Facts about MLM
Multi-Level Marketing
Direct Sales Network Marketing

What is "Multi-Level" or "Network" Marketing?

Over the years, the term Multi-Level Marketing (abbreviated MLM) and Network Marketing have become Synonymous. The history of MLM and its evolution over the years is very interesting. If you want to find out about in detail, there are many books describing this fascinating industry's development.

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Let's analyze the now and today of Multi-Level Marketing (MLM). This is what will make a difference in your financial health.

MLM or Network Marketing is a method of marketing products and services through independent representatives who refer customers to the Multi-Level Company they represent.

Does your local restaurant, your grocery store, your garage, the movie theatre in town, your wine shop, and all other suppliers where you regularly buy something, pay you when you refer customers to them? Probably not.

All companies have certain expenses involved in running their businesses. Some of these are production costs, personnel, advertising and sales budgets. Traditionally, companies of larger sizes pay millions of dollars in television, magazine,and other forms of advertising plus salaries, commissions, and benefits for sales / marketing people to get customers to purchase their goods and services.

MLM companies have advertising and sales/marketing budgets too. The difference is that instead of paying millions of dollars the traditional way, they pay those dollars out in commissions, bonuses, and overrides to their "network" of independent representatives, for the referals these reps make to new consumers. This is relationship marketing.

MLM companies typically pay a percentage of the wholesale or retail purchase price of their product or service through four or more generations (or levels) of representatives.

For instance... you sponsor your friend, Paul into XXX MLM company and Paul sponsors Jenny and so on. (Sponsoring is an industry term and means: You show a person the business and then help them to enroll as a representative)

Jenny would not have been sponsored unless YOU had sponsored Paul. That's why XXX MLM company pays you on the sales that both Paul and Jenny produce.

It's like a family tree where as a result of your efforts a family multiplies generation after generation (level after level) and you receive the rewards/benefits when they sell and/or just purchase products for themselves. These multiple (levels) is where the term multi-level came from.

Is MLM or Network Marketing a Pyramid Scheme?

Pyramid schemes are illegal.

MLM Direct Sales/Marketing has been recognized as a legitimate form of business for over 40 years by the U.S. Government and most other countries around the world.

However, often an unscrupulous individual will run pyramid scheme cleverly disguised as a legitimate MLM company irregardless of severe penalties. That's pretty stupid.

The basic way to recognize a pyramid scheme is when there's a very large cost to join and there's a much lower value or even no product or service offered in return for this cost.

Another way to recognize a pyramid scheme is when there's a huge fee required to participate in the program disguised as "membership" or "training" fees or to purchase a huge inventory requirement in order to receive the right to recruit others and be paid bonuses. Usually your sponsor is paid a large commission from your initial entry fee.

A third way is when you see a product or service is offered with no perceived value except to those who are investing for the purpose of getting others to invest. The focus in a pyramid scheme is on making money by selling initiation fees, rather than moving REAL goods and services, to REAL customers, for REALISTIC prices.

Is MLM a Legitimate, Legal and Serious Business?

Yes, Correctly run MLM - Direct Sales /Network Marketing is a legitimate and credible business.

It's just like any other business though - the people running it make it credible and legitimate. As to the question of legality; all businesses are innocent until proven guilty. There are various levels of government involved in regulating MLM as well as non-MLM businesses including Federal, State, and Local laws.

Contrary to popular belief, Attorney Generals, the FTC, and other government authorities do not approve of any company's business plan. Even the FDA does not approve of a company's product unless it is considered a drug or medical device.

The authorities only investigate complaints and enforce laws governing companies in their jurisdiction. But, just because a company is under scrutiny does not mean it's an illegal business. Every major MLM company has gone through painful legal trials to become respected household names.

There are hundreds of legitimate MLM companies, some who have been operating for decades; i.e. - Avon, Tupperware, Amway, Mary Kay, Shaklee, Fuller Brush, and many more. Empires with household names like these, with total sales in the billions of dollars, are not based on some kind of scam. People are not that stupid to fall for the same scams for years and years.

The MLM Companies who are successful provide unique, high quality products, at a fair price to the consumer and have high regards and a fair compensation plan for their representatives

Is MLM a "Get Rich Quick" Business?

Although thousands of people have become wealthy in as little as 2 to 3 years due to the power of MLM, it is not a "get rich quick" business. In reality, MLM is a "get-rich-SLOW" business for most people. It takes a lot of hard work, patience, persistence, commitment in time and money, a strong desire to succeed, and a never-never quit attitude. No business enterprise is easy, and MLM is certainly no exception.

Why Choosing MLM or Network Marketing?

MLM or Network Marketing is what Free Enterprise is all about - creating something from nothing, the true entrepreneurial free-enterprise opportunity.

MLM offers those of us who were not lucky enough to be born with a silver spoon in our mouths, the opportunity to start our own business from scratch with no money, no previous experience nor previous training. You learn on-the-job as you earn!

A lot of companies market their products or services with MLM, because it reduces the time and up-front advertising and marketing expenses of getting products and services to the end consumer.

Compared to a conventional distribution mehtod via importers, wholesalers and retailers, in MLM there are fewer start-up costs, and fewer employees for the company to contend with in both the short and long term. This helps reduce the high operating costs and allows the savings to be used to fund research and development of quality products.

Also, owners of MLM companies are usually committed to the free-enterprise system and want to help people gain financial independence. Mind you, this financial independence can only be gained by taking up part of the burden: Time against commission - with the upper limit of this commission cheque being open: Your rewards are directly linked to the work you put in.

Do You Have to become a "Super-Salesperson" or "Heavy-Hitter" to earn Big Money in MLM - Direct Sales - Network Marketing?

NO, ABSOLUTELY NOT!!!

I used to admire people who had the skills of a heavy-hitter (= a person who builds a large network very quickly and seems to attract a lot of other networkers) and a super-salesperson.

It's not necessary to have these skills to succeed in MLM. I've met and know of several highly successful ordinary people who came from very different social groups and had very different educational backgrounds, and they made it big in MLM.

The number one money-makers in some of the older more established MLM's are former truck drivers, farmers, carpenters, nurses, hair-stylists, carpet-layers, house-wives, secretaries, engineers, school teachers, etc.

In nearly every case these people, just like you and I, had the strong desire to change their financial condition without changing their character. They simply act normal, make new friends, have home meetings which are not necessarily meetings, but more like mini parties, meet at coffee shops, and naturally sell themselves... by just being themselves, something we all do everyday.

Most "heavy-hitters" burn out due to the exhaustive schedules they keep. They fly all over the country putting on meetings, get a bunch of people excited for a few hours, and then never seem to be there for you when you need support. The way they recruit cannot be duplicated by the average person, and so they are like a virtual machine, recruiting so many people continuously - to make up for the ones who keep quitting and dropping out.

The real beauty of MLM is that ordinary people like you and I can create a full-time income from a part-time effort in our homes.

So, in conclusion, no, you absolutely do NOT have to be a heavy-hitter or become a heavy-hitter or super-salesperson to make it BIG in MLM. Ordinary people are making it big every day!

What is a MLM "Heavy-Hitter"?

About 1 out of 1000 people in MLM are to some degree considered a "heavy-hitter". These are people who can recruit dozens and even hundreds of people with their charisma and charm. They have superior selling and group presentation skills, public speaking and other persuasive talents. Some people have developed these talents and skills over time and for others it just comes naturally. MLM heavy-hitters are not necessarily the top money earners in MLM, although they are perceived to be so.

What are the Key Factors for Financial Succcess in MLM?

Finding your Company and Partners:
1. Choose a solid company that is going to be here for the long term.
2. Choose a good sponsor who is there when you need him or her.
3. Choose a good upline who is there when you need him or her.
What you need yourself:
4.
 		 Be honest, patient, persistent, positive, full of integrity, truthful, supportive; and never-ever give up, no matter what! (you can't fail if you don't quit)
5.
 		 If you have a spouse, close friend, or partner... you must have their unconditional support.
How to conduct your business:
6.
 		 Promote your business in a simple manner that other people can easily duplicate.

Finding the right MLM - Direct Sales -
Network Marketing - Company

There are no secret or specific formulas for choosing a company. Your major consideration must be:

  • The product: Do you like it and are you going to use it? Is it of high quality? Is the price competitive?
  • The marketing plan (the plan that determines how you are getting paid): How much and how are you going to be paid? Are there high volume requirements for yourself and your future partners? Are there other restrictions? There are many different plans in the market, some are more advantageous than others. Be careful not to believe plans that promise higher than approx. 65% pay-outs. The average pay-out is around 55% to 60%.
  • The owners and the management: Who is behind the company? What have they done before? How much exprience do they have?
  • The company finances and history: Since when has this company been in existence? How solid is this company? How nuch debt does it have? Are there public news stories that mention the company? Waht can you find in the archives of BBB, FTC, etc.
  • The companies future: Is this company committed and PREPARED(!) to being around for the next 20+ years (If you ask them they are all comitted to be there in 100 years! :-) )

You must believe in the company and its products. Keep a critical eye open, but if you fall in love with the company, its products, and the business opportunity, your frame of mind is right.

Once you decide on "your" MLM Company, you must commit to it for 18 - 36 months. This is the time it takes to develop your business and build a solid basis. If you are not ready to make this comittement, you better not start at all. You will waste your time and effort. This is not a get rich quick game, this is solid business. And any independent business takes a minimum of 2 to 3 years to become established and solid.

There are many companies out there with limited capital resources, poor management, lousy products and marketing plans and many of them are ultimately destined to fail. Please be extremely careful when you choose.

New MLM companies are just like any new company - most fail within the first 5 years.

Consider this: It takes 18 - 36 months for the average person to make a full-time income from an MLM company. If "your" company fails, so do you, your upline and your downline. While no one can ever say that a company will definitely be around for many years, a good indicator is the length of time it has been in business.

Even if you find a good MLM company that has been in business a few years, it may not work well for you and even more important: for the average person (If you can handle products that are difficult to sell, difficult to explain etc. that's great! But you have to think of your future partners. Not everybody is a genius.)

Some MLM companies require you to stock product. The average person cannot maintain large inventory purchases and then distribute these products to retail and wholesale clients. Nor can they maintain typically large group sales volumes that so many of the "inventory" type companies require.

I prefer two types of companies:

  • MLM companies where all I have to do is refer customers and distributors to the company and the company takes care of their orders. That's the easiest way!
  • MLM companies where I can get my stock within two days locally. Thus when I receive an order from a customer, I order the product from the company and then deliver it. No inventory, no hassle!

A major consideration in choosing a MLM Direct Sales Network Marketing company is to pick one with consumable, high quality, unique products that are NOT over-priced and can be purchased exclusively from one source (or limited sources). That creates the repeat sales that help you build up a solid business. If the products do not conform to these specifications, you and your sales organization will burn out having to constantly find new customers.

How to Choose a Good Sponsor and Upline

Call your prospective sponsors and ask what kind of support and training they AND their upline provide. Ask them to give you evidence of such support.

Look closely at the materials and methods they give you and try to determine if the average person can use these materials and methods to obtain and easily duplicate to build, recruit, train, and manage a successful MLM - Direct Sales - Network Marketing organization. If so, then you've found a winning team to hook up with.

However, there are other concerns you should have, like their honesty, experience, integrity, leadership. Are they serious about the company and products/services they're promoting? Are they going support their downline for the next 18 - 36 months or longer?

Or are they MLM junkies who aren't serious about success and never stick with a company long enough to be successful? If they are the MLM junkie type, stay away from them or they'll be calling you often trying to get you to join a different company. You will probably never make a significant, long term, full time income with an upline or sponsor who is a MLM junkie. Be sure and ask about how many programs they've been in during the last 18 months.

Can You Represent More Than One MLM Company?

Yes, if all you do is consume the products and do not promote the company. You must focus on working and promoting only ONE company for 18 - 36 months.

This is the ONLY way to assure high income and long term success. Find a good sponsor, fall in love with a stable company and high quality products, become committed to your goals, and you too will be successful.

Ask us about our MLM Organization

I know the tips on this page can't answer all your questions. There isn't just one simple answer. It takes experience, common sense, solid investigation, and finally also gut feelings.

If you liked what you just read, then step over to the next page to read a really short story.

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Rolf C. Zimmerli
ZNMC Zimmerli Networkmarketing & Consulting
Schaffhauserstrasse 131 CH-8400 Winterthur - Schweiz/Switzerland
Tel. +41 - 52 - 213 01 10 / Fax +41 - 52 - 213 01 10
 http://mlm.ch - E-mail: znmc@mlm.ch

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Last updated by Rolf C. Zimmerli - ZNMC - on 06 July 2005 -
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