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What Is MLM, Anyway? (It May Not Be What You Think)

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What is MLM? If you’re at this blog, you probably know that it stands for “multi-level marketing.” You probably know that it means network marketing with a company that will pay you on multiple levels, assuming you do your part.

But do you really know what it means? I have to ask the question, because when I was new to MLM, I didn’t know the answer. My sponsor never really explained it to me, and based on his behavior as well as the opportunity video he’d shown me and the Saturday morning training calls, I was under the distinct impression was that it was some system to help you get rich quick.

I found out soon enough that it was not. Or, that it was, but that only certain people got the riches.

I walked away from network marketing with a bitter taste in my mouth because I didn’t understand what it really was. I became a drop-out statistic.

And while there are many reasons that people eventually drop out of MLM, this one is key: people join without understanding what it really is.

So, what is network marketing, anyway?

Network marketing is a system of product or service distribution carried out by word-of-mouth advertising rather than traditional media advertising. Distributors are rewarded for making sales by receiving commission on those sales.




The system is made “multi-level” when the company pays you not only on your personal sales, but the sales of the other distributors who come into your organization underneath you. You get paid on several levels, rather just for your personal sales.

While network marketing vs. multi-level marketing are technically different, today they are used interchangeably (most, if not all, network marketing companies use a multi-level compensation plan). For clarity’s sake, on this blog I will do the same.

Why you really need to get this at a deep level

Now, you may be looking at me like I have three heads and thinking, “Well, duh, I already knew what network marketing was!” And maybe you really do.

But for the other readers who will come across this post, I need to emphasize this point: Network marketing is not about getting rich quick, or even getting rich at all.

It is about sales.

I have to drive this point home, for two reasons. First, once you really understand this business, you’ll stop feeling your stomach knot up whenever someone asks you, “Is this a pyramid scheme?” You’ll have the absolute confidence to breeze over that objection because you know MLM has nothing to do with “pyramid schemes.”

sale

Second, I need to drive the point home because I’ve seen a lot of the opportunity videos out there. They tell you nothing about you selling a product or service. Instead, they show you the matrix and explain that once your five levels are filled out, you will be making $25,000 a month. “All” you have to do is go out and sponsor five people, and help each of them to sponsor five people.

And, of course, meet your required monthly personal quota.

If you have just begun your network marketing journey, you have probably seen a presentation like that…and you probably had no thought about the product or service after seeing it because your mind started reeling with images of Ben Franklins piling up in your bank account.

Am I wite or am I wong?

I’m probably right, and assuming so, I need to get your head out of the clouds so that you will build your business right and not turn off everyone you run into during the next couple of months.

A true story…

I’ll never forget the time I showed an opportunity video to a friend. (I am no longer with that particular company; it was a short-lived relationship.) After she watched it, she looked at me with a puzzled expression. “I don’t get it. They didn’t say anything about sales. How do you make any money? Don’t you have to sell something?”

I didn’t realize it at the time, but she had nailed it.

MLM is about sales.

Of course, when you’re good at selling, you make a lot of money.

But network marketing companies know this secret about human nature: most people don’t think they can sell a glass of water to a man in a desert. So they avoid using the word on their DVD’s. Instead, you share the product and opportunity.

Well, I’m sorry, but if you try a brand new shampoo and like it, then tell a friend you think she should try it, you are trying to sell it to her – whether or not the company who makes the shampoo is going to pay you for the sale.

The difference with MLM is that the parent company will pay you for getting sales of their products or service.

Here are the brass tacks:

MLM is not a get-rich-quick scheme. It is not about building a matrix as fast as you can. It is not about retiring in two to five years (although quitting your job in that time is entirely possible, it should not be your focus when you talk to other people).

MLM is about finding a product or service that you enjoy, and telling others about it with the goal of having those others purchase so that you can make a commission.

It’s about sales. End of blog post.



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