Most MLM companies make a profit
Network Marketing: What Is MLM?
In contrast to typical direct sales, in which the salespeople are employed by the company, network marketing is based on freelance distributorswho carry out this work as a main or sideline. Mostly these are satisfied customers who are recruited with bonuses, favorable purchasing conditions and high commissions. The idea behind network marketing is that the personal networks of the sales partners are used for targeted recommendation marketing - according to the motto: "You are more likely to believe a friend than an advertising agency."
Dedicated independent distributors function as Brand ambassador often better than expensive celebrities. The principle of micro-influencers in online marketing is implemented in network marketing outside the network in personal circle of friends. Word of mouth plays just as important a role here as it does in influencer marketing or viral marketing.
The internationally used term multi-level marketing (level = level) refers to the different ranks within the pyramid-like organizational structure. The company's sales manager has a few permanent employees who recruit freelance distributors who, in turn, recruit new partners.
If a sales partner generates sales, he receives one commission. The person who recruited him also receives a partial commission, and his sponsor also receives a share of the turnover. This principle continues right up to the top. In addition to the pure value of the goods, some of the commission should also arrive at the top of the company. It is quite common for a sales partner of a higher rank to receive more income through commission shares from the sales of the people they have recruited than through their own sales of goods.
In contrast to the classic corporate hierarchy, the levels in multi-level marketing only apply to the distribution of commissions. Sales partners at higher levels have no authority to issue instructions to subordinate persons. These flat hierarchy Many sales partners feel that they are very positive because they feel they have more direct contact with the executive suite. However, the sales partners in multi-level marketing have a significantly higher business risk than sales employees in classic direct sales, since their income is usually made up solely of commissions.
Most sales partners in network marketing excel high motivation even though they often have no commercial training, but only received product and sales training from the company. In most cases, companies reward strong commitment with two typical models: Those who are successful in recruiting new sales partners generate a high passive income through forwarded commissions. Plus, successful sellers can move up and earn higher commissions.
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