Multi-level marketing is one of the most successful and popular business models of all time. It is a tried and tested strategy for selling goods and services. Existing MLM members of an MLM network advertise and sell their products to others, as well as attract new members into the firm. Members are remunerated depending on the sales of their recruits. New recruits join the distributor’s downline, or network, and are urged to make sales to earn money. Although most MLM companies are legitimate, some operate illegally as pyramid scams. So what is multi-level marketing? How does it work?
What is Multi-Level Marketing
Multi-level marketing is a viable business approach that is frequently employed by companies that rely extensively on sales for income generation. Multi-level marketing schemes, unlike traditional sales channels, rely on networks to make sales and acquire new members. As a result, network marketing is a common term used to describe this business model.
This is how it works. Contractors, independent business owners, distributors, and salesmen are all types of people who work in the business. These individuals are tasked with selling the company’s products and/or services to others. Sales can be made in person or through the internet and they are paid a commission for each sale they make.
Different Types of MLM Plans
A wide variety of compensation plans are implemented by Multi-Level Marketing companies all over the world today. Your earnings and chances of growth in a network depend on the type of compensation plan you join in an MLM company. Let’s have a look at some of the most popular Network Marketing compensation plans.
a. Binary MLM plan
The binary plan is the most popular and commonly implemented compensation plan. Individuals and companies benefit equally from the plan. It uses a two-leg system, with a left and right leg. These legs become either power or profit legs based on activity. An individual who joins the network will be accommodated either on the left or right leg.
b. Matrix MLM plan
This popular compensation plan is also commonly known as the ladder plan or forced matrix plan in which the downline is structured using a fixed width and depth matrix. For this process, just a small number of people are selected. Only limited new members will be eligible for width front, and they will be able to receive rewards up to five levels. Because the width of the plan is limited, the upline is dependent on the downline to create more sales.
c. Unilevel MLM plan
This is one of the most basic MLM compensation plans. It allows you to add new members straight into the only line, giving you direct control over distributors. You can add an endless number of people to the front row and extend the width. Multi-level marketing organizations add excitement to this plan by including awards, incentives, or bonuses for achieving a certain degree of frontline width. This MLM plan can produce impressive results for distributors.
d. Board MLM plan
The board plan is often referred to as a revolving matrix plan by MLM companies. A group of associates known as the board work together in this plan as a team. The company’s supervisory processes allow for a number of persons to participate on its board. When the board reaches capacity, it splits into two, with the surplus members forming a new board. The members on the board determine how many members can be recruited for the board and how many can be promoted to the next board.
e. Generation MLM Plan
The Generation plan is also known as a Repurchase Plan or a Gap Commission Plan. Product sales are the most important aspect of this compensation plan. The affiliate must sell the products to earn rewards and incentives. When compared to other compensation plans, the generation plan is unique and effective. Marketing is important to businesses that manufacture consumable products. This method, on the other hand, is based on word-of-mouth or person-to-person marketing, which gives the whole process a personalised feel.
Multilevel Marketing vs Traditional Marketing
Multi-level marketing and traditional marketing are just two of the many ways to do business today. Both business models are hugely popular and implemented by millions all over the world. So how do multi-level marketing and traditional marketing compare against each other? Let’s have a look.
|Multi level marketing||Traditional marketing|
|Affordable startup cost||Requires a big investment as startup cost|
|No need for an address||You need an address for your business|
|No employees required to run the business||Employees are often required to run the business|
|MLM is a global business||Restricted to a limited area if your business is not online|
|Exponential earning opportunities||The chances of earning are linear|
|Work anytime, from anywhere||Will have to work 80 odd hours a week|
|Low risk as little investment is involved||Increased financial risk as a lot of investment is involved|
|Can be done part-time or full time||Requires your full-time attention|
|High rate of failure||High rate of failure|
Pros and Cons of Multi-Level Marketing
Here we are taking a look at all things multi-level marketing. We already covered what is multi-level marketing and the different compensation plans deployed in the business. There are two sides to every coin, and there are pros and cons to every business. Let’s have a look at some of the pros and cons of the multi-level marketing business model.
Pros of Multi-Level Marketing
- It is a method to share something that you are really passionate about and generate an income from it.
- One of the best and affordable ways to start a new business.
- The working hours are flexible, so you can spend time doing other important things too.
- A great way to supplement your income by working part-time.
- The opportunity to earn passive income.
- You get the chance to teach and mentor others.
- You can be your own boss.
Cons of Multi Level marketing
- Alarming number of scams in the field.
- Most distributors don’t earn enough from multi level marketing.
- You will get rejected a lot of times.
Multi-Level Marketing Statistics 2022
You may know what is multi level marketing, but How well do you know the multilevel marketing industry? Most people are unaware of several facts concerning the Multi Level Marketing industry’s history, companies, distributors, consumers, and entrepreneurs. So let’s take a look at some of the most important Multi level marketing statistics for 2022.
- Amway has been the top MLM company based on revenue generated for the last decade.
- The company generated a revenue of 8.5 billion $ in 2020.
- Natura &Co, Herbalife, Vorwerk, and COWAY were the next biggest MLM companies in 2021.
- There are over 120 million MLM distributors in the world.
- 10.5 million people consider multi level marketing as their full-time job.
- MLM distributors work for an average of 13.3 hours a week.
- USA is the biggest market for multi level marketing business, followed by China, Korea, Germany, and Japan.
- Health and wellness products are currently the most popular in the MLM sector globally.
- There are more female MLM distributors than males.
Is Multi-Level Marketing Right For You?
If it hasn’t already happened, a friend or family member will come to you with “an amazing business opportunity” at some point. They are likely trying to recruit you to their multi level marketing network. Multi level marketing is becoming increasingly popular every day with old-school Amway or Herbalife or newer enterprises recruiting aggressively on social media.
These offers can be attractive because they promise a lot of money for only a few hours of work per week. But there’s nearly always more to the story than meets the eye. Before you join any MLM company, ask yourself the following questions:
- What are the start-up costs?
- Are you comfortable doing sales?
- Do you like the product the company is selling?
- Can you recruit others to your network?
- What is multi level marketing?
If you have a favorable answer to these questions, then MLM might just be the thing for you.
Legality In Multilevel Marketing
In the multi-level marketing industry, there are polar opposite viewpoints on the subject of legality. Is multi-level marketing, therefore, legal? In a nutshell, the answer is yes. It’s legal in most countries if done correctly and according to the rules.
The difficulty is that multi-level marketing businesses are often deliberately complicated, unclear on important details, and it’s often impossible to identify whether the business is structured upon the consumption of an actual product or the idea that you must bring more people “under” you to thrive.
Illegal pyramid schemes, sometimes known as “Ponzi” schemes exist. This is where the money is made by getting other individuals to join the network, with little or no actual products sold. Despite all this, companies like Amway, Excel, Herbalife, USANA, etc have been successful for decades and sold billions of dollars worth of products.
Top Earners In Multi level Marketing
There are numerous success stories in the MLM business. Many hard-working, passionate individuals have climbed the multi level marketing mountain and made their way to the top. These people serve as motivation for beginners starting out their MLM journey. Here are some of the top earners in the multi level marketing business.
|Name||Est. Earnings Per Month||Est. Earnings Per Year|
|Igor Alberts & Andreea||$ 1,200,000||$ 14,400,000|
|Kim Hui||$ 850,000||$ 10,200,000|
|Jenna Zwagil||$ 730,000||$ 8,760,000|
|Ivan and Monika Tapia||$ 715,000||$ 8,580,000|
|Rolf Kipp||$ 700,000||$ 8,400,000|
|David Imonitie||$ 650,000||$ 7,800,000|
|Dexter Yager||$ 600,000||$ 7,200,000|
|Jason Brown And Matthew Rosa||$ 600,000||$ 7,200,000|
|Jeff Roberti||$ 450,000||$ 5,400,000|
|Brian McClure||$ 400,000||$ 4,800,000|
Know more about the Top earners in multi-level marketing here.
Types Of Multi-Level Marketing Companies
There are mainly two types of multi-level marketing companies. These are MLM companies that sell products, services and memberships. Let’s have a detailed look at each of these types of companies.
- MLM companies that sell products normally manufacture them themselves.
- Popular products include vitamins and nutritional supplements, cosmetics and beauty aids, cleaning supplies and other household products, etc.
- MLM companies that sell services do not require to maintain inventory or conduct frequent client visits.
- Their distributors promote the company’s services in the same way that product-selling distributors do, and they are paid accordingly.
- The difference is that they sell memberships to the company’s services rather than selling products.
- A distributor must constantly acquire new clients to have a steady income.
- Renewal of memberships is also a way to generate revenue but only pay very little commission.
- Online courses, club memberships, legal services, financial services, etc are the popular services sold by service-oriented MLM companies.
List Of Top MLM Companies
There are thousands of MLM companies in the world today. Many of them generate revenues exceeding $100 million every year. Top companies have consistently crossed the billion-dollar revenue mark over the years. Let’s have a look at the top MLM companies in 2022.
Amway has been the leading name among MLM companies globally for decades now. The company managed to generate a revenue of $8.5 billion in 2020. They sell a wide variety of products in nutrition, beauty, home, energy categories.
Natura & Co
Natura & Co is a Brazilian MLM company that sells cosmetic products. They climbed to the top of the list of top MLM companies after acquiring fellow MLM giants Avon in 2020. The company also owns renowned brands like The Body Shop and Aesop. Natura & Co generated revenue of $7.16B in 2020.
Herbalife is a popular MLM company based in LA, California. It employs nearly 10000 people worldwide and has a network of over 4.5 million members. The company has a global presence with members in 94 countries. Herbalife managed to amass a revenue of $5.5B in 2020.
Multi-Level Marketing Business Model
To know what is multi-level marketing, you must understand how it works as a business. Multi-level marketing is a business model that develops a company by relying on a network of distributors. Making money in this model mainly involves the use of three fundamental types of systematic strategies: lead generation, recruitment, and product sales.
If you’re considering creating a company that relies on multi-level marketing in any form, make sure you have a strong marketing team at the helm. The more natural salespeople you have on your team, the better your chances of long-term success are.
Not everyone who wants to sell something is skilled at it, but if you have someone who is enthusiastic about your company but isn’t a good fit for your sales staff, find them another position. Marketing is important for any business’s success, but don’t forget that genuine excitement and loyalty towards a company or product is something that can’t be bought.
Multi-Level Marketing vs Pyramid Scheme
There is actually a third sort of MLM company that doesn’t sell products or services. These are more correctly defined as pyramid schemes. Today it is impossible to talk about what is multi-level marketing without mentioning pyramid schemes. The focus of such companies is on recruiting new members, with little emphasis on selling products or services. These MLM companies reward distributors handsomely for recruiting new members, providing an additional incentive to generate income from sources other than sales. Such MLM companies inevitably fail as they do not place a strong emphasis on generating income through sales.
Get More On MLM vs Pyramid Scheme
Here we have talked about what is multi-level marketing, how it works, MLM software, its uses, benefits, features, the different types of multi level marketing, and much more. This blog can act as a definite guide to MLM for you.