The Multi-Level Marketing Distribution Model

If you want to create a distribution model that allows a parent company to market its products directly to consumers by means of relationship referrals, and if you have ever thought about becoming a distributor for a multi-level marketing company in order to make a little extra money or build a business working on your own, then following paragraphs will explain you how you can achieve it.

Multi-level marketing is a system of retailing in which consumer products are sold by independent businessmen and women known as distributors usually in customers’ homes. You can set your own hours and earn money based on your efforts and ability to sell consumer products or services supplied to you, the distributor, by an established multi-level marketing company.

Independent, unsalaried salespeople of multi-level marketing, referred to as distributors (or associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, etc.), represent the parent company and are awarded a commission based upon the volume of product sold through each of their independent businesses (organizations).

The multi-level company also will encourage you to build and manage your own sales force by recruiting, motivating, supplying and training others to sell the products or services. A percentage based on the sales of your sales force would be your compensation, in addition to personal sales.

“Pyramid” schemes, on the other hand, concentrate mainly on the quick profits to be earned by selling the right to recruit others.

The merchandise or service to be sold is largely ignored, and little or no mention is made regarding a market for the products. Pyramid scheme participants attempt to recoup their investments in products by recruiting from the ever- decreasing number of potential investors in a given area.

Consider the results if one person recruited six distributors, each of whom, in turn, recruited six others, and carry the process through nine steps as follows: 1 6 2 36 3 216 4 1,296 5 7,776 6 46,656 7 279,936 8 1,679,616 9 10,077,696

At more than ten million people for every nine steps in the distribution program, the distributors soon would be recruiting one another. In order for everyone to profit in a pyramid scheme, there would have to be a never-ending supply of potential (and willing) participants.

Although it is possible to build a successful multilevel business with comparatively little start-up money, we have to keep in mind that it is not a means of getting rich quickly or easily.

Successful distributors, who have recruited and trained a large number of sellers, also have to assume ongoing wholesaling and managing responsibilities as well as making sales to their own retail customers.

Managing such a large network can be lucrative, but it is hard work and can become a full-time job. Distributors earn a commission based on the sales efforts of their organization, which includes their independent sale efforts as well as the leveraged sales efforts of their downline.
 
This arrangement is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager.

Commissions are paid to multi-level marketing distributors according to the company’s compensation plan. There can be multiple levels of people receiving royalties from one person’s sales.