Multi level marketing (MLM) businesses are considered by some to be the future of marketing. This is also a type of marketing strategy that receives a lot of criticism. There are different types of MLM businesses and we will be looking at these here. We will begin though, be explaining what we mean by multi level marketing.
What is MLM?
Multi level marketing differs from other types of sales because it doesn’t involve an actual sales outlet. Instead this type of marketing involves recruiting people to sell the product and find other people to recruit to the cause. The individual who is recruited for this type of marketing can not only make money by selling goods and services, but they also get rewarded for finding other people that will sell these as well. In a lot of cases new recruits will be expected to pay a joining fee and they may be encouraged to pay more money in order to obtain a managerial position. New recruits can be known by a variety of names including: affiliates, representatives, distributors, or associates.
The Different Types of MLM Business
Here are the main types of multi level marketing businesses that you are likely to come across.
- An MLM business can be based around selling a certain product. In a lot of cases this product will be manufactured by the company, but in other cases it will just be something that has been bought from a third party. These MLM businesses can work in different ways. The associate may be expected to order the goods in advance or they can take orders and have the company ship these out to them as required. Sometimes the company will send the goods to the customer directly or they will send them to the associate who will then pass them on. The types of products that usually lend themselves to this type of marketing strategy are things like nutritional supplements.
- An MLM business that sells services differs from one that sells products in a number of important ways. For one thing the associate will be under constant pressure to find new clients. There is no repeat business because the associate usually doesn’t get paid if the client subscribes again to the service — if they do get commission for this it will tend to be a small amount.
- The type of MLM business that gets the most criticism is the pyramid scheme. Here the main focus is getting new members for the scheme and the goods on services on offer may be of minor importance. A lot of these companies will make more money from signing new associates than they ever will make selling products and services — they really can’t lose.
Although there are some good MLM businesses where associates can make money, there are a lot of them that are little more than scams. Anyone who is considering signing up with a multi level marketing business will need to research the company carefully.