How successful are MLM companies

Multi-Level Marketing: Really a Serious Way to Make Money?

Definition: multilevel marketing

Multi-level marketing (MLM) is a special type of sales. With this direct sales, products are sold to customers through a growing network of employees. Thus the attempt is made to poach the customer directly as an employee, so that he then recruits further customers as a sales partner. Because this can create a large network, it is also known as networking marketing. Startups in particular like to use this type of sales promotion, as it not only enables them to generate more sales in a short period of time, but also to grow rapidly. Multi-level marketing does not exclude any industry. The lucrative thing about the model for employees is that they can earn more at higher levels within the company. Accordingly, the employees climb the internal steps if they generate more sales and sell a lot of products.

Multi-Level Marketing - A Ponzi scheme?

With this type of distribution, the suspicion of a pyramid scheme quickly arises. A pyramid scheme is a business model, the basis of which is a constantly growing network of employees or participants, and which is essential for the success of the company. So that the number of participants increases rapidly, managing directors attract with profit sharing or bonuses for the recruitment of further employees. Only those who bring partners on board earn their money. Since this business model can collapse quickly if the growth of new employees stagnates, this type of direct sales is prohibited. However, in order to quickly identify a pyramid scheme, there are the following characteristics that can be used to identify it as such:

  • Advertisement for an apparently simple business idea that is very easy and quick to make money.
  • You can get into business with a “small” investment.
  • With a bounty or a bonus, more participants are attracted.
  • Opaque structures do not reveal the founder or initiator, even though he receives a commission from every increase.
  • Reaching higher positions and higher salaries only serves the purpose of recruiting more and more people.

How does serious multi-level marketing succeed?

Since the boundaries between multi-level marketing and sales according to a pyramid scheme merge into one another, it is often difficult to identify serious MLM. In order to make this possible, one should ask oneself the following questions: Would the customer buy the product even if he did not receive a bonus for recruiting new employees? Does the business model also work with a stagnating number of salespeople? If these questions can be answered with yes, then it is obviously not a pyramid scheme, but a serious type of networking marketing.

The focus of multi-level marketing is primarily on the products. The aim is to sell high-quality products to customers at a reasonable price and also to constantly invest in product development. In addition, the products are sold to customers who are initially unrelated to sales. If these customers are convinced of the products, they can indirectly expand sales through recommendation marketing. Accordingly, recruiting employees is of course an advantage for the company, but it is not the focus. If customers decide to become employees in sales, they also receive training or further education in order to present and sell the products to other people in a qualified manner. You can therefore not only become a representative of the company, but also earn a passive income with a steady expansion of the network. Because the larger the network, the greater the income - the more recruited staff, the higher your own earnings.

You can quickly recognize serious multi-level marketing based on the following characteristics:

  • The focus is on high quality products at a reasonable price
  • Training and further education free of charge or inexpensive for the employees
  • No investments necessary or even too small amounts
  • A wealth of information about the products, the company and the management level
  • Direct contact

The pros and cons of multi-level marketing

In order to be able to grasp at a glance the advantages and disadvantages of this type of direct sales, the following list is intended to provide assistance.

advantages

  • no personnel management necessary as the sales partners are independent
  • flexible sales activities, part-time or part-time employment possible
  • motivated partners through performance-related income
  • more sales through a large sales network with other partners
  • Improved advice through direct customer contact

disadvantage

  • high administrative effort through training of the partners
  • Lateral entrants often have no commercial experience
  • The structure of the employee network can quickly become opaque
  • high fluctuation of partners
  • Risk of slipping into illegality

3 examples of successful multi-level marketing in German companies

The following three German companies show that the MLM system can be used successfully in companies.

German financial consulting

The German asset advisory service advertises the profession of asset advisor with many advantageous circumstances. If people decide to pursue a career there, they can flexibly set their working hours and accordingly have a lot of freedom for everyday life. In addition, the company promises a performance-based income. Therefore, the employees can determine their progress on the career ladder through their commitment and commitment. Those who achieve more success here will be rewarded additionally. In order to ensure further development, the German investment advisory service offers training and further education.

Home & House

The direct sales of Heim & Haus enable employees to have attractive earning opportunities and good career opportunities with intensive commitment and ability to work. You advertise the collaboration with a long-term partnership and enable extensive training programs for the staff. When employees work in direct sales, they are self-employed and advise customers on exclusive components for their own home. The consultants are initially trained through special induction coaching and can then advise customers independently.

PM International

PM International offers all kinds of products in the areas of fitness, beauty and wellbeing. If you want to work there as a salesperson, you first receive training through training programs and then the opportunity to advise customers independently. Here, too, the income depends on the effort made. PM International advertises with fair treatment of employees and with high flexibility. It is up to the staff whether the service is seen as additional income or whether it is to be carried out full-time.

Conclusion: criticism of multi-level marketing

Since multi-level marketing can quickly become opaque and can flow smoothly into an illegal distribution system, MLM is repeatedly criticized. Basically, however, networking marketing is legal. Rather, it is an interesting form of sales because it is very flexible for employees and enables quick promotion opportunities. Especially when people have a talent for presenting and selling products or services and are generally open-minded. But be careful: Anyone who wants to set up their own business on the basis of an MLM system as an entrepreneur should know all the necessary requirements and legal regulations. All corporate structures should be transparent and open so that they can be checked at any time.