it seems all too often the focus is on selling a single "system", a one true way, so to speak, with a large one time pay out with no real distribution on the other side to generate any substantial residual income or profit. So in other words, you have to sell the system to a new distributor each time in order to get paid for your hard work and effort promoting someone's "how to and i do it better than the rest" guide.
In short you spend all your time networking, marketing, promoting and trying to sell one thing.
Now the second part of the definition discusses representing a company that allows you to not only grow distributorship but also retail product yourself. Looking at this model in the short term, the pay out may seem a lot smaller than the previous model. I know the lure of a big pay out is tempting but hear me out. If you represent a company that has multiple streams of income and pays you a commission per sale through your distributorship and your own retail
sales the numbers start to add up to equal or exceed the big one time pay out package with a lot less investment of your time and the residual income is yearly not on a one time basis.
In short you have multiple ways of selling and
promoting your product to the same individual.
A good, better, best business profile.
Let me slow it down for a minute so I can make my
point. Network Marketing, is simply the art of selling.
You have a choice on the internet which way you want
to develop your income. One model is the Rep, on the
Internet, a Rep sells a "system". The "system" being
one that you buy into that has a large 1-up, as I see
it, one time pay out per sale. You are selling a program
that someone else controls. Typically you spend your
time Networking seeking interested individuals to
become fellow distributors and buy the system. He in
turn needs to do the same, and so on and so on.
What's missing here is who does the distributor get to
retail to? No one. How many other categories of product
do you Rep for the company? None. How much time and
how many people do you have to present the offer to?
An incredible amount. How many say yes? Very few.
For example, you are a Franchiser trying to sell another
Franchise to someone else in order to get paid. Ask a
Franchise owner of McDonald's how much money they
would make if they could only sell Franchises instead
of billions of burgers at $3.00 bucks a pop. Not much
if you look at the yearly sales and time vs income per
sale. On the other hand, the Rep who can sell both a
distributorship (aka Franchise) as well as sell product
(the burgers) may make less per sale, but has the
opportunity to have more success and a higher dollar
income per year because they are diversified. So the
odds of Networking and making either a retail sale or
a wholesale sale per lead is far greater. The time
spent per individual you Network with ends up being
a greater payout. The odds are simply in your favor.
The road to success is always paved with good
intentions, the reality is, you can't spend all your time
training and pitching. At some point you need to start
selling and building a business. So the question is,
what is your time worth? What is your perceived value.
How do you want to sell in it? Training and pitching to
people on how to sell someone elses "system" to others
or selling wholesale distributorship along with retail to
the masses with an infinite number of sales potentially
available with little or no time training?
The day of the one time big pay out "systems" are slowly
coming to an end. "Marketing Systems" have a defined life
expectancy. Over time the market becomes saturated.
Eventually the well runs dry by the sheer numbers of it.
As the down line forms, more and more people understand
the program less and less. It gets watered down, like that
game "telephone" where in the beginning everyone
understands the program and the internet but somewhere
as the line gets longer, the message gets garbled and the
meaning and intention are lost. The value of your
investment decreases as the number of investors rises who
are leass and less satisfied with what they have invested in.
They give a large sum of money and get nothing in return.
They are told to "leverage". Leverage in this case
means charge a couple of thousand to your credit and being
told that you will make the money back in 30 days. What if
you don`t? Then what? You are now in debt, scrambling for
as many leads as possible to make a sale out of desperation.
This is not sales folks, this is not Network Marketing,
this is panic mode.
If you take a step back and act as a business person,
the slow and steady daily income, and the built in residual
income that comes with it, is a great way to build and fund
other opportunities. All too often I see people investing in
large expensive programs without have any way to fund
them. Build your business, Network and Market yourself.
Build your relationships an income and more importantly
take on other programs slowly. If you want to be a
Representative of multiple products, make sure you can
produce sales on your own and have the customer base
to sell it to before putting yourself in the red.
That my friends is good business, good sales policy.
Then you have something very special to Market on the
Network we call the Internet.......
As always, feel free to contact me with your questions.
I enjoy passing along information that helps you growyour business.
Keep those questions coming!
Wishing you success this week.