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Home Marketing A Quick Walk through Multi-Level Marketing (MLM): Workflow, Terms and Prerequisites

A Quick Walk through Multi-Level Marketing (MLM): Workflow, Terms and Prerequisites

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Over the past few years, many marketing models have surfaced. Most of the time, ambitious marketers are caught in the midst of a pyramid model. This a vicious model where most of your time and hard-earned finances are lost. The characteristics of the pyramid model are not appreciated by most people. This is why, the world needed something like the pyramid model, but more profitable and transparent. Thus, the Multi-Level Marketing Model, alias MLM came into action.

Related Post: A Basic Guide on Network Marketing

How does the multi-level marketing scheme function?

multi level marketing scheme function

By definition, the MLM marketing strategy depends on sound networking capabilities. This is a network-based model, in which each individual has to include more people under their functional boundaries. Indeed, marketers need to pay for “individuals” to join under him/her. Now, people who join will have the freedom to add a few more members under them. This way, people who add new members are given bonuses or incentives for their performance.

A famous example for the MLM marketing prototype would be the AMWAY business model. The business is officially reputed, and legit. In fact, there is nothing “wrong” or “fraudulent” about this business model. Yet, the overall structure is similar to the traditional pyramid model.

Another company that follows the MLM marketing model, would be “Herbalife Nutrition Ltd”. This is a multi level marketing and a high-profile company in the industry. The role of this organization is to sell products that encourage weight loss. Currently, this brand features nearly 500,000 active distributors. All these distributors tend to follow the MLM marketing scheme.

Also Read: A Small Business Owner’s Guide on How to Prevent Burglary

Important terms in MLM

When you learn more about MLM marketing, you are likely to come across a few common terms. Here is a quick walk through these jargons:

  • Plan: This is one of the most commonly used terms in multi level marketing. The plan represents the brand’s actual program. It gives details about the company’s compensation and marketing plans for its followers.
  • Sponsor: As suggested by its name, the sponsor is someone who hires another person, into the brand’s marketing plan. For example, if member A chooses to hire member B into the brand, through the MLM plan – Member A will become the sponsor of Member B. Member A has to train and manage Member B.
  • Recruit: The process of hiring a member is known as a recruit. As mentioned previously, the member hiring a new one would be considered as the supervisor. The flow of control is “upline” in the MLM marketing strategy.
  • Downline: For a specific member, the downline represents the members he/she recruited. A member can recruit as many members as possible. With more recruits, they are likely to make bigger returns from the MLM marketing plan.
  • Upline: For a specific member, the upline represents the member who hired them. The upline member is responsible for training and monitoring the progress of the downline members.
  • Network Marketing: Another commonly used term for identifying MLM marketing would be network marketing.

Network Marketing

Also Read: Six (#6) Components of the business continuity plan

  • Compensation: Once again, this is a commonly used term in MLM marketing. This outlines the actual money made by members of the plan.

Is MLM marketing officially approved?

Yes, MLM is an approved marketing method. Time after time, many misconceptions and myths have surfaced around the MLM Marketing method. However, it has survived the test of time and is legal. For MLM to be officially approved, and for it to be legal, it needs to meet the following qualities:

  1. The product or service has to be approved and of high quality.
  2. Income is made only when a product is sold, or a service is offered.
  3. Growth is not controlled by recruitment alone. Instead, it should depend on sales.
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