Multi Level Marketing

Multi Level Marketing

Multi-level Marketing
Multi-level marketing is​ a​ business model where salespersons like sales consultants,​ distributors,​ and even franchise owners and independent owners work in​ harmony to​ increase the​ sales of​ the​ product,​ on​ commission basis .​
This is​ more like a​ franchise arrangement where the​ sales of​ the​ product depend on​ the​ combined effort of​ each franchise and regional manager .​
There are multiple levels of​ people receiving commission .​
Usually there are seven or​ more levels .​
Multilevel marketing is​ basically a​ combination of​ franchise and direct marketing.
This concept started in​ 1980s when most of​ the​ companies started handling the​ stocking and distribution issues and started compensating all the​ individuals involved .​
This increased the​ interest of​ each member in​ promoting sales due to​ the​ chance of​ earning bonuses and since then the​ Multilevel Marketing companies have taken the​ responsibility of​ taking orders,​ shipping goods,​ and paying revenue .​
Things became easier with the​ transition to​ Internet .​
Product promotion,​ advertising and sales were made online and hence,​ the​ whole process began to​ be known as​ online MLM.
There are various MLM compensations plans .​
According to​ the​ uni-level or​ stairway breakaway plans there are two types of​ distributors involved managers and non-managers .​
According to​ the​ matrix plans,​ the​ width of​ each level in​ a​ distributor’s group is​ regulated .​
In binary plans,​ the​ limit of​ each level’s width has two legs .​
Commission was paid when both the​ legs reached a​ specific target .​
In elevator scheme,​ the​ distributors pay splits after a​ certain number of​ units have been paid .​

The commissions are paid in​ two ways,​ the​ first says that the​ commission is​ paid only if​ the​ product is​ sold and the​ second one involves paying commission even if​ the​ customer just signed-up,​ it​ doesn’t require the​ customer to​ buy anything .​
Because of​ the​ second method illegitimate MLM or​ illegal pyramid started to​ arise .​
The intermediate members used to​ make proxy customer sign-ups to​ receive commission and they used to​ tempt the​ participant to​ buy more products than they can be sold .​
But as​ most of​ these businesses present themselves as​ legal,​ precautions must be taken .​
It is​ better to​ approach businesses that follow the​ first method of​ commission,​ where it’s compulsory to​ make a​ sale and not just recruiting a​ customer .​
Here money isn’t paid for customer sign-up at​ all .​
MLM marketing is​ being practiced all over the​ United States and in​ hundreds of​ other countries .​

In 1979,​ Amway Corporation was accused of​ price fixing .​
They exaggerated sales claims,​ while their distributors sold the​ products at​ a​ minimum price .​
After that,​ FTC warned all multi-level companies whose commission was based on​ recruiting and not sales .​
In 2018,​ all the​ business sellers including MLM organizations were asked to​ provide customers with thorough information,​ according to​ the​ Business Opportunity Rule introduced by the​ Federal Trade Commission,​ so as​ to​ save them from deception .​
Before that many motivating programs were started which hid the​ truth .​
Such programs were known as​ cult programs .​

Laws have been made stronger .​
As a​ measure,​ pyramid scheme is​ banned in​ most of​ the​ countries .​
All the​ newly hired salespeople have to​ bare the​ cost of​ initial training and material .​
They even have to​ buy a​ big amount of​ inventory .​
To test the​ legality of​ MLM marketing,​ the​ 70% rule is​ being implemented .​
The members are stopped from over-loading so as​ to​ increase their commission .​
Only when seventy percent of​ the​ inventory is​ sold,​ order can be made for new material .​

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