Today we are talking about MLM business model. We will explain what is MLM business opportunity and after reading our post you will know should you take part in MLM business or avoid it at all cost.
We will do our best to give you our unbiased opinion and highlight the good and the bad of this type of business model.
So what does MLM actually means?
MLM stands for multy-level marketing. This term is also known as network marketing, referral marketing and pyramid selling.
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HOW DOES MLM MODEL WORKS?
MLM companies create their revenue through their sellers who are part of their marketing network.
These sellers are not paid by the company but their earnings depend only on their skill to sell company products and/or expand their network of associates. Most MLM companies charge one initial membership fee.
After that you are ready to start recruiting more people to your network and sell products.
So, selling a product gets you some commission but in order to really succeed in these kinds of companies – you have to expand your networks of associates.
This is where lies the real income and real money for workforce in the MLM companies. Of course, this is not all the work.
After you recruit new members they need to start making sales and acquire new members. This is what you will need in order to succeed in this business model.
As you might expected, getting new people to join you is not an easy job. That is mainly because most people are drawn away from this type of business. Especially if you need those people to actually start and make sales of their own.
CAN I REALLY BENEFIT FROM THE MLM BUSINESS MODEL?
Yes you can – BUT ONLY IF YOU ARE THE TOP. Otherwise, you will just keep your hopes up with little or no results.
The biggest benefit from this type of business has the owner, or number 1 in the network. The lower you are in the network the less money you will earn that’s if you earn at all.
When you are recruited as a new member in any MLM company, you are firstly introduced to the system. Alongside company history, you are also introduced to the most successful members – either personally or just via some company brochure.
As we said in the beginning of the post another word for this type of sale is pyramid sale. This specific model works as a binary plan. Binary plan reperesents organizational structure used in MLM business from the 1980’s.
As it is shown on the picture below, new members have two downline distributors/member underneath them. It is also clearly visibile who gets most of the profit.
You will be one of these “nods” and your job is to expand your network and invite people who will buy company products from you and also become part of your network.
As you assumed, this type of marketing is also called referral marketing. So, this mouth-to-mouth marketing is not easy and really needs true dedication and patience as well.
Every new member dreams of one day having a pyramid of his own members. Theoretically, this is the best business model. In reality, most members lose more money than they gain. That is just a FACT!
NEGATIVE ASPECTS OF MLM BUSINESS MODEL
As we all know, this business model had some really bad reputation because of the similarity with famous pyramid scheme scams. Basically, this pyramid scheme scam works almost the same as MLM model.
Every member is promised a share in profit if they recruit new members to the network. So as in MLM business model, workers are not paid and are working only for the share in profit.
You first have to pay join in fee and after that you are one of the members. The accent here is on acquiring new people who will join the network on the same terms.
Biggest difference between pyramid scheme scam and a legitimate MLM business is the PRODUCT! If the accent is on recruiting new members and not actually selling the product there is high chance this business operates as a scam.
Pyramid scheme scam organizations are usually short term and only very small percentage of involved parties have real benefit. Usually those people are creators of this scheme. And that is the only truth about this type of SCAMS!
So if you decide to join MLM company, make sure you do a good research about the company status, feedback – both workers and employees, ask many questions and find different sources.
Some critics have the theory that MLM business is actually a legit pyramidal scheme some think that MLM is legit business opportunity.
HOW TO SUCCEED IN MLM BUSINESS?
Well, the best way to really be successful in this business model is to become a company member when the company is still new. This is because of how MLM system works.
The sooner you are a part of the new company network the greater the chances you are gonna be one of the top tier members – with big network and great profit.
Finding a new MLM company that are gonna be the next gold mine for this type business model is not easy. Why? Because, there is always a chance that this company could be running some pyramid scheme scam.
So you would not like risking your time and effort just find out you were used. Not to mention that participating and earning from pyramid scheme scam is ILLEGAL and considered criminal offence in many countries.
Having all this in mind, I would not recommend investing in becoming a member of MLM company.
You will spend more time without any guarantee you will become successful and actually earn money.
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Let me know in the comments about your previous experience with MLM companies.