More informations about MLM / Network Marketing

Unfamilar with MLM?
Take comfort, only a few know this modern way of ditribution..

A reason that he is marked with a lot of misunderstanding.

Network-Marketing means
Creativity at the pulse of time.

Learn some basic-elements of MLM and become familar with the system.

MLM stands for Multi-Level-Marketing
Other terms are Network-Marketing, Recommendation-Marketing, Structure-Distribution, Snowball- or Pyramid-scheme. Especially this last two words leading often to negative associations, since this distribution-model and it's quick growing potential is perfect to make quick money. This fact and the widely poor knowledge about the true function of this marketinginstrument is unforunately also utilized by black sheeps promising the "get rich quick"-fairytales. And becouse the system works that perfect, also negative rumours are multiplied booming.

The basic-concept is quite simple:
MLM base on (personal) recommendations, utilizing the most powerful weapon in advertising -
Mouth-to-mouth publicity

How often are you recommending a movie, a new boutique or a nice restaurant to friends? Do you get paid for this? No - usually not. If you refer a product or a service from a company using MLM as way of distribution you will get paid for this.
And if your friend (and new client) you referred, recommend another person you also receive a commission and if this friend from your friend refer you earn again ..... and so on over several levels (Multi-Level) - becouse it was you who set the ball rolling.
Imagine, for every new guest you recommend a restaurant, you receive a steak for free. And if this guest refer another guest you will get the hors´doeuvre - for the next new guest in this chain you will have a free desert, free wine, bread, soup, coffee, digestive and finally you could have your daily lunch and dinner without paying a single cent.
Sure this restaurant will become famous without investing in advertising and it would be overcrowded every day.
The money the owner save on advertising he pass to his guests, which will return again and again. They will not only become loyal guests, but also his best salespersons.

What sounds in this example like a complicated and non-organizable bonus-system, is - thanks the modern technology, software, databanks and internet - easy and quick administrable. Finally, you won't get salad and sandwiches but real cash, which is easier to calculate with.

Multiplication-effect as drive to growth for everybody
The strenght of this system is based on the multiplying-effect, which make out of a handful satisfied clients (and who will not be satisfied, if not only the product and the service is perfect, but also he receive commissions) within a few levels an enormous client potential.
Remember the example with one ricecorn on a chessboard - by simply doubling on the last field would be already the complete rice-harvest from china......

In practics MLM-companies pay over 3 to 10 (seldom more) tiers commission for recommendations - anyhow the multiplication-effect is quick recognizable.
Especially, if you base the calculation not on the basic-number two, but an higher number - in fact everybody knows more that just two persons he can refer to something.

If the basic-number is just 5, such a structure will have more than 10 million people within 10 tiers and by multiplying with the factor 10 the million is reached in level 6 already.

Facing this tremendous numbers, a small percentage commission will be enough to make a millionaire or at least a longlasting high income.

The possible width of a structure (i.e. how many persons someone can refer in his first line and bring into business = "to sponsor") may vary as well as the depth (how many levels / tiers the structure got) of the matrix. In some case the width is unlimited and everybody can enroll and lead as many partners he want, other systems limit the width (usually between 2 and 10 "firstliner" = partner in the first, direct level).
In case a structure is limited and someone recruit more partners as he got spots in his first tier, the new members will usually placed "forced" somewhere deeper in his structure and come as the "spillover" to the downline-partners.
The type of a structure is described by the width, the depth and the information what will happen to additional recruited persons.
" 3 x 5 forced matrix" means, that everyone may have 3 partner in his first level and will get paid over 5 tiers. "forced Matrix" means the frame of the scheme is fixed and every additional partner will be placed deeper in the structure according to the marktingplan. The downline will take adventage from the spillover of their upliner. In this example would be place for 363 persons, most of them (243 persons) are placed in the 5th. Level.

"Unlimited 6 Levels (or tiers) Matrix " means everyone may have unlimited partners in his first level and payment will be done up to level 6. Theoretical the number of partners would be indeed unlimited; only the depth of 6 levels set the frame, but not the width.

Overall (most) structures are usually open on every side - the company itself can (in most cases) enroll directy unlimited partners (some pass them volountary to the downlines as incentives or by random-selection) and also in the depth is usually no limit. This means, the distribution-scheme itself may have even 1000 tiers, but commissions will be paid mostly over a noticeable and economical possible number of tiers.
Moreover there exist various (rare) special-forms of structures (e.g. closed matrix, which accepting only a limited number of members in their club and close when the number is reached, reversed matrix, where new members will be placed from the bottom up and some with - in some rythm - changing placement of partners) - to explain all these rare types would be too much.

A science with history and even more future.
This kind of distribution is a science of it`s own - teached since several years at the Harvard Business Universits (and many other institutes own). The best of this science is, you don't need experience or special knowledge for a successful use.

History of MLM starting in the 40ties, when California Vitamins (later Nutrilite) first time rewarded their staff in such way. Two employees startet a bit later an independent company: "Amway" (American Way), today one of the stars at the N.Y. stock exchange.
Till end of the 50ties there had been only approx. 30 Structure-sales, before some black sheeps started "headhunting" (they gained the income by recruite new partners only, without selling a real product behind). They discovered the system as a money machine, which based the terms "snowball- resp. pyramid-scheme"
End of the 70ties the judgement of the causa "Federal Trade Commission contra Amway" based the legal security. Since this time Network-Marketing is a boundless legal way of distribution, which is just about to boom, utilizing the new technologies. While Amway-representatives had to go a long way to build a structure with millions of consulters, Alladvantage grew in 1999 within just 6 month to 4 million partners - only promoted by internet.

In a time, when more and more people looking for a profitable second income without sacrifice all their free time or searching for a job, they can do from the comfort of their home, this form of business - MLM by Internet (the actual "Network Marketing") - come to the right time. Also changing consumer-habits and the growth of e-commerce aid this movement.

Beside the pure structure-distributors (Amway, Avon, Herbalife, Forever Living, ...) more and more companies, which selling usually in classic ways, discover MLM. Since years already businesses as Coca Cola, Microsoft, AT&T, IBM, Gillette, Sun Microsystem, Netscape, AOL, Oracle, Colgate, Citibank, Xerox, Texas Instruments, General Motors, General Electrics, Toyota, Donauland, Otto-Versand,..... , realized how powerful personal references can be used and how efficient clients can be tied to the company, if they get paid for their referrals and they are acting as reseller. All these firms are selling already some of their products and services this way or use "recommendation-marketing" for promotions.

In fact, many men running this kind of business without knowing it: A referral-premium from a readers club, the friendship-offer for a newspaper-subscription, the cellphone for the partner, or "2 eat - 1 pay" coupons - all this are parts of referral-marketing, even it is not obviously the look of a multi level structure - the basic idea is still the same.

Be your own boss - same chances for everybody.
Most fascinating in MLM is the fact, that every partner in the system is his own boss and everybody got equal chances.
To enter this business is not linked with high capital, sophisticated skills or education and experience. While the establishment of a "normal" business (a store, resturant or some service) is risky and needs a lot of funds and also franchising requires high investments (even the risk to start is lower), the start as a partner of a Network-Marketing business needs no money at all. Usually a own purchase is good enough to become a reseller, receiving commissions and reach management-positions, leading others.

No matter when and in which position someone enter a structure, he will find exactly the same conditions his sponsor got and his future partners will get.

Everybody starting at the groundlevel and can bring as much clients and partners in the business his structure allows. The income of everybody is only determined by the own efforts and the efforts of this partner he recommended in this business.

Within the whole structure, led by the administration and organisation (in charge for the daily work, storage, shipment, billing, accounting,.. ), there can grow eternal single structures in a self-dynamic process. Everybody is a part of the whole structure, a part of smaller cells and head of an own cell as well.

A system brings advantages for all.
A company utilizing MLM will safe the usual high costs for promotion and marketing (employed sales persons, wholesellers, intermediates) and prefer to pay this money ti their clients, which act as consultants. Finally they know the product from their own experience and recommend by their persuasion.
"Only a believer can convince others" (Sokrates)

More clients, more referrals, more consulters means quicker growth, bigger purchase-volumes and better prices for the clients.
Becouse of the nearness to the base (no exporters, importers, sales-reps., intermdiates, wholesellers, detail-shops in between) the company knows exactly what their clients want and can react very flexible to changing markets - a great advantage for every reseller - and closing the cycle of advantages for all partners.

Partnership and solidarity as philosophy
Top of philosophy in MLM is the cooperation to reach one common goal. This community exist over all borders and across all languages. In this connection the single cells within the whole structure take effect. This cells stay independent and every individual can bring in himself and his ideas more or less - just as in his nature and depending on the time he want to invest in his business.
No matter, if someone just want to recommend a few friends or if he want to take responsibility in leading a team, if he wants to build a regional distribution and organize regular meetings, or bring the distribution by translations and own websites to new countries - within the struchture there is place for every task and all skills are requested and honoured. Everybody can work as independent and free as he want or follow the tested advice of his sponsors - work as much or as less he wants - absolute individual.

Organisation and support comes from the top and is transported - step by step - all the line down. Even there is no "down" in such a construct, becouse everybody us in the same moment down as well as on top and in the middle.
Amid a network of relationship - the basic if every human coexistence.

Work one time - earn residual income.
Nature of MLM-systems is also to create a steady, residual income by a one time effort in building a structure of clients and resellers.

Suitable for structure-sales are especially such items, which are reculary consumed and bought again and again automated. (subscriptions, re-consumption-products, continous service). Best, if the item sells like toilet-paper.
Over the internet best sold are such products, which are worldwide understood, used and bought, which are easy to explain and can be shipped woth no problems. Even better if shipment plays no role at all, becouse the service can be sent and used online directly over internet or the item needs no costly storage, handling, packing and delivery. (software, means of communications, financial services, education, consultations, information, etc.)

But MLM may not end in itself. It is just a way of distribution - for products, many people need and would buy them at same conditions and prices, even if there would be no business-opportunity connected with. In the foreground always a marketable product have to stand - Network Marketing must not be a pure money-reshuffling instrument.

What doing networkers?
The task of everybody within a strudtured distribution is to advertise, refer products, demonstrate, advise and to sell as well as to recruit new resellers, to educate and to support them. The main job in Network Marketing (the part of MLM which is supported by internet in special) is to do advertising, to recruit and guide the new members. The selling itself is usually done by the webpage, which the partners get and all the organisation (shipment, accounting, etc.) is done by the company direct.

Thanks the modern means of communication, the inconvenient door-to-door selling is not longer necessary and there is no more need to force all relatives to participate. This (not unfounded) reservations from people without sales-skills had been hindering many to join in a structure selling scheme. Today that's history. In the age of internet and global electronical advertisement the sales-region got no more borders; clients and pertners for a good network-program can be found everywhere in the world - not just around the corner.

A global, longlasting business model.
Even the buildup of the sales-structure happens quire quick, in a serious, stable MLM-business nobody must be afraid to be too late.
While the first pioneers have the hard work to build up the structures and will be rewarded accordingly with a first wave of signups, the others, joining at a later moment participate from the growing recognition of the brand and rising trust. Those, who hesitated in the first time often join after years, as soon they hear from more and more others, that the system and the company works. The sceptics usually hustle into successful MLM-companies only after 5 and more years - after some of his friends already receive a continous high income. This sceptics pull other sceptics - a continous process of growth and renewal.
"Panta rei" - everything is flowing.

The idea that someday everybody in the world takes part in some Network-company and will not find new partners any more will be a theoretical gambling with numbers forever and a complete illusion. Not only daily new men are born, growing up and start looking for a kind of income and always new products come into the market, also the needs of men and market situation changing in constantly quicker cycles. Ist not the product dictating the market, it's the marked dictating products.

Task of a MLM-company is to react to the needs and changes of the market in a flexible way and to supply the distributors with always new, requested products, which acquire always new sorts of clients and co-worker. Finally the capital of such a company above all is the powerful distribution-apparat and the existing frequent buyers. An client- and market-orientated business knows how to utilize this capital.
Today not the products determine the market, but the market dictates the products - and whoever is closer to the clients and quicker in the market will make the running.

Network-Marketing means creativity at the pulse of time.

NEW - GlobalCash 

to the top of the page