What Is MLM

| July 23, 2011 | 5 Comments

What is MLM imageWhat is MLM?

Multi Level Marketing, or commonly referred to as MLM, is a another name for Network Marketing.  It is a combination of franchising and direct selling.

So, what is MLM?  Multi Level Marketing is a business where people are contracted to distribute products and recruit new Distributors to do the same.

Members of a MLM company earn compensation that is based upon the sales that they have achieved for a particular product or service.  Members also earn compensation based upon the production and sales of personally sponsored team members.

Common names associated with MLM

MLM ImageYou will often here Multi Level Marketing, or MLM referred to as ‘pyramid schemes’ or ‘ponzi schemes,’ which are considered illegal.  Because of this stigma that is automatically associated with MLM, many business owners prefer to refer to their MLM business as a ‘home based business,’ franchising, or sometimes, ‘affiliate marketing.’

Like we mentioned earlier, commissions are earned in the process of selling a particular product or service.  It is illegal to generate earnings in the form of ‘sign up fees’ or through recruiting alone.  There has to be a tangible product or service that is being offered and sold.

Going back in time…

Many companies got in trouble in the early 1980s for focusing only on recruiting, and not concentrating on distributing or stocking actual products.  This created that stigma that still follows MLM companies today.

The 1980s brought about major changes in the industry, and today, many companies perform as fulfillment firms by taking on the tasks of physically shipping products, paying commissions, and accepting orders from clients.

Fast forward to today…

Today, you will see a multitude of Multi Level Marketing companies.  Many of these companies are legitimate, and offer fantastic products.  Where they fall short is in the marketing training that they provide to their Distributors.  You will hear old-fashioned marketing concepts of utilizing the ‘three foot rule,’ or be encouraged to prospect amongst your family and friends.

Many Distributors are just simply unwilling to practice these methods, or their ‘warm market’ is just simply not large enough to sustain a business of this magnitude.  This is why we see such a high failure rate in the Multi Level Marketing industry.

Learn how to market on the Internet, and you can achieve success in any business that you choose to participate in!

Category: Online Marketing Topics

About the Author ()

Dave Fennell is the founder and editor of Marketing Methods Online and BloggerGo. Learn more about him here. You can also connect with him on Facebook, Twitter, and Google+
  1. Raylene Pouch says:

    Great post, I just like the way you write out this post.
    Just bookmarked your blog and will visit at least once a week.
    Please do feel free to email me if you have some exclusive information on this topic. Regards,

  2. cathy says:

    Am so glad to have discovered this site, as it’s really helpful. Want to develop some expertise as to how do my MLM business online. And it’s always amazing that people have trouble with the concept of network marketing, in that everything’s a network! I would far rather help an individual build their business as oppossed to the corporate big boys! In fact, MLM is one of the few ways a person can get ahead, IMO.

    • Dave Fennell says:

      Hi Cathy,

      MLM is a fantastic opportunity, but you have to know how to market it. You are smart to concentrate your marketing efforts on the internet.

      I am a very firm believer that the traditional Warm Marketing methods of signing up friends and relatives does not work for 99% of those who get into MLM. The Internet is the key!

  3. sonkohassan says:

    can i build an mlm business online while selling tangible products?

    • Dave Fennell says:

      Are you referring to products of your own? If so, sure you can. Everything will be dependent upon time management, and the time that you devote to both businesses. If you have the time, you can be successful in both endeavors! Does this help?

      Dave F.

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