Almost all entrepreneurs always look for a business that yields high returns with low investment. The first and foremost business that strikes with such a strategy is the Multi-level marketing business (MLM).
Yes! MLM or Network Marketing Business is in the current trend to allure more people to join this huge network. Now some people might wonder what is Multi-Level Marketing and how it works.
Here in this article, you will be able to understand MLM or multi-level marketing and the working principle behind this network marketing.
Hope you all know the basic term "Marketing" now we will look into what is multi-level marketing or MLM.
What is Multi-Level Marketing (MLM) or Network Marketing?
Multi-level marketing is also known as network marketing, which is a trending business model basically to build a huge network of distributors and their recruits (downlines) to promote their MLM products via marketing or sales.
I hope you all would have heard about the top MLM companies Amway, Tupperware, Herbalife, etc. Here they promote their products or MLM products via their distributors to their customers. This type of marketing is known as Multi-level marketing or Network marketing.
You will be able to buy these products only via their distributors and the distributors will earn a certain commission on the product sale or new recruits (downlines). The commission offered will be based as per the MLM plan preferred by the MLM organization.
Now, what is MLM Plan?
MLM plan is a plan designed to form the network structure of the distributors and their recruits or downlines to promote the product sale. The MLM organizations will offer the distributors and the downlines commission for the successful product sale or new MLM recruits to the network.
The commission percentage offered for each distributor is based on the individual distributor sale or percentage commission of their downline sale.
Most of them would have heard about the popular MLM plans like Binary plan, Matrix plan, Unilevel plan, etc. Here as per the MLM plan the distributors and their downlines are placed in the network structure or the genealogy tree.
The MLM network structure provides you a clear idea about the distributors and the respective downlines of distributors. The commission calculation becomes simple as per the MLM plan preferred by the MLM owner.
How does MLM Work?
As we have already seen it is a huge network of people promoting their MLM products, now let us see how this network marketing works.
Once the customer signup with the MLM business to promote the MLM company products, they will become the downlines of the distributor and now the distributor is called as the sponsor of the downlines. Now the downlines of the distributor will become a distributor and they, in turn, can recruit their downlines to form the chain network structure.
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In general, look into the different types of MLM plans offered by the MLM company to know more about the MLM network structure and the commission calculated based on the structure and PPV.
An efficient MLM software will have two modules like admin and user module. Admin will be the MLM owner, who will be able to track the distributors and their respective downlines. They keep track of the commission offered to the distributors and also all the MLM business transactions, MLM reports
Users will be the potential customers who sign up with the MLM business and will become the distributors of the MLM business. In the user module of the software, the users or the distributors will be able to manage their own team and will be able to communicate with their downlines effectively.
Finally, in this article, you will easily be able to understand what is multi-level marketing and how it works from the beginning like building the team to earning the MLM commission. It gives you a short description of the MLM plan and how the MLM organization calculates the MLM commission.
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