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What is Multi Level Marketing ? - MLM - How it Works

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Posted 04 April 2012 - 07:23 PM

What Is Multi-Level Marketing?

Multi-level marketing or MLM has been present everywhere even before the internet was born. Before it was done through calls, snail mails, or meet ups. Now with the internet, you may not even have to leave your home to make money.
Using the internet for MLM can be so easy. There are many sites that allow you to make free calls, and video-calling makes conferences easier. In any number of ways, you can utilize your internet to expand your customer base and prospect for more people to work for you.

The Basics

Basically, multi-level marketing is a way to earn money not only by selling products, but by getting other people to work for you and sell the products as well. By doing this, you get a commission from the new person and/or from his sales. It is basically a network where you are on top, and you have people working for you.

As a seller, you are referred to as a salesperson. In some companies you do more of prospecting for new members than actually selling products. This is done to expand the business. Without an expanding base for salespeople, most multi-level marketing businesses fail.

If you forget the name of the job, just remember what MLM stands for. It is a multi-level business with you always in the middle of a higher or a lower person. The higher person is the one who got you started on the business. The person lower to you is your ‘new person’, from whom you will earn commissions. Marketing means the business relies wholly on your ability to market both products and the company.

How It Started

MLM started centuries ago, although it gained the name later on. People usually get into this before through buying and selling. That kind of MLM however, is not effective as there are hardly any connections to the recruiter and the person recruited. As a result, the network gets ‘broken’.

How It Works

The network starts with a person who wants to start a business of, say, selling shampoos and soaps. He begins to ask other people if they are interested in selling the products as well. He tells them that there is a fee that they have to pay which includes some products to sell and other documents. These people on the second level will get a commission if they get other people to sign up as well, and so on.

MLM is incentive or commission based. It markets both products and membership, which attributes for the term networking. One person is always higher or lower than another. These networks are maintained by trainings, seminars, or meetings.

Other Names

Other people prefer to call this referral marketing, because they focus on the prospecting aspect of the business. Others call this product marketing because they go more into getting the products sold. Sometimes, these people become members just to get a discount on the products which they use themselves. Both ways involve the marketing aspect of the business.

Things To Do In Multi-Level Marketing

Because of the large payoffs and great salary, more and more people are interested in multi-level marketing. While it is a great way to earn money at home, there are some things that you need to avoid when facilitating your business. Here are some tips to help you achieve success.

Never Say, “Work Under Me”

That just scares people off. Because there is already a bad reputation going on with MLM, you need to be careful with your choice of words as much as possible. Most people short-term MLM as pyramid scams, when these are different.

Working under you automatically means that the money that they will pay you for a starter kit will actually be money that you will earn. Some people immediately get scared of this. Instead of saying that they will work under you, tell them that they will work with you. That way, they know that both of you are basically doing the same thing—getting other people to join and selling the products as well.

More Action, Less Thinking

Once you get someone to work for you, have them get involved as much as possible. This way, that person will doubt what he is doing less. Have him read through the company’s profile, or listen to prospecting calls. You will get your new person to think that his job is manageable.

Even in doing prospecting calls, it is more advisable to have the person on the other line do things. Instead of explaining to him what the company is and what it does, have him get a pen and paper. Let him write down the company name. Have him answer questions instead of asking.

Never Mind Your Own Business

It is a network, not an independent venture. So whenever you feel like you cannot do it anymore, plug into the network. Hear other people’s stories, and get inspired by them. Occasionally, you will feel burnt out. That is perfectly normal. In a job like this, you have to work independently in prospecting but not in inspiring yourself.

Go to seminars and other talks on the weekends. Not only will you learn more innovative ways to become more successful, but you will also meet people. You will learn secrets that they will never tell anybody outside seminars.

Do Not Be Judgmental

If you do not want customers to judge the company based on its nature, then do not judge your fellows as well. Most leaders get carried away—they get mad at fellows who do not get people signed up or do not sell enough products. Remember that it is always hard. They may not be able to get people to sign up, but they are good in cheering the whole company up. He may not be able to sell products, but he gets so many people signed up that it is actually more than how many you did.

Remember that people work best when they are feeling no pressure. Let them know that you trust them and they will definitely work harder.

There are also some that claim MLM does not work, see an example of this here:

Robert Bond

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