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MLM or multi level marketing
What is MLM ?
MLM or multi level marketing is one of the areas that promises most and delivers least, in terms of acquiring a residual income. With an MLM selling system the salesperson receives income from sales of the product and a percentage of sales made by anyone they recruit - their 'downline'.
It sounds great on paper: 'once you have recruited a downline', the glossy literature says, ' you can relax and watch the money roll in!'
In practice, hardly anyone makes money from MLM schemes except the people at, or near, the top of the tree. MLM products tend to be more expensive than branded goods, and once you have exhausted family and friends as potential buyers, it can be difficult to make any further sales.
Much of the projected earnings therefore are dependent on you recruiting more people to join the scheme. While you are working hard at trying to do this, don't forget that you will have to pass a proportion of your earnings on to the person who recruited you (your upline).
You may also be urged to pay for stock, starter packs, stationery and motivational material by the boxfull. To do well at MLM, you need to be happy to work in a highly sales-focused environment. If you are shy about cold-calling or hard-selling, it's probably not the best choice for you.
Many MLM companies have been the subject of investigations and complaints. This is mainly because they exaggerate the earning potential of their products and thr reality that the product is in fact secondary to the recruitment process.
Comparisons have been made between MLM and illegal pyramid selling schemes, where profits are made solely by recruiting others. Those recruited then pay a fee to join the scheme, on the promise that they will in turn receive a profit. This kind of scheme pays dividends for the people at the top of the pyramid, but is unfortunately a sure-fire way of losing money for those who join later.
Some companies and MLM distributors have been reported for putting undue pressure on their downline to spend more than they can afford - from buying stock to attending expensive sales conferences and events.
The atmosphere at these expensively staged conferences and events can be high pressure; with delegates being fired up by high-rolling distributors to 'get out there and win - at any cost!'
The whole idea is to keep the delegates motivated and earning money for the upline, whether it's from sales of the product or more likely, from recruiting new members, buying motivational materials and selling aids.
Some MLMs have been compared to cults - often demanding a very high level of commitment, placing the blame on the downline for lack of sales and allowing little time for consideration and reflection on the performance of the business.
Failure is always because you were not committed enough or weren't motivated enough to get out of bed at 4am and sell. It's never because the market is saturated, or your customers could buy cheaper and better products from their local supermarket, or off the web!
If you are thinking of getting involved in MLM our advice is don't. However, if you are seduced by the promise of a fast profit, do at least take some time to research the company and product. The link below is a useful starting point, and you can also try typing the name of the company or product into google, followed by the word 'sucks' or 'scam'.
MLM in the UK is a little less full-on than in other parts of the world, particularly the US and some developing countries. But if you are looking to make money within a structured sales set-up, we'd suggest you look at some of the direct sales opportunities available.
What is the difference between MLM and direct selling?
Opinions vary, but generally direct sales companies place much more emphasis on selling the actual product than on recruitment. Most direct sales companies will still offer incentives if you recruit other people, but it's secondary to demonstrating and selling the product.
In the UK, direct sales take place via catalogue delivery door-to-door and with the party plan method. This is a popular method of selling, especially with products that can be demonstrated such as cosmetics, beauty and skin-care items. It's also a great way of avoiding embarassment when buying adult items, as the hostess needn't know what you've ordered!