Multi-level marketing is a unique marketing system for the sale of goods or services whereby the income of the MLM business is derived from those who are new to the business. The people in this business are referred to as levelers. They are invited to join the organization by the recruiters who represent the company. The new recruits are taught to recruit more people and to promote the business in order to create maximum business opportunity.
In order to understand the essence of network marketing work, it is important to understand the working of an Amway Corporation. The Amway Corporation is one of the well-known multilevel marketing organizations that employ more than eighty different types of distributors and representatives. It has become one of the leading companies in the direct sales industry with thousands of distributors in various states of the United States as well as Canada. There is a difference between direct sales and multi-level marketing.
In direct sales, the product or service sold is bought directly from the customer by the supplier at a prescribed price and the profit made by the seller is passed on to him or her. In multi-level marketing organizations, the distributors become promoters of a product or service and earn by recruiting other distributors. In Amway Corporation, the representatives earn by recruiting new representatives. The income generated by these companies is almost the same though the profit margins are less in multi-level marketing organizations.
A network marketing distributor is only entitled to earn money when he or she is able to sell at least one product or service to a new tier of customers. This is where two distinctions are significant. First, there is the upline or new tier customer and second, there are direct salespeople who have been recruited by the upline company and are working with the new tier of customers. The distributors who have been recruited by the upline company do not need to worry about the direct selling rules because their job is not to sell the products or the services but to introduce them to the new customers.
The earning potential of a person who is involved in network marketing has never been doubted. In fact, network marketing can be compared to a company’s development stage wherein the salespeople earn money while the company continues to flourish. The key factor that determines a salespeople’s earning potential is the number of sales he or she is able to get every month. The success of every salesperson is based on the amount of profit the company earns through the sales they have brought in. This is what draws a large number of people to join sales groups including network marketing businesses.
The challenge for distributors in network marketing is to ensure that more people will join their sales teams. They do this by attending sales meetings regularly and learning from the experience of the people in the meeting. They should also stay updated with the marketing strategies of the upline company and their own sales pitches should be very convincing to attract members of their own team. A good distributor is one who is able to build a strong relationship with his or her upline team members and convince them to buy products or join their business opportunity. Distributors who are successful in their own business are the ones who have mastered this art of persuasion.