How Do MLM Companies Work?

At times referred to as network marketing, MLM business employs self-reliant sales representatives or associates to get to customers. The use of sales reps as intermediaries allows MLM companies to reach customers who would otherwise not be targeted by traditional marketing techniques both offline or online. More so, MLM companies allows their network marketers have their own working hours and make however much money their skills and efforts allows them to, this way improving their marketing skills.

While other marketing companies might advertise through expensive means, MLM companies provide presentation items like DVD’s and brochures that work as guides for those who choose to become independent business owners marketing on behalf of their company and guide new associates to start selling immediately. Use of social media to bond the internet and network marketing together by associates is also recommended to increase sales.

How does it work?

A sales representative for an MLM company becomes operational after their first sale of a product or service to a customer. Depending on the company’s commission plan, a sales rep should get as many customers as the company recommends; on average 20 customers per sales rep. MLM companies pay you to “duplicate yourself”  hence it is not efficient to more than the recommended customers. It’s easier and more effective for the sales representative to recruit and train other sales reps then acquire more customers through them. More products get to reach your customers more effectively than when selling them on your own. These sub-sales reps are referred to as your downline. The main sales rep trains the downline how to acquire customers and then how to recruit their own sales reps and they ought to also learn how to train their sales reps as well.

Commission plans are MLM Company’s way of rewarding distributor’s production but they’re to some extent different from one company to another. Most plans can be complex on the face of it since all companies aim at getting a sales rep to sell more products. An example of the most commonly used plans is the one designed by dividing money set aside for commission to “buckets”. The first bucket is aimed at motivating the sales reps to sell products and services to customers by buying the products at wholesale price then marking it up. The next bucket is aimed at encouraging sales reps to train new people. The better the trained skills the more the products sold hence the more the reward. The other bucket rewards sales reps for being and/or obtaining leads. When found, the company will then reward both the leader and the sales rep that found or developed the leader.

When making a decision on which MLM company to join, on should focus on the difficult but achievable compensation plan. This is because you will have to work very hard to attain the commission but once received it will be worth the effort because it is very rewarding. It sure would be nice to be rewarded based on your results and production.


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