informations about MLM / Network Marketing
Take comfort, only a few know this modern way of ditribution..
A reason that he is marked with a lot of misunderstanding.
Creativity at the pulse of time.
Learn some basic-elements of MLM and become familar with the system.
MLM stands for Multi-Level-Marketing
Other terms are Network-Marketing, Recommendation-Marketing, Structure-Distribution,
Snowball- or Pyramid-scheme. Especially this last two words leading often
to negative associations, since this distribution-model and it's quick
growing potential is perfect to make quick money. This fact and the widely
poor knowledge about the true function of this marketinginstrument is
unforunately also utilized by black sheeps promising the "get rich
quick"-fairytales. And becouse the system works that perfect, also
negative rumours are multiplied booming.
The basic-concept is quite simple:
MLM base on (personal) recommendations, utilizing the most powerful weapon
in advertising -
How often are you recommending a movie, a new boutique or a nice restaurant
to friends? Do you get paid for this? No - usually not. If you refer a
product or a service from a company using MLM as way of distribution you
will get paid for this.
And if your friend (and new client) you referred, recommend another person
you also receive a commission and if this friend from your friend refer
you earn again ..... and so on over several levels (Multi-Level) - becouse
it was you who set the ball rolling.
Imagine, for every new guest you recommend a restaurant, you receive a
steak for free. And if this guest refer another guest you will get the
hors´doeuvre - for the next new guest in this chain you will have
a free desert, free wine, bread, soup, coffee, digestive and finally you
could have your daily lunch and dinner without paying a single cent.
Sure this restaurant will become famous without investing in advertising
and it would be overcrowded every day.
The money the owner save on advertising he pass to his guests, which will
return again and again. They will not only become loyal guests, but also
his best salespersons.
What sounds in this example like a complicated and non-organizable bonus-system,
is - thanks the modern technology, software, databanks and internet -
easy and quick administrable. Finally, you won't get salad and sandwiches
but real cash, which is easier to calculate with.
Multiplication-effect as drive to growth for everybody
The strenght of this system is based on the multiplying-effect, which
make out of a handful satisfied clients (and who will not be satisfied,
if not only the product and the service is perfect, but also he receive
commissions) within a few levels an enormous client potential.
Remember the example with one ricecorn on a chessboard - by simply doubling
on the last field would be already the complete rice-harvest from china......
In practics MLM-companies pay over 3 to 10 (seldom more) tiers commission
for recommendations - anyhow the multiplication-effect is quick recognizable.
Especially, if you base the calculation not on the basic-number two, but
an higher number - in fact everybody knows more that just two persons
he can refer to something.
If the basic-number is just 5, such a structure will have more than 10
million people within 10 tiers and by multiplying with the factor 10 the
million is reached in level 6 already.
Facing this tremendous numbers, a small percentage commission will be
enough to make a millionaire or at least a longlasting high income.
The possible width of a structure (i.e. how many persons someone can
refer in his first line and bring into business = "to sponsor")
may vary as well as the depth (how many levels / tiers the structure got)
of the matrix. In some case the width is unlimited and everybody can enroll
and lead as many partners he want, other systems limit the width (usually
between 2 and 10 "firstliner" = partner in the first, direct
In case a structure is limited and someone recruit more partners as he
got spots in his first tier, the new members will usually placed "forced"
somewhere deeper in his structure and come as the "spillover"
to the downline-partners.
The type of a structure is described by the width, the depth and the information
what will happen to additional recruited persons.
" 3 x 5 forced matrix" means, that everyone may have 3 partner
in his first level and will get paid over 5 tiers. "forced Matrix"
means the frame of the scheme is fixed and every additional partner will
be placed deeper in the structure according to the marktingplan. The downline
will take adventage from the spillover of their upliner. In this example
would be place for 363 persons, most of them (243 persons) are placed
in the 5th. Level.
"Unlimited 6 Levels (or tiers) Matrix " means everyone may
have unlimited partners in his first level and payment will be done up
to level 6. Theoretical the number of partners would be indeed unlimited;
only the depth of 6 levels set the frame, but not the width.
Overall (most) structures are usually open on every side - the company
itself can (in most cases) enroll directy unlimited partners (some pass
them volountary to the downlines as incentives or by random-selection)
and also in the depth is usually no limit. This means, the distribution-scheme
itself may have even 1000 tiers, but commissions will be paid mostly over
a noticeable and economical possible number of tiers.
Moreover there exist various (rare) special-forms of structures (e.g.
closed matrix, which accepting only a limited number of members in their
club and close when the number is reached, reversed matrix, where new
members will be placed from the bottom up and some with - in some rythm
- changing placement of partners) - to explain all these rare types would
be too much.
A science with history and even more future.
This kind of distribution is a science of it`s own - teached since several
years at the Harvard Business Universits (and many other institutes own).
The best of this science is, you don't need experience or special knowledge
for a successful use.
History of MLM starting in the 40ties, when California Vitamins (later
Nutrilite) first time rewarded their staff in such way. Two employees
startet a bit later an independent company: "Amway" (American
Way), today one of the stars at the N.Y. stock exchange.
Till end of the 50ties there had been only approx. 30 Structure-sales,
before some black sheeps started "headhunting" (they gained
the income by recruite new partners only, without selling a real product
behind). They discovered the system as a money machine, which based the
terms "snowball- resp. pyramid-scheme"
End of the 70ties the judgement of the causa "Federal Trade Commission
contra Amway" based the legal security. Since this time Network-Marketing
is a boundless legal way of distribution, which is just about to boom,
utilizing the new technologies. While Amway-representatives had to go
a long way to build a structure with millions of consulters, Alladvantage
grew in 1999 within just 6 month to 4 million partners - only promoted
In a time, when more and more people looking for a profitable second
income without sacrifice all their free time or searching for a job, they
can do from the comfort of their home, this form of business - MLM by
Internet (the actual "Network Marketing") - come to the right
time. Also changing consumer-habits and the growth of e-commerce aid this
Beside the pure structure-distributors (Amway, Avon, Herbalife, Forever
Living, ...) more and more companies, which selling usually in classic
ways, discover MLM. Since years already businesses as Coca Cola, Microsoft,
AT&T, IBM, Gillette, Sun Microsystem, Netscape, AOL, Oracle, Colgate,
Citibank, Xerox, Texas Instruments, General Motors, General Electrics,
Toyota, Donauland, Otto-Versand,..... , realized how powerful personal
references can be used and how efficient clients can be tied to the company,
if they get paid for their referrals and they are acting as reseller.
All these firms are selling already some of their products and services
this way or use "recommendation-marketing" for promotions.
In fact, many men running this kind of business without knowing it: A
referral-premium from a readers club, the friendship-offer for a newspaper-subscription,
the cellphone for the partner, or "2 eat - 1 pay" coupons -
all this are parts of referral-marketing, even it is not obviously the
look of a multi level structure - the basic idea is still the same.
Be your own boss - same chances for everybody.
Most fascinating in MLM is the fact, that every partner in the system
is his own boss and everybody got equal chances.
To enter this business is not linked with high capital, sophisticated
skills or education and experience. While the establishment of a "normal"
business (a store, resturant or some service) is risky and needs a lot
of funds and also franchising requires high investments (even the risk
to start is lower), the start as a partner of a Network-Marketing business
needs no money at all. Usually a own purchase is good enough to become
a reseller, receiving commissions and reach management-positions, leading
No matter when and in which position someone enter a structure, he will
find exactly the same conditions his sponsor got and his future partners
Everybody starting at the groundlevel and can bring as much clients and
partners in the business his structure allows. The income of everybody
is only determined by the own efforts and the efforts of this partner
he recommended in this business.
Within the whole structure, led by the administration and organisation
(in charge for the daily work, storage, shipment, billing, accounting,..
), there can grow eternal single structures in a self-dynamic process.
Everybody is a part of the whole structure, a part of smaller cells and
head of an own cell as well.
A system brings advantages for all.
A company utilizing MLM will safe the usual high costs for promotion and
marketing (employed sales persons, wholesellers, intermediates) and prefer
to pay this money ti their clients, which act as consultants. Finally
they know the product from their own experience and recommend by their
"Only a believer can convince others" (Sokrates)
More clients, more referrals, more consulters means quicker growth, bigger
purchase-volumes and better prices for the clients.
Becouse of the nearness to the base (no exporters, importers, sales-reps.,
intermdiates, wholesellers, detail-shops in between) the company knows
exactly what their clients want and can react very flexible to changing
markets - a great advantage for every reseller - and closing the cycle
of advantages for all partners.
Partnership and solidarity as philosophy
Top of philosophy in MLM is the cooperation to reach one common goal.
This community exist over all borders and across all languages. In this
connection the single cells within the whole structure take effect. This
cells stay independent and every individual can bring in himself and his
ideas more or less - just as in his nature and depending on the time he
want to invest in his business.
No matter, if someone just want to recommend a few friends or if he want
to take responsibility in leading a team, if he wants to build a regional
distribution and organize regular meetings, or bring the distribution
by translations and own websites to new countries - within the struchture
there is place for every task and all skills are requested and honoured.
Everybody can work as independent and free as he want or follow the tested
advice of his sponsors - work as much or as less he wants - absolute individual.
Organisation and support comes from the top and is transported - step
by step - all the line down. Even there is no "down" in such
a construct, becouse everybody us in the same moment down as well as on
top and in the middle.
Amid a network of relationship - the basic if every human coexistence.
Work one time - earn residual income.
Nature of MLM-systems is also to create a steady, residual income by a
one time effort in building a structure of clients and resellers.
Suitable for structure-sales are especially such items, which are reculary
consumed and bought again and again automated. (subscriptions, re-consumption-products,
continous service). Best, if the item sells like toilet-paper.
Over the internet best sold are such products, which are worldwide understood,
used and bought, which are easy to explain and can be shipped woth no
problems. Even better if shipment plays no role at all, becouse the service
can be sent and used online directly over internet or the item needs no
costly storage, handling, packing and delivery. (software, means of communications,
financial services, education, consultations, information, etc.)
But MLM may not end in itself. It is just a way of distribution - for
products, many people need and would buy them at same conditions and prices,
even if there would be no business-opportunity connected with. In the
foreground always a marketable product have to stand - Network Marketing
must not be a pure money-reshuffling instrument.
What doing networkers?
The task of everybody within a strudtured distribution is to advertise,
refer products, demonstrate, advise and to sell as well as to recruit
new resellers, to educate and to support them. The main job in Network
Marketing (the part of MLM which is supported by internet in special)
is to do advertising, to recruit and guide the new members. The selling
itself is usually done by the webpage, which the partners get and all
the organisation (shipment, accounting, etc.) is done by the company direct.
Thanks the modern means of communication, the inconvenient door-to-door
selling is not longer necessary and there is no more need to force all
relatives to participate. This (not unfounded) reservations from people
without sales-skills had been hindering many to join in a structure selling
scheme. Today that's history. In the age of internet and global electronical
advertisement the sales-region got no more borders; clients and pertners
for a good network-program can be found everywhere in the world - not
just around the corner.
A global, longlasting business model.
Even the buildup of the sales-structure happens quire quick, in a serious,
stable MLM-business nobody must be afraid to be too late.
While the first pioneers have the hard work to build up the structures
and will be rewarded accordingly with a first wave of signups, the others,
joining at a later moment participate from the growing recognition of
the brand and rising trust. Those, who hesitated in the first time often
join after years, as soon they hear from more and more others, that the
system and the company works. The sceptics usually hustle into successful
MLM-companies only after 5 and more years - after some of his friends
already receive a continous high income. This sceptics pull other sceptics
- a continous process of growth and renewal.
"Panta rei" - everything is flowing.
The idea that someday everybody in the world takes part in some Network-company
and will not find new partners any more will be a theoretical gambling
with numbers forever and a complete illusion. Not only daily new men are
born, growing up and start looking for a kind of income and always new
products come into the market, also the needs of men and market situation
changing in constantly quicker cycles. Ist not the product dictating the
market, it's the marked dictating products.
Task of a MLM-company is to react to the needs and changes of the market
in a flexible way and to supply the distributors with always new, requested
products, which acquire always new sorts of clients and co-worker. Finally
the capital of such a company above all is the powerful distribution-apparat
and the existing frequent buyers. An client- and market-orientated business
knows how to utilize this capital.
Today not the products determine the market, but the market dictates the
products - and whoever is closer to the clients and quicker in the market
will make the running.
Network-Marketing means creativity at the pulse
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