| What
Is Multilevel Marketing and How Does It Work?
What
is multilevel marketing?
Multilevel
marketing (MLM—also called network marketing) is a way of
distributing and selling
products and services through a chain of independent distributors
rather than through traditional retail outlets.
How
does multilevel marketing work?
Each
distributor has two basic jobs: (1) to sell the company's products
or services and (2) to recruit more distributors to sell the company's
products or services.
Each
new recruit a distributor brings into the organization is, in
turn, encouraged to bring in his or her own recruits. The result
is that an active distributor eventually develops a hierarchical
substructure known as a downline that looks somewhat like an organization
chart in a company with a lot of employees.
Each
distributor gets sales commissions on his or her own direct product
sales. He or she also makes a commission on the sales of the distributors
in their downline. There are also likely to be performance bonuses
available for reaching certain sales levels.
Since
each distributor profits not only from his or her own sales but
from sales of the downline, it is to the advantage of the distributor
to guide and help those below to succeed.
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