What is MLM

Mar 8, 2019Sheffield Blog

What Does MLM Mean?

Multilevel Marketing (MLM) is a business in which non-salaried sales representatives sell products on behalf of the company while attempting to recruit other sales reps. It’s a business model that provides a wealth of benefits to the owners and management but also gives hard-working sales staff the opportunity to earn a limitless salary.

MLM, which is also known as referral marketing and network marketing, is a rapidly growing industry that’s providing a wealth of opportunities to employers and employees across the United States.

What is MLM?

Multilevel marketing is a unique business model that turns customers into representatives and gives everyone involved with the company a chance to earn their share of the spoils. A MLM company will provide its sales reps with two typical revenue streams:

1. Product Selling: The sales rep is tasked with finding—and selling to— customers. Their success, and therefore their salary, is entirely dependent on how many products they sell as they earn a small percentage from each sale. They can go door-to-door, they can sell online, or they can sell to friends. They earn their percentage from each sale, which means they can earn a regular wage by building a network of repeat customers, much like a regular store would do.

2. Acquiring Sales Representatives: The sales rep signs other sales staff to the service and in doing so they either earn an upfront bonus or, more typically, a percentage of every sale the representative makes.

How Does MLM Work?

MLM exists in many forms and can be used to sell many products. Affiliate marketing, which has become the go-to way for webmasters and bloggers to make money, is actually a form of multilevel marketing. The affiliate not only promotes a company’s products in order to earn a share from each sale, but they also look to acquire other affiliates so they can earn a share of
their sales as well.

For the sales reps, the benefits are obvious; the more they work, the more money they can make. They earn an active income by acquiring new customers and taking orders from repeat customers, and they can earn a passive income by signing-up sales staff.
For the company, multilevel marketing is an affordable and effective way to sell a product or a service. They only pay staff when sales have been processed, which means increased expenditure is a direct result of increased income.

A properly structured MLM program will allow for significant profits for the company while also providing non-salaried workers with large financial incentives.

MLM Examples

Avon Products and Amway are the two biggest MLM companies in the world. Avon was actually founded over 130 years ago and was one of the very first MLM companies in the US (although they don’t adopt this model straightaway). It was founded by a struggling door-to-door book salesman and now generates a revenue of more than $5 billion, with representatives in over 100 countries worldwide.

Amway, who we have worked with in the past, was founded much later, in 1959, and today it has over 17,000 employees (and many more sales reps) and a revenue of nearly $9 billion.

These are the biggest examples of how successful MLM can be. Not only do they generate revenue equivalent to the GDP of a small nation, but they help over 10 million representatives to pay their bills and put food on their tables.

They are far from the only successes in this industry either. There are many more billion-dollar and million-dollar MLM companies out there, with new ones being launched every single year.
This ship has yet to sail, the opportunity has yet to pass and the golden age of MLM is well and truly upon us. If you want to take your company to new heights, this unique method of direct selling could be the answer.