Learn More about MLM Network Marketing Multi-level marketing rewards an individual salesperson for both their own personal sales, as well as for those of any member recruited by that individual. Organizations which utilize this marketing strategy may be referred to in a variety of ways. Network marketing, multi-level marketing (MLM), and affiliate marketing are all term used to describe this kind of marketing strategy. In this system, those recruited by the individual (often referred to as "downline") may also utilize their personal network to add members. In order to maximize the income potential for members, an individual is also rewarded for the sales of those recruited by the "downline" that individual personally recruited. By continuing to reward members for increasing the number of sellers in their network of "downline" with this "multi-level" reward system, an organization encourages its members to enlist more independent distributors and to increase sales for the organization. Individuals within this system most-often use word-of-mouth advertising and their own personal relationships to produce sales.Sales: 10 Mistakes that Most People Make
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Individuals participating in MLMs are known by many names. Participants might be known as independent business owners (IBOs), franchise owners, independent agents, associates, or a number of other titles. These participants are looking for monetary or lifestyle options and have become unsalaried participants in an organization. These participants are, however, authorized to provide consumers with products and services offered by the organization. By utilizing their access to the organizations services, participants are able to create retail profit from sales of these services and are also given commission from the company as a reward for promoting their service and increasing their consumer base. Independent distributors can also purchase products at wholesale cost and create retail profit without directing consumers to the company first. The productivity of fellow sellers an individual has in their network of downline is also factored into their income, though the specific compensation plans vary between MLM organizations. Independent distributors grow their network of downline marketers in order to increase their own income potential. Because this compensation plan encourages the growth of members in the organization, the amount of salespeople increases quickly and, because these salespeople bring their personal networks of consumers with them, the consumer base for the organization also increases. What's in a Name In describing multi-level marketing organizations, many different names and terms were developed by the organizations themselves in attempts to distance themselves from illegal and illegitimate entrepreneurial enterprises such as Ponzi schemes, internet scams, and other fraudulent businesses. As a result, there has been some confusion over the terminology surrounding MLM organizations. Sometimes direct selling strategies are mistakenly considered synonymous with MLM, however direct selling is only one component of MLM strategies and there are many non-MLM direct-selling companies. As one author described it, direct selling refers to the manner in which sales are created and financial transactions occur. The compensation plan, in contrast, is described by the "multi-level marketing" label. An organization which rewards the personal sales of an individual, but not those made by recruits is considered to be a single-level marketing organization, which differs from MLM. Many organizations have transitioned from a single-level marketing compensation plan to a multi-level marketing plan and have found success and an increase in sales.