A Basic Guide To The Multi-Level Marketing (MLM) Network

Multi-level marketing (MLM) is also referred to as network marketing. The MLM is essentially a type of business model that combines direct marketing with franchising. The term business model describes a vast range of informal and formal models that are used by companies to represent various aspects of business, such as operational processes, organizational structures, and financial forecasts.

The MLM business functions by enrolling un-salaried salespeople to sell products and meanwhile earn additional sales commissions based on the sales of people enrolled into their downline, an organization of people that includes direct recruits, recruits' recruits and so on.

This arrangement is similar to franchises where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager. There can be multiple levels of people receiving royalties from one person's sales. New MLM members may be required to pay for their own training and marketing materials, or to buy a significant amount of inventory to start their career.

The compensation plans vary from one MLM business to the other, but there are basic plans in place. The Unilevel or Stairstep Breakaway plans are the oldest and most popular in the MLM business. These plans features two types of distributors either managers or non-managers.

The pay method of these plans includes Baseshop overrides where there are overrides of managers from their subordinate non-managers. This method is the same as any other type of sales organization. Generational overrides are overrides of managers from the baseshop of managers who were previously their subordinate. Most plans compensate at least three generations of such managers. Executive bonuses are commissions for managers who exceed a posted sales quota.

For example, 2% of the total company sales revenue may go to a bonus pool that is shared monthly to managers who exceed $10,000 in that month. Commissions are based on the aspect of cycles, where a distributor is paid a fixed amount whenever both legs achieve a certain number of sales units each. Commissions are paid incrementally when the sales volume in each leg matches.

In recent years, the MLM business has developed an image problem due to its resemblance to the illegal pyramid or other similar schemes. MLM businesses operate in the United States in all 50 states and in more than 100 other countries around the world.

Many pyramid schemes try to present themselves as legitimate MLM businesses. In the legitimate MLM companies, commissions are earned only on sales of the company's products and/or services. No money may be earned from recruiting alone through sign-up fees, though money earned from the sales of members recruited is one attraction of MLM arrangements.

A commonly adopted test of legality is that MLMs follow the so-called 70% rule which prevents members "inventory loading" in order to qualify for additional bonuses. The 70% rule requires participants to sell 70% of previously purchased inventory before procuring new orders.

There are however variations in interpretations of this rule. Some attorneys insist that 70% of purchased inventory should be sold to people who are not participants in the business, while many MLM companies allow for self-consumption to be a significant part of the sales of a participant. The Federal Trade Commission offers advice for potential MLM members to help them identify those activities that could be scams.

Keith Walden is an experienced Networker and is currently involved in Energy Deregulation. Visit his site to learn more at www.energy4profit.com

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The Power of Leverage in Your Online Marketing

In the world of online marketing there are a number of strategies that have been developed over the years that are strategies that are tried, tested and true when it comes to starting a home business. The only caveat that should be added to that statement is that some business marketing strategies will only work for certain niches, whereas others are good strategies to pursue in general.

There are a couple of strategies that people use when they want to get their business off to a roaring start and these strategies can certainly have a much better chance of doing that than anything else currently being used as a marketing strategy so long as you do it right. These two strategies are known as affiliate marketing and network marketing. Take a look below to see what they can do for you!

Affiliate Marketing

Affiliate marketing is absolutely the best way to get your business off to a strong start and this is primarily because you are leveraging the work of others and the time that they will spend to promote your business for you. In affiliate marketing, people that have nothing to do with your company, your business or your product will sell your product on your behalf in exchange for getting a cut of the profits.

For example, on a major affiliate marketing website like Clickbank a typical product that is sold for $50 might give anywhere between $20 and $40 of that money to the affiliate that inspired the sale. This allows you to market on your own (for the full $50 per product) as well as enlist the help of others on the terms that you only pay them when they make a sale.

Some affiliate marketing programs will also allow your affiliates to recruit other affiliates to help out and this means that in addition to giving the affiliate that makes the sale a cut of the profits, a much smaller cut of the profits would also go to the affiliate that brought them into the product sale.

This is also known as multi-level marketing and if you are someone that wants no part of multi-level marketing, it is important that you register your product either with an affiliate service that does not use it (like Clickbank for example) or that you simply do your own affiliate program on your own terms without help from any of the major affiliate services.

Network Marketing

Network marketing is very similar to affiliate marketing in the sense that network marketing allows you to recruit people to sell your products for you. The difference between network marketing and affiliate marketing is that network marketing usually has multiple products and multiple levels, whereas affiliate marketing usually refers to one product and one level although that is changing.

Network marketing is much more appropriate if you are planning to offer a line of products that you would like people to sell and therefore building up your network of distributors at the same time that you are creating the product lines is a good idea.



Keith Walden is a home based entrepreneur who earns multiple streams of income. For more articles, resources and home business opportunities, visit www.Unlimited-Profits.biz


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MLM versus Internet Marketing (Guest Article)

I am an active Internet Marketer (IM), but a few of the affiliate programs in my IM portfolio are also MLMs (Multi-Level Marketing). I have simply chosen Internet Marketing as the way I like best to promote them.

A few years ago, when I was involved in "traditional" face-to-face MLM, I did well enough in the income department, but I did not like weekly meetings, three-way and conference calls, and chasing people to join me - or once they joined, chasing them to be active themselves in promoting it.

Internet Marketing attracted me because first, I love marketing and promoting, second, I can do it on my own time, at my own leisure anytime, day and night, and third, because I believe I am "visual" and I need to think about things and examine them before acting. In other words, I am not typically "spontaneous" and never liked the demand in "traditional" MLM to think on my feet and make snap decisions or judgements. Some people are good at that. I am not.

Now I am thoroughly immersed in Internet Marketing and thoroughly enjoying it. The few MLM-style programs in my IM portfolio can be successfully developed via IM. Some of the team-building principles are the same - like training and sponsor support - but it can all be done via the Internet.

I suppose my point, and the bottom line, is you have to find what is right for you. Not only what product or program you want to promote, but also the style or method of promoting it.

There is no "best" or "right" way to market. It all comes down to the best fit for you, personally. That usually requires some time and effort on your part to research the opportunities, and it could mean some trial and error until you DO find that right fit, but the important thing is the goal. Where do you want to end up? How do you define success?

Once you determine the goal, you can then start putting the steps in place to achieve it.

MLM or Internet Marketing? Whatever it takes! Remember the saying, "If it's going to be, it's up to me."

GT
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