Multi-Level Marketing
Multi-Level Marketing (MLM) is a term which is referred to as network marketing, direct selling, referral marketing, or pyramid selling.
Multi-Level Marketing has been designed to create a marketing and sales team by compensating individuals for the sale of products that they generate, as well as for sales from other promoters to the business. Downlines of distributors are created as well as multiple levels of compensation hierarchies shaped like a pyramid. (see the diagram to the right)
Put more simply, Multi-Level Marketing is a sales system where each sales person gets a commission for each of their own sales, as well as a smaller commission on the sales of individuals that they introduced into the business.
Some things to consider before participating in an Multi-Level Marketing business:
- Perform research on the Multi-Level Marketing business. Find out the company name and perform diligent research on the Internet. You can also contact the State Attorney and Better Business Bureau for additional information.
- Find out who pays you and how the compensation plan works. Are the commissions primarily for recruiting others to the business, or are there also commissions for selling products?
- What is the market for the products that are being sold? Are they asking a reasonable price and is there a market for these products?
- Are there real products being sold to consumers?
- Do you like the products that are being offered and would you purchase these products if you were not involved with the Multi-Level Marketing?
- Is there training offered so that you can train others who join the business?
- Is there a money back guarantee if you are not satisfied?
- How much is the initial start cost and what are the requirements to be involved in the business?
- How early are you getting involved in the business?
- Are there products actually sold to consumers?
Characteristics of a Legitimate Multi-Level Marketing Business
- You can become a distributor of products and services by building, training, and managing your own sales team
- Income is not dependent upon signing up downline sales representatives
- Sales representatives sell products to individuals
- The compensation plan provides sales representatives to make income selling products rather than just recruiting sales representatives.
- Distributors can sell the product for a fair price and do not have to over purchase stock
Some Warning Signs of a Pyramid Scam
- Income is dependent primarily on recruiting downline sales representatives
- Products include certificates, tokens, chances to participate in games, clicks, etc. rather than something that you would buy outside of the business
- Member discounts through using a shopping portal
- Pressure to sign up quickly and agree to pay a large amount of money before sales claims can be verified
- Promises that you can make a huge amount of money or that profits are guaranteed or claims that profits are easily achieved
- Initial fees that are much higher than any of the products, training, or kits that are being provided
- Lack of willingness of the sales person to provide disclosure documentation when requested
Where can you go to learn more?
Websites:
http://www.mlmwatchdog.com
Forums:
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