MLM, or multilevel marketing, is a business structure that works on a multi-tiered level.  Income is earned when you sell products, but also as you sponsor other sellers to work as part of your team.  This is called the downline.  Money is earned from the downline when those individuals sell products and also recruit additional people in to the business.  The compensation plan grows exponentially and the most successful MLM business owners make money from the work that their downline does.

There are a number of MLM business opportunities and the various types of products to be sold are limitless.  In the MLM business, selling product is the first source of income.  Sales representatives sell their product and earn a set commission on what they sell.  Usually, there is little to no overhead as the parent company handles all of the inventory and product delivery to the customer.  For that reason, there usually isn’t a need to buy and store large amounts of inventory.

The key to a successful MLM business is duplicating efforts.  Although revenue can be earned selling products, recruiting others in to the company and training them to sell product is where the business and compensation grows.  For instance, if a sales representative has 20 customers, he can earn revenue from those 20 customers, however, if he recruits another MLM representative and trains that person to get 20 customers, he now can earn a percentage from 40 customers, not just 20.  The growth of MLM comes in training recruits to be successful in doing the same.  Thus, the downline builds and revenue builds with it. 

MLM compensation can vary from company to company, but essentially, that process of selling to customers and building the downline is consistent across all MLM business models.   The sales representative will normally be paid a larger percentage or commission on the direct sales of products to his customers.   Some MLM companies pay additional revenue when a new recruit is brought in to the business, or sponsored.  Newly recruited members will be trained so that they can learn strategies to be successful in selling products.  Some MLM companies pay individuals when they train new recruits.  Compensation continues to grow as the downline continues to expand and there are usually bonuses or additional percentages paid at predetermined levels.  For instance, a company might increase the product sales commission percentage.  Building leadership is important in any MLM company.   Successful leaders will continue to help the MLM business grow.

The commission structure can be quite complex in MLM’s.  If a company paid out too much in commissions, it would quickly go out of business.  MLM’s , however, are structured so that reaching specific compensation levels is difficult, but attainable by those that wish to work hard to achieve leadership levels.  With MLM’s, it’s not necessary to reach the upper levels of leadership.  There is money to be made just from selling a product that the representative is passionate about.  The income that can be earned can be substantial.  In an MLM, compensation is rewarded by effort.  That old adage “do nothing, get nothing” applies to any business.  But depending on the effort that is put forth, MLM’s can be quite lucrative.

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    This entry was posted on Wednesday, July 6th, 2011 at 11:35 am and is filed under Home-based Business, MLM, Network Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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