About multilevel marketing

For those who need an explanation, multilevel marketing (which is usually known for the acronym MLM) is a sales scheme in which a manufacturer or a service provider recruits salespeople to distribute and sell their products or services in an independent manner. By 'independent', we mean that these salespeople are not formal members of the company and do not receive any fixed compensation for the work they do. They just receive a commission for the products they sell.

If you place MLM under this light, it doesn't sound very fair for the average salesman or distributor. Taking this into account, the company usually agrees to compensate the distributor by granting him the additional right of receiving extra commissions for the sales that other salespeople he referred to the company do in turn. Thus, the more salespeople a given distributor of the MLM company refers, the higher his possibility of achieving a high commission for the sales he contributes to the company.

The conflict

Multilevel marketing has been largely observed and criticized since its first appearance in the 1960s. There are multiple reasons, but the main two are below:

One is that, because of the fact the multilevel marketing sales scheme grants additional commissions for the sales other distributors referred to the company provide, people tend to sign up to multilevel marketing schemes not to try to sell the product or service the company produces (which is the real end), but to try to get huge networks of salespeople under them and live upon the commissions they hope to get from "their own" distributors.

Disgracefully, the people they sign up usually try to do the same and no one tries to sell the product to any potential customer.

The other is that salespeople are usually motivated to sell the products of the company to their own friends and relatives, which both in the short and long term damages their relationship with them.

A few advices

I will not explicitly tell you not to sign up to a multilevel marketing company. There are many successful cases here and there, so MLM can be a relatively effective way to sell for both manufacturers and intelligent distributors. You must been careful with it, however.

Remember you are signing up to a multilevel marketing company to become a distributor, that is, someone who will try to sell a product and earn a commission in exchange. Do that.

If someone suggests you to start a team, agree and work in it, but only a limited time. If you dedicate your time into trying to build a team, you will fall in the vice of trying to earn commissions without selling and you will lose a lot of both: time and money. Reserve only one or two hours a week to build your team. The rest of the time, try to sell the product or service you are supposed to promote.

Remember that multilevel marketing is a work you can do in your free time only, specially if you are just starting. People may tell you a lot of stories about how people made themselves rich in a very short time and those stories may be true; but the real truth is that the large majority of multilevel marketing salespeople never achieve this because they never engage themselves into selling seriously.

In the same fashion, never quit your job for your multilevel marketing business unless you are absolutely sure you can live at least one year without working to focus your time and money on that.

Keep your family and friends very away from your MLM business. It is not fair to ask your relatives to change their purchasing habits to help you with your new independent business. It is not fair to ask them to introduce you to their friends and relatives to help you increase your network either. Keep them away from your business and things will not change with them.

Last but not least at all, do not forget who you are in a multilevel marketing company: You are a salesperson without a fixed wage who will earn commissions only. Focus on what you need to do to get them.

Good luck.

Colleagues + Entrepreneurs