The Concept of MLM – A Synopsis
More often than not, the Network Marketing folks are found busy talking about everything that MLM is not, which is quite strange and perplexing to the neophytes of the trade. Paradoxical, isn’t it?
What exactly, then, MLM is?
It starts with a manufacturer who has a product line that it wishes to market to consumers. The main reason new companies choose to use MLM is that it usually costs millions of dollars/rupees of marketing expense to introduce a new product. And even then, the results may be disappointing because the competition for consumer dollars/rupees is so great.
Compared to conventional advertising and promotion, it costs a small fraction to introduce a product line through MLM. This means that start up costs are considerably reduced, and more money can be allocated to research and development. As a result, MLM products are generally, of excellent quality.
The concept is simple. An MLM company chooses a nucleus of enthusiastic people in key areas across the country to learn about the product and the business opportunity it represents. The company, then, depends on these people to literally “SPREAD THE WORD”. Of course, there has to be motivation for these original “Sponsors” to become disciples for the company and its product(s).
{The motivation is that it is a well known fact that the people who introduce an MLM company into an area, have a good chance of making a great deal of money- provided, of course, that the company is stable.}
The company provides you as an individual, an opportunity to build an organization (sometimes referred to as your “Downline”) by sponsoring four or five committed people who will also “reproduce” themselves by sponsoring another four or five equally committed people. This continues for four, five, six and even seven “levels” in some companies.
Sponsoring a person in your MLM organization means that you bring them into the organization as Distributors of the product. The key to making huge sums of money is that you collect commissions and bonuses for the products sold by everyone you bring into your organization plus the people they sponsor.
A little arithmetic will tell you that after five “levels” of four people each (as per basic plans), your organization, theoretically, can contain as many as 1,024 people at the fifth level itself, following the pattern of (4x4)- 16 people on the second level and (4x16)- 64 people on the third level etc.
By nature, people thrive and live in social groups. They follow a leader until they gain enough experience and confidence to challenge for leadership, themselves or start their own group. I could dump two tons of the greatest new Super Vitamin 2000 on your driveway, but unless you knew how to market it to the right people, you wouldn’t make a dime. The money is not in the product. It is in knowing how to market the product!
The entire point of building a network marketing business is to create well-educated distributors who can market and acquire a large base of happy product customers who have nothing to do with the business.
If you feel like tossing this aside as being ridiculous or impossible- don’t! I have personally met people earning $ 50,000 to $ 100,000 a month (Yes - I said MONTH) and even more! In many cases, they have been able to earn five figures monthly within one year of joining an MLM company. In INDIA, as well, I have, personally met people earning Crores of rupees from an MLM business. I don’t know of any other type of business that offers this potential. Do you?
MLM seems to be the great economic leveler. Some of the biggest earners are unsophisticated, non-business people. In fact, some of them never finished High School. In India, I’ve seen completely uneducated (“Angutha-Chhaap”, as it is called in Hindi) people earning more than 2-3 Lakhs rupees a month. Most of them had little or no money to start their businesses when they began in Multi Level Marketing, even in the West. Believe me, friends, I have really seen lives changing overnight, thanks to the revolutionary and miraculously powerful business of MLM.
Most Networkers are like home builders except when they fail to build their house; they go back to the tool store and try a new hammer. When that doesn’t work, they go do it again and again. (Like trying dozens of opportunities and lead companies…). If they would only realize that it is the skill and knowledge of the person swinging the hammer that mattered, and not the company or the comp plan.
“Take the attitude of a student; never be too big to ask questions, and never know too much to learn something new.” ~ Og Mandino
Where Do MLM Companies Pay the Distributors From?
The key to these earnings is the fact that MLM companies save the usual fifty or more percent of gross income that conventional firms continuously spend on marketing. This money is, therefore, available to pass on to Distributors in the form of commissions and bonuses. Very little or no advertising is done by the MLM companies, although individual distributors may advertise on their own for other distributors and/or retail customers. Distributor kits, sales aids and literature, product packing plus cost of traveling to the key areas for opening seminars and training programs are the major marketing expenses- and even these expenses are borne by the distributor network.
Inference:
The bottom-line of MLM is that it works.
The concept is so simple that many intelligent people find it difficult to accept and wind up considering it a fraud or scam. However, one of the truths about MLM is that it is simple, but NOT EASY. Your network of contacts is the name of the game. MLM is a people business.
MLMers call it “sharing” the product and the opportunity. Another very appropriate name for MLM is Network Marketing because it is through one’s own business and personal network of people that an organization is built. If you know people who believe in you or in the company you represent, and the products it sells, and they are ready to commit themselves to becoming distributors for the sake of their own Financial Freedom, you could be on your way to a fortune. The key is to make absolutely sure that they are committed to buying the product and finding other good people to sponsor- which is exactly what you must do, On a Regular Basis…
“I will not say I failed 1000 times, I will say that I discovered there are 1000 ways that can cause failure.” ~ Thomas Edison
“There is a great deal of difference between the eager man who wants to read a book and the tired man who wants a book to read.” ~G. K. Chesterton
