"What is MLM? (AKA Multilevel or Network Marketing)"

MLM is an acronym for "multilevel marketing," and is also known as network marketing. MLM is not a TYPE of business, but a WAY of doing business.

MLM companies are no different than other companies who manufacture or distribute products in most respects. The key difference is in the way MLM companies advertise and distribute their products or services.

Instead of doing their own advertising and having their own in-house sales staff, MLM companies pay independent distributors to sell product. Sales are based on the personal recommendation and endorsement of the MLM distributor.

But MLM is more than just direct sales. It takes direct sales one step further: they also pay distributors commissions on the sales of their own organizations. Each MLM distributor can build a downline, or sales organization, simply by recruiting new distributors for the company. The multilevel distributor is then paid on the product sales made in their downline according to the company's compensation plan.

Most multilevel marketing (MLM) compensation plans are based on a percentage payout for each level of distributors in a member's downline (hence the term "multilevel"). When an MLM distributor recruits new distributors for his or her downline, they are generally placed on their first level (or front line).

When THOSE MLM distributors recruit, their new people are placed on THEIR first level, which would be the second level of the first distributor. Most MLM compensation plans pay a different percentage for each level down a specified number of levels.

There are many variations, however, to network marketing compensation plans. Many MLM plans have a fixed width for each level. Example: a 5 X 5 MLM matrix would be one in which each distributor can only have 5 people on their first level, and they would get paid down 5 levels. This, of course, would be an organization of thousands:

Level 1:     5 people
Level 2:    25 people
Level 3:   125 people
Level 4:   625 people
Level 5: 3,125 people

Total:   3,905 people

You will note from this example that our MLM distributor doesn't need to fill all 5 of those levels by themselves. They may only sponsor 5 people. When those 5 each sponsor 5, their 2nd level in their MLM matrix is filled with 25 people. When those 25 sponsor 5 apiece, the 3rd level is filled with 125 people, and so on.

As a multilevel distributor begins building their downline, the people they sponsor ALSO start building their own MLM downlines. And as they do that, they help build the lower levels of the distributor's organization. One of the big attractions of MLM is that you profit from the work of all those people below you, who are building their own organizations (which is also part of YOUR organization).

With MLM, you can make a lot of money from the work of other people - particularly if you realize that you have a responsibility to train those people to become just as successful in network marketing as you are!

In this example, the MLM company might pay a certain percentage for the sales of members on each level. To make it simple, let's say that everyone in this MLM program buys a $50 product every month. And each level of the matrix pays out 10% per month on that $50 purchase. Here is the total payout potential of this particular matrix:

Level 1:        5 X 10% X $50 = $    25
Level 2:       25 X 10% X $50 = $   125
Level 3:      125 X 10% X $50 = $   625
Level 4:      625 X 10% X $50 = $ 3,125
Level 5:    3,125 X 10% X $50 = $15,625

Total Payout on 5 Full Levels = $19,525

As you can see, large MLM organizations can pay you an almost unbelievable monthly income! But please understand that sponsoring thousands of people is NOT something you are going to do in a couple months! You should expect to spend 2-5 years building a large, full-time income in an MLM program. However, don't forget that the people you sponsor will be helping you fill your multilevel organization.

While very few people have ever filled all the levels of their MLM matrix, it is easy to see that the earnings from one's sales organization can be quite exceptional over time. Most MLM pay plans payout somewhere between 55-75% of the product cost. Our example showed a payout of 50% (10% over 5 levels).

Most network marketing pay plans also offer leadership incentives, such as extra percentages on lower levels, or even infinite levels, when some level of performance has been met. Or they may have a bonus pool that is divided among high-achievers according to some formula. Each MLM company's plan is a little bit different, so this is an important item to evaluate when comparing MLM companies (as well as products, longevity of the company, and other factors).

For those who are familiar with affiliate programs as they exist today on the Internet, there is a lot of similarity between MLM and multi-level affiliate programs that pay on more than one level. The difference is usually that in MLM programs, distributors buy a specified amount of product each month. Affiliate programs generally don't require personal product purchases, but they do require continuous sales to new customers in order to pay the affiliate a good commission check.

Multilevel marketing (MLM) companies sell many different kinds of products and services. Some of the most popular products and services among MLM companies are household products (example: Amway); vitamins and nutritional products (examples: Shaklee and Herbalife); cosmetics (Mary Kay Cosmetics and Avon); and discount long distance service (example: Excel Telecommunications).

In recent years, more and more established network marketing companies have been adding an Internet presence. They have put up web sites describing their products and services, and their MLM business opportunity. That allows online ordering and signing up as an MLM distributor online. Many provide web sites for their distributors to use in their own marketing efforts.

There are also many newer MLM companies that started right out on the Internet and provide services for the Internet community, such as web sites, opt-in leads, Internet marketing tools, hosting, etc.

Our MLM training website provides training, specialized resources, and tools for network marketers. Our site is set up to provide all the specialized training and knowledge that network marketers need to be successful with their specific MLM program.

Most people who try network marketing aren't very successful for a variety of reasons:

• They don't understand that MLM is a business, like any other, and requires motivation, time, energy, and personal investment in marketing and training.
• They don't really understand how MLM works and that one must build a SALES ORGANIZATION in order to earn residual income.
• They think MLM is one of those "get-rich-schemes" that will make them rich in a few weeks without much work.
• They don't understand that one of the most important ingredients of success in MLM is personally training and working with your downline.
• They don't understand how to successfully recruit.
motivated people who will make good MLMbusiness partners.

© 2003 MLM Millionaire Training Systems, Inc.