MLM Basics describes the basic components of an MLM, or Multi-Level Marketing, business. Another common name is Network Marketing. When a company uses these MLM Basics in their business, they use independent distributors to market and distribute their products rather than the traditional methods of using paid advertising and resellers. They usually choose this model because the products or services they offer have unique advantages over similar products available elsewhere.
When using MLM Basics, the company uses distributors to share the story about the products so that potential consumers understand the benefits they offer. This is also known as word-of-mouth marketing. It is similar to you going to see a movie, really liking the movie and telling your friends about it. In essence, you are really marketing the movie for the production company – free of charge.
6 MLM Basics
The distributor signs up with the company and uses the products. They see how their life is affected and share the experiences with others. They are the main “voice” of the company to get the word out about the products or services.
MLM Basics encourages the distributors to recruit people into the business by talking to every one they know. The typically teach them to build a list that contains the names of everyone they have ever known and talk to everyone on the list about the business opportunity and the products.
MLM Basics involves team building where members of a team help each other grow the business together. Typically, a distributor invites a prospect to come to a meeting to hear a presentation which is usually in someone’s home or a hotel meeting room. The presentation is done by someone who has been in the business for a while and has had success — the distributor’s upline, who is someone who is higher up in the team genealogy.
4. Business Tools:
Typically, the company provides the distributor with a standard, or replicated website that they can do limited personalization on. The website has general marketing information about the company and products that can be used by the distributor for marketing. There is also a back-office where the distributor can track their team, or down-line. Basically, they can see who they signed up and how the business is growing. One important thing that is tracked here is volume – the amount of sales in the team for a given period.
5. Compensation Plan:
There are a variety of compensation plans that pay the distributor based on the volume their team generates. The commission paid out for a given period is determined by the sales volume generated multiplied by a percentage. There is usually a one-time bonus offered for each person a distributor recruits into their team as well. The larger the team a distributor builds, the greater the commissions they earn.
The biggest way volume is generated in a down-line is to have everyone on auto-ship. Auto-ship is where product is purchased by a distributor or customer every month. There is usually a minimum auto-ship amount a distributor is required to have to keep their distributorship active and qualified to earn commissions.
That is a brief overview of MLM Basics. The business model is very strong and can be very lucrative for all involved. It encourages distributors to support and help others to succeed. A distributor who is good at helping their down-line succeed will make more income that one who is not. This definition of what MLM represents describes the concept very well:
MLM = “Many Lifting Many”
Hopefully, this has given you a better understanding of MLM Basics and can help you see why it is becoming such a popular business model for both businesses and distributors alike.