Multi Level Marketing

Multi Level Marketing, widely known as MLM is a major business trend. MLM partners are compensated based on their efforts and performance. It is an equitable business model that rids business owners of fixed overheads. Members of an MLM organisation work mostly on the basis of commission, and without fixed salary.

Members also known as distributors work at the bottom layer, moving up the hierarchy based on their ability to meet certain quotas and deadlines. Top performers in the industry can move up the hierarchy very quickly and earn a five to six figure monthly income in a relatively short amount of time. These are normally individuals with charisma and the ability to motivate their employees to produce results.

Multi Level Marketing as a business model cannot be faulted as it rewards members based on results. In fact, it is better than conventional business models rewarding seniority and sometimes non-performers.

Multi-Level Marketing (MLM) utilizes a combination of direct marketing and franchising. Normally, individuals become associated with a parent company in an independent contractor relationship. Sellers are compensated based on their results (ie. sales of a product or service, as well as the sales of those they introduce into the business).

Multi-level marketing has some image problems because of difficulties in making a clear distinction between legitimate network marketing and illegal "pyramid schemes" (Ponzi schemes). However, many MLM businesses operate legitimately in more than 100 countries. Because of this image problem, many new MLM businesses do not use the words "multi-level marketing" or "network marketing" and instead use terms like "affiliate marketing," "home-based business".

In a legitimate MLM company, commissions are only earned on the sale of products or services to the end consumer who, in many cases, is also a distributor. In a properly run MLM company, no money may be earned on a "sign up fee" or for recruiting alone. Critics of the network marketing industry contend that some companies produce revenue primarily by attracting new participants, as opposed to selling products. Analysis of the compensation plan is often required to determine whether members are paid based on actual sales of products to customers versus new recruit bonuses and sales of business support materials.