21-09-2017, 11:22 AM
Multi-level marketing (MLM) is also called pyramid marketing network marketing and referral marketing. It is a controversial marketing strategy for the sale of products and / or services where the income of the MLM company is derived from an unpaid workforce (also called participants, and also known as "sellers", "distributors", "consultants "" promoters, "" independent business owners, "etc.) who sell the company's products / services, while the profits of the participants are derived from a pyramid-shaped commission system.
Although each MLM company dictates its own specific "compensation plan" for the payment of any gain to its respective participants, the common feature found in all MLMs is that compensation plans theoretically pay participants only for the two potential income streams. The first clearing stream can be paid from the sales commissions made by the participants directly to their own retail customers. The second stream of compensation may be paid from commissions based on sales made by other distributors below the entrant who had recruited those other participants in the MLM; in the organizational hierarchy of MLMs, these participants are referred to as downline distributors.
MLM marketers, therefore, are expected to sell products directly to end-user retail consumers through referral referrals and word-of-mouth marketing, but most importantly they are encouraged to hire others to join the company as fellow vendors so that these can become your downline distributors. Studies by independent consumer watchdog agencies have shown that between 990 and 999 out of 1000 participants (ie 99.0% to 99.9% of all participants) in MLM actually lose money.
Although each MLM company dictates its own specific "compensation plan" for the payment of any gain to its respective participants, the common feature found in all MLMs is that compensation plans theoretically pay participants only for the two potential income streams. The first clearing stream can be paid from the sales commissions made by the participants directly to their own retail customers. The second stream of compensation may be paid from commissions based on sales made by other distributors below the entrant who had recruited those other participants in the MLM; in the organizational hierarchy of MLMs, these participants are referred to as downline distributors.
MLM marketers, therefore, are expected to sell products directly to end-user retail consumers through referral referrals and word-of-mouth marketing, but most importantly they are encouraged to hire others to join the company as fellow vendors so that these can become your downline distributors. Studies by independent consumer watchdog agencies have shown that between 990 and 999 out of 1000 participants (ie 99.0% to 99.9% of all participants) in MLM actually lose money.