Want to dive into the vast sea of MLM but don’t know what it is, how it works, or what are the benefits? Well, then you are in luck because we will explain all of these things in this guide. Read the content below, and you will have a precise idea by the end of this guide.
What’s Multi-Level Marketing?
It is basically a distribution business model that many companies leverage to get their products out into the market and directly introduced to their customers. Instead of going for the typical routes of offering the products to customers via an online store or a physical retail shop, they get help from sales reps to promote and sell their products.
The sales reps buy the inventory and sell it in their own way, like in person or online. The sales reps are not considered as employees; instead, they are the owners of their business because they are basically purchasing the product and reselling it.
The aspect of ‘multi-level’ means that the sales reps get their own sales reps, train them, and help them start their business selling the same products. This way, they earn a commission when the sales rep under them make sales.
How Does MLM Work?
It’s pretty simple. Let’s suppose someone named Sam starts his own MLM Company, and he has bought some great products to sell. Now, whenever he sells them, he obviously earns a profit. However, to further increase his income, he hires sales reps; Marty and David. He trains both of them and educates about the products.
Now, these two guys purchase products from Sam and sell at a profit. A small chunk of their profit will go to Sam as a commission because he brought them into the business and taught them everything. Now Marty and David can further hire their own sales reps to increase their incomes and the process will be repeated. Here are a few main terms you should know about MLM:
The sales rep who recruited another salesperson will be his sponsor, he will train and educate the new rep and earn a commission when he makes sales. In the above example, Sam is the Sponsor.
The person who is recruited by the Sponsor, Marty and David are recruits.
All the recruits that are brought into the company below a sales rep. So in above example, David and Martin and all the sales reps they will recruit will be Downline to Sam.
It’s the opposite of Downline, all the sponsors who came before a recruit are Upline; Sam is Upline to Martin and David and their recruits.
What Kind of MLM is Legal?
Many people are scared of getting into MLM because they have heard horrible things where people lost a lot of their money, and to be honest, they are not wrong. The problem is that when the sales reps get greedy and try to sell every kind of product, even if they are not good ones and focus on hiring recruits irrespective of their skills then the MLM turns into a scam. People who come in the last usually lose their money this way. So the ingredients of a legal MLM are:
- Excellent quality of service/product
- Focus on sales instead of blind recruitment
Remember, the money primarily needs to be made from the sale of quality products rather than form the recruitment of other people. This is the crucial factor that makes the MLM legal.
Benefits of MLM for Your Business:
As discussed above, you will be provided with tons of insights regarding how your campaigns when and also which leads are the best. It can even rank leads and give them scores based on how they performed.
So the next time, when you are creating another campaign, you can use this data to better prepare yourself, and instead of wasting time on unimportant leads, you can follow quality ones. This can help you turn your sales funnel into a money-making machine.
Benefits of MLM for Your Business:
- Increase in Sales:
One of the main benefits of MLM is that many businesses prefer it because of fast paced sales. So you can have some pretty good clients and won’t run out of business if you maintain a good standard.
Furthermore, if you promote god quality products, more people will be interested in joining you as sales reps.
- Low Risk:
There will always be risk when it comes to opening up a business. However, the level of risk is minimal with MLM because you will not need high capital to get started. Just some initial amount to get a few pieces of products to sell, have a customized system for MLM developed from a software development company for your ease and that’s pretty much it.
It all comes down to your marketing skills, the more you sell, the more you make and the more sales reps will come to you.
- No Need to Hire Anyone:
The beauty of MLM is that it is a self-sustaining model where the people selling products under you will earn their own bread and butter and you will get a small amount of commission from them.
Meaning not only you don’t have to pay them; they will pay you back instead. This is a great way to earn pretty good residual income without much overhead costs.
- Live with Freedom:
People who do legal MLM can go to any part of the world and run their business from there. You don’t need a brick and mortar institute especially.
Just having an MLM software or web application will help you keep tabs on inventory, sales and commissions.
Over to You:
If you are ready to dive into the sea of MLM and build a legit and legal business that sells quality products and become a reason for jobs for many sales reps then you can start with our help. We provide MLM software development service where we can do both; either make a customized system or do a clone system of a tried and tested MLM software.