MLM: Quick Guide to Understanding Multi-Level Marketing

Multi-level Marketing PowerPoint Template

Perhaps many have thought about the idea of receiving a passive income or starting a business; but have no capital to start. The idea of becoming an entrepreneur is intrinsic to human beings and moves many hearts with a passion for making money. However, the challenge of running or starting an enterprise might seem like a daunting task from the get-go. 

MLM, or multi level marketing, since the early 1900s, became an exciting option for many who were looking to have an income revenue stream. The ones who started being attracted to this direct sales strategy liked the flexibility of running a business from home or on the move.

In current times, and with the popularity of alternate work models, it’s relevant to analyze how MLM can be a legitimate way of making a living. This article intends to answer the pressing questions around this term and demystify taboos to make informed decisions. 

 What does MLM stand for?

You will find excellent and profound articles on the subject online, so we will briefly share a definition to understand what is a MLM company. Nevertheless, it is important to frame this method as a direct sales format that can provide many interesting options. 

Multi Level Marketing, as the US Federal Trade Commission describes it, is person-to-person sales. This definition might sound simplistic, but there is a whole interesting analysis to it. As it is common knowledge, currently, whoever wants to transaction retail goods must work with logistics and distribution models. This tends to be costly and complicated, requiring a vast workforce to fulfill orders as per demand. 

On the other hand, if your interest is to transact services, it can be tricky and require a multifaceted array of non-tangible needs to be mapped. By itself, this task of designing services and creating sales presentations is hugely challenging and might not be for everyone. 

This is where MLM becomes applicable: a corporation has already created a catalog of goods or services that can be provided to others. As an additional feature, there is already a logistics process that will guarantee prompt delivery to final users. The multi-level affiliate’s job is to be a middle person and provide great customer service and reduce response times.  

MLM Presentation Template

Up to here, it seems pretty straightforward, so let’s start going deeper into the more complicated part. For a company to manage a multi level marketing or network marketing format, one of 2 things happens: products are sold or people are recruited. By this point, you might also be thinking about pyramid schemes, which are in many places illegal; in that model, people are recruited to sell something that has no proof of existence or seems too great to be true. In the next sections of this article, we will discuss this and how to spot the differences. 

A legitimate MLM company will have valuable products to transact. Some famous examples of companies with successfully established multi-level marketing models are Avon, Mary Kay or Amway. These corporations have positioned themselves as household names, loved and bought by millions every month. 

Companies like the ones mentioned above have temporary catalogs with appealing and practical products for users like cosmetics, kitchen wearables, cleaning supplies, and even kids’ toys. Instead of traditional supply chain distribution, they work with armies of people offering the brand’s products on social activities, workplaces, parties, and now of course, social networks.

Sales Funnel MLM PPT Template
Source: Timeline Funnel Concept Template by SlideModel.com

Understanding MLM marketing

We got the first part straight; now that we’ve cleared the definition of the way, let’s deepen our conversation. If someone wants to become successful at MLM, it’s important to remember the most fundamental component: sales. Selling is the critical activity here; having great strategies for persuading others to purchase is imminent. 

It’s crucial here to recognize what will be some relevant activities in the process of understanding MLM. 

1. Becoming a seller. 

Being great at sales is not an easy task. It has to do with understanding human needs and catering to them. Anyone willing to take on this challenge must have an appetite for learning what the product is all about and why someone should buy it. It’s necessary to become trained in presentations and selling; luckily most companies already have materials and boot camps for new recruits.

2. Choosing the goods to sell.

The options are endless. You can sell everything from kitchenware to children’s clothing, superb makeup or even fancy jewelry. The ideal situation is to work with a brand you can connect to and products you can relate to. Also, it’s a great idea to think about potential buyers’ likeliness to obtain. 

3. Creating a reliable sales method. 

Selling is both a matter of persistence and strategy; therefore, having a balanced combination of both is a good start. From there on, it’s necessary to diligently build a sales pitch to use during your visits, phone calls, emails, social media posts, etc. This is always work in process, and sales strategies must be continuously optimized. 

4. The magic component: networking.

For MLM business, this is the most crucial step: presentations. Every person who works in this area knows that networking and showing others your worth is vital to find new buyers frequently or recruit others on board. One of the ways you make money in MLM is earning commissions on other affiliates selling. One thing must be clear though; every affiliate must recruit others to achieve this commission. Often this is what generates confusion with other schemes, which might be a scam.

5. Learning about the organization 

Researching the corporation is also a significant step in understanding who the sales will be benefiting. It takes some minutes to google a company and find relevant information: legal, social, or even HR. Don’t be shy in asking questions, any legitimate company will not be afraid of validating its existence. 

Sales Pitch Presentation PPT Template
Source: Sales Pitch Presentation Template by SlideModel

Compensation and network

As mentioned before, multi-level marketing or network marketing can bring revenue and help many make a living. However, it’s also imperative to understand the two main ways this happens and what is required for the system to work. According to a recent study, 50% of recruits leave MLM companies in the first year. 

Setting correct expectations is an essential first step, this way it’s easier to move forward with the brand eventually. Anyone can learn how to do person-to-person sales; yet, it might be an extenuating amount of energy spent if not done right. 

The first way to make money is by creating sales; every product will generate a markup, which will allow the seller to earn a percentage. Under the usual assumption, we can say that whoever sells the most earns the most. One appealing thing about this model is that profits not only depend on the primary affiliate’s sales but also on the people they bring on board. Each person’s overall deals will generate a commission to whoever signed them into the company. 

The game’s name then becomes more appealing for those who don’t like direct sales because by recruiting and training several good salespeople, they can also make a living. By no means should this be understood as less work; on the contrary, this requires constant maintenance, training, and optimizing process from the top associate. All recruits must feel support and receive information to perform better continuously. 

To have a good earning strategy, then one who is into MLM or network marketing, must remember that to earn, they must follow through: 

  • Plans reliant on others: who is your team and how do you support them, or in whose team are you and how do they help you. 
  • Plans conditioned on your sales: what are the KPIs you will be applying to your sales, including overall earning goals. 
  • Timelines of earnings: relevant dates for transactions, timely plans, and decisions.
Sales Manager PPT Dashboard
Source: Sales Manager Powerpoint Dashboard by Slide Model

Risks and why many stay away

One of the biggest taboos around this way of selling products or services is the feared pyramid schemes. Generally, these models are easy to recognize because they offer something too good to be true: an evergreen flow of escalating revenue based on your network’s efforts. 

Here, it’s important to mention as well what is commonly known as a Ponzi scheme, a method that promises unrealistically high investment returns not available from regular investment action. In a nutshell, both schemes recruit victims, take their money without compassion, and reach the top of a pyramid.

To illustrate this, imagine your friend Joe asks you to invest some money, but to make a profit, you must ask your friends Rick, Thomas, and Rose to invest some money as well. You must then convince them to have their friends and family also invest in an ongoing recruiting process that sees no return. 

Joe knows that to make money, he must have a team of effective recruiters who convince others to invest and bring him a more significant profit. At the end of the pyramid, the problem lies with no one left to recruit, and the plan collapses on it’s own. 

Regardless of whether it’s a diet system that will work quicker and with less effort than real life, or a service that might seem to make you money for nothing, it’s important to research to understand what the brand does. This an excellent time to put into place your risk-adversity sensors and ask yourself some valuable questions: 

  • Is there a real product of value to sell? 
  • Are the services being transaction-proven? Are there real testimonials or users that can testify of the results? 
  • How do I get my return on investment? When does it happen?
  • Who will you be working with? What do you know of them as serious business people? 

One way of knowing you are joining with a verifiable product is to make sure that selling a product or service is the primary way of earning money. Contrary to this, a company that provides you profits only by recruiting others with a promise of money is a pyramid scheme. 

An obvious sign of a legit company versus a scam is the first to make money through work and effort; the latter promises wealth with little to no effort. Often people are lured into pyramid schemes with the offer to become millionaires quickly. This story is embellished by the testimonials of people presenting unrealistic lifestyles, lavish lifestyles, amazing sports cars or unbelievable trips. The warning signs are the false promises that can be seen miles away: building an empire takes time and work. 

MLM Companies

Final Thoughts

Whoever is a natural salesperson will find themselves very comfortable making a living through transaction products or services. Learning marketing and sales tactics will come naturally and represent an exciting challenge. Also, if you want a corporation’s support and avoid the complexities of building a supply chain, MLM might be for you. 

The most relevant analysis here is never to forget that no matter if you choose to participate in a multilevel marketing or networking company, it’s always better to be bound to a genuine operation. The steps taken towards success will be proven over time, hard work and diligent commitment. 

1. Sales Pitch Presentation Template

This PowerPoint template is designed around the concepts of Sales Pitch and of Presentation Deck. This means that the user can quickly use the presentation to provide an effective speech with high quality visual assets and later handle the deck as an auto explanatory brochure of the sales speech.

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