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Multi-Level Marketing (MLM) is a marketing technique that involves several independent entrepreneurs pursuing a common goal. There are two types of MLM operation: direct sales, and network marketing. In contrast to traditional businesses that sell to individual customers, direct sales MLMs sell to businesses or potential customers, and network marketing companies sell to individuals.
Direct sales companies generally offer minimal training, and all sales are made over the Internet through web sites. Representatives typically earn commission on sales to customers that they recruit, and often on sales to customers that the recruit. In contrast, network marketing companies often provide extensive training to their independent representatives (known as “independent business owners, or IBOs”). Most network marketing companies do not require that representatives make sales.
Direct Sales Companies Direct Sales Companies are the simplest kind of multilevel marketing company to join, and to become a successful representative, a person must have a mailing list or customer database, a computer or smartphone, and an Internet connection. A new representative starts with an inventory of products to sell. Then the representative creates a product presentation and goes through a sales training program.
Representatives must find prospects and convert them into customers. With ongoing sales training, the representative might earn a commission on each sale. Most of the sales are generated through prospecting new customers, and many also generate sales from “reselling” the products of other “downline” reps. A new representative must become proficient in a highly competitive environment, and must be driven to recruit as many customers as possible.
An MLS provider will help launch a new MLM company in just two weeks, for about $2,000. The companies are a good investment, and will eventually generate several million dollars in revenue and tens of millions of dollars in profits, according to lawyers who track new companies on a regular basis.
Internet Marketing Companies Internet marketing companies employ the technology that makes multi-level marketing possible. A web-based technology lets customers buy products online, and these companies typically charge no initial cost to become a representative, although commissions are earned on all sales.
Many multi-level marketing companies make their money from the commissions representatives earn on sales to their own customers. MLMs may also charge commissions based on other performance-based sales metrics such as sales volume or the number of recruits the representative makes. Most Internet marketing companies provide extensive online training to their representatives, and some also have free customer support.
Representatives can be active or passive, and may recruit or be recruited by
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