What is MLM?
MLM or Multi-Level Marketing is another term for “networking” or “network marketing” wherein a particular product is marketed by literally a whole network of sales personnel. In most cases, these personnel earn money with the products that they represent and sell. It is also common for sales personnel to be tasked with recruiting other people to sell the same products and have a share or commission on the sales of the people he/she recruited. This concept creates a somewhat pyramid or hierarchal sales network where one sales personnel can receive multiple levels of commissions and compensation. Because of the pyramid-style of the sales network, MLM is also referred to as “pyramid selling”. Others also refer to it as “referral” selling since most sales personnel are encourage to acquire new recruits or referrals while at the same time selling the products involved.
Healthcare and nutrition companies are the most common to use MLM as a marketing strategy. Nowadays, it is common to come in contact with people who engage in direct selling of nutritional supplements and other healthcare products. But MLM is also employed by other companies that sell basically everything from books, household items, insurance, and even credit cards. A person who gets hired to be part of a multi-level marketing team usually is given two options to earn a living. The first option is to basically sell the product/s of the company to other people. But this option usually does not really earn much for the sales personnel. To earn more money, most sales people simply recruit others to be part of the network. In this way, one sales personnel will have a network of other sales people under him/her from whom he will also have a share or commission.
Many companies who are into MLM usually recruit new sales personnel by enticing them with a “get-rich-quick” campaign. With this sales technique and the pyramid-style of generating commissions, many people disapprove of this strategy. Others also view it as a scam since more emphasis is put on recruiting new sales people rather than selling the actual products.