Multi-Level Marketing, often known as network marketing, is another way for a company to sell its products, by means of direct selling, repeat business and referral sales.

Referrals are the base of any Multi-Level Marketing plan. Independent outside salespeople, whom often work for commission, sell the products of the company, looking not only for prospective buyers. They are also looking for other people they can recruit to sell the product for them. This is sometimes called the down line, or pyramid plan.

These independent salespeople, often called distributors, market the product not only by means of their own sales, but also as a result of the sales of the people that were signed on after their own purchase, and subsequent hiring as associates.

These associates, are also asked to find more people to do the same thing. The benefit is that the person who started before, gets a cut, or commission of all the sales that the people who were hired after them make. The distributor, at the top of the chain, benefits from all who came after.

This is by no means a new marketing concept. Long before the Internet was popular, variations of what are now called Multi-Level Marketing plans were in place at hundreds of telemarketing companies around the world. And before that I guess it could have all started as simply as a salesman selling things out of the back of a wagon, like they used to do, and saying as he was packing up, “Tell all your friends!” Bring them with you next time!”

Sounds like referral sales to me.

While all of this sounds very well and good, there are a lot of things to watch out for before getting involved in any Multi-Level Marketing plan. First there is the question of legitimacy.

Yes there are honest companies out there, trying to make a living out of network marketing, with all their licenses, insurances and fees paid up. But for every one that is honest, there are a hundred who are not. The problem is distinguishing between them.

Everywhere you look there are ads for network marketing, they come worded differently but you see them on the want ads boards at Laundromats, on telephone poles, at dollar stores. “Make Money From Home”

“Parent Company seeks workers to make easy money from home!” You know the kind. They are everywhere.

But even the most honestly run Multi-Level Marketing plan is doomed to failure. This happens for one of two reasons. One, either the distributor is really good at hiring people to work under them, and those people are doing the same thing, and soon you find, that sales are dropping off, because the area is overloaded with people selling the same thing to the same customers.

Or if the distributor is really bad at hiring people to work under them I guess the company will still go under, no matter how good the plan is. Companies have turned to the Internet in an attempt to expand their customer base. But even there, eventually there will be an end reached. Even though the distributor benefits from every sale by commission, the market saturation leads to sales dropping, and resellers leaving.

Not how I want to see my future end.

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Good Luck,
Sarah Newman