What is MLM?

MLM is an acronym for Multi-Level Marketing, sometimes called Network Marketing.

As the name suggests, multiple levels of people are marketing a product to consumers. A sales representative (also referred to as a distributor, member, affiliate, partner or associate) gets customers and recruits and trains another sales rep to get customers.

Sales rep gets customers and trains another sales rep to get customers

Multiple levels of marketing are actually what all companies desire (both MLM and non MLM companies). If you’ve ever heard a traditional company announce, “Refer a friend and you’ll receive a discount on your next purchase,” this is multi-level marketing. Health clubs, real estate, telecommunications, and countless other industries use this technique. Professionals (doctors, dentists, accountants) live or die based on their customers telling others about them. All these businesses are simply trying to get current customers to advertise and market their product or service to potential customers.

The Traditional Company

In a non-MLM company, a sales manager and sales reps are hired by the company. The company is limited to the number of sales reps they can hire based on the financial resources the company has to pay salaries and on the traffic the sales manager can handle. Once a sales manager is overwhelmed, the company can hire another manager or convert a sales rep into a manager. This could be called “Multi-Width” marketing because it expands the organization horizontally as compared to “Multi-Level” marketing, which expands its organization vertically.

Traditional companies (non-MLM) use “Multi-Width” Marketing

The MLM (Multi Level Marketing) Company

An MLM (Multi Level Marketing) company “starts” by recruiting one person who gets customers and recruits sales reps (just as above in the traditional company). But each sales rep is also given the option to become a manager, who can also recruit sales reps. The MLM company only pays commissions, not salaries; therefore, there are no limitations on the number of sales reps or managers an MLM company can recruit. This is beneficial to the company because of rapid expansion by the number of trained sales reps. This is also beneficial to the sales reps because their income isn’t limited to only what they can sell - they can also earn commissions for having trained other sales reps.

MLM uses “Multi-Level” Marketing, which is similar to traditional marketing (see above illustration “Multi-Width-Marketing,”) except there is no limit to growth.

Source