Define direct and multi-level marketing. MLM business: what it is and how networkers work on the Internet. Video: how online business works

MLM business, or network marketing, began to conquer the Russian market back in the 90s of the last century, and still remains in trend, attracting new entrepreneurs to its ranks. Thanks to this form of sales, we distribute all kinds of additives, cosmetics, detergents, dishes, etc. According to the Direct Selling Association, 43.5% of the market is occupied by personal care products, 29%- products that promote a healthy lifestyle. 11.2%- clothing and accessories, 9.5%- household chemicals, 5% - household goods and others. But, despite the fairly high demand for goods, and the growing turnover of companies engaged in network business, our attitude towards MLM is very ambiguous.

• What is attractive about MLM business?
• Why people don't like MLM: 3 reasons for distrust of business
• How to start a business from scratch in MLM
• How to choose the right company to work for and start earning money
• 3 tips on how to make money with network marketing
• Internet network marketing: a second wind for business?
• MLM business trends 2018
• How to develop a business mindset using MLM

On the one hand, hundreds of thousands of people come to the MLM business who want to earn money and build a career: at the end of 2017, 3.8 million people were engaged in network marketing. With another- They try to avoid network marketing and often do not consider it as an opportunity to make money, preferring a stable job with a stable monthly payment. The thing is that often people have no idea about the true face of network marketing. Let's try to figure out what MLM business is today, what positions it occupies in Russia, whether it has prospects and what awaits it in the future.

What is attractive about MLM business?

The name MLM comes from the English multilevel marketing, that is, multi-level marketing, sales. Network marketing is a certain type of sales of goods and services by independent distributors. Each of them can not only engage in sales, but also attract new partners, and they, in turn,- theirs. Thanks to this approach, a “network” is formed, each participant of which can receive interest both from their own sales and from the sales of people they attract. The larger the distributor network- the higher his income.

Let's say you have a store that sells cosmetics. You can only make a profit when buyers come to you. Opened - earnings will also depend on its customer attendance. Network marketing will provide completely different opportunities. People themselves will order the necessary goods, buy them and distribute them among their friends. It is for this reason that it is so attractive to companies producing certain products. "Dinosaurs" of the market, such as Avon, Mary Kay, Oriflame, Amway do not have worthy competitors for the simple reason that their products are often sold out almost immediately, even at prices that are several times higher than “store prices”. Sales through stores are fraught with competition and unnecessary problems that can be solved through network marketing. The manufacturer does not need to spend money on advertising, renting retail space or incurring other expenses. But for networkers, the big plus is that companies not only earn money themselves, but also give everyone the opportunity to earn money.- those who like their products.

In network marketing you can:

- have a flexible work schedule;

- get by with minimal financial investments;

Make a career;

- create passive income;

- transfer the contract by inheritance or sell.

But despite all the advantages, not everyone manages to achieve success in MLM.

Millions on MLM: how American multi-level marketing differs from Russian

American MLM marketing differs from Russian only in the attitude of representatives of two nationalities towards it. Americans most often consider network marketing to be a side hustle or second job. They are ready to devote some time to it, but not their whole life. If things are going well, and there is not enough time to manage a multi-level company, a few leave their jobs and engage only in MLM business. Some people can actually become millionaires through MLM. But this is only the top of the pyramid, at the foot of which there are thousands of less successful entrepreneurs.

In Russia, newcomers often try to invest all their strength and resources into a new business and constantly run around among acquaintances and strangers, offering goods and trying to sell them at any cost. To build their own network, many lack the skill or desire. Beginners mostly see only a system of bonuses and bonuses plus the opportunity to purchase goods cheaply.

Network marketing today, like any other business, requires a reasonable approach and a clear plan of action. And one more thing: if abroad the times of trials of network companies are a thing of the past, and business has become completely legal and profitable, then in Russia the possibility of encountering fraud still exists.

Hello! Today we’ll talk about network marketing. We will just tell you about it, but this does not mean that we encourage you to do it. This article is just a review of the tool, nothing more.

It is difficult to say what network marketing is in a nutshell. Some people call this earning scheme a real “scam”; others talk about the only opportunity to open your own business without investing tens of thousands in its development. This article will collect the most detailed information, after considering which you will come to certain conclusions and decide for yourself whether it is worth looking for a job in network marketing or whether it is better to leave this area to others.

What is network marketing and what is its essence?

Network marketing- a way to promote a certain product with the help of a network of people who, in turn, receive a percentage of the sale of the product and rewards for attracting new people to the network. A person tells his friends about it, who, in turn, tell their friends, and the result is a kind of network in which it is very easy to distribute the product.

For each person invited, he receives a percentage of his profit. Of course, to attract people to network marketing, various psychological techniques are used. Not everyone will find this work profitable, so before explaining to a person the essence of the technology for distributing goods, they work with him for a very long time and explain the advantages that he will lose if he does not agree to this work.

Network Marketing - Pyramid

Some people compare network marketing to financial pyramids. Yes, the scheme is a little similar, but in the case of network marketing, no one forces a person to invest huge amounts of money and just sit and wait for a miracle. If you work, constantly increasing your base, you can first break even, and then turn into a plus. Unfortunately, in large networks you will already be too far from the top, so you shouldn’t expect exorbitant fees and life in the Maldives, but a couple of tens of thousands in salary increases is quite possible.

Network marketing system and principles of its functioning

• Any network system must somehow serve the distribution of a product, good, or specific service that a company or group of people provides;
• If the flow of goods or services stops for even a few days, money stops flowing and the system collapses completely;
• There must be many representatives of the lowest level in the system, because otherwise the scheme makes no sense at all.

If you decide to get into network marketing

It all starts with a banal interview, during which specially trained managers talk to potential buyers, describing all prospects in vivid colors. There may be exaggeration (for example, about the highest income in the first couple of months - even if you are super active and all your friends immediately connect to the network, you will not receive a large amount in the first month).

If you agree to register, some companies may require you to pay an entry fee into the online business. Of course, they will not provide you with any documents, or they will give you something that has no legal force. True, only young and unscrupulous network companies are guilty of this; masters who have been on the market for several decades will never do this, their reputation is too important to them.

After this, the work itself begins. That is, a constant search for new sellers whom you can connect to the network after yourself and make a profit from them. The money is received after the goods are sold, but some companies additionally set a certain payment day, before which it is impossible to receive the full amount. In the latter case, you should strain yourself - often these are scammers who work for a couple of months, after which they disappear along with the money they earned, leaving behind an empty office and a girl manager in a pre-heart attack state.

How to make money from network marketing

There are three ways to make money in such a company:

• Resale of products. To do this, a certain product is bought at a wholesale price and sold from friends at the market price. The percentage markup varies from 15 to 30%. This method even has a name: margin;
• Receiving bonuses for some actions performed within the framework of work in the company. Typically, bonuses are based on the number of sales, although there are certain exceptions. Such earnings greatly depend on the company in which a person works - some do not offer anything at all for exceeding the plan, while others very generously reward for every important figure;
• Receiving funds from interest that drips from employees who were invited directly by you and your friends. The more such people you have under your command, the greater the amount. If you stand at the beginning of a large network, you don’t have to work at all - but you need to spend a lot of time and effort on building it, in addition, if some of the distributors get disappointed and leave, you will have to come back again to expand the network to an acceptable level of earnings for you.

All these methods require one thing from you: you must work. Work hard, constantly disseminate information, look for new clients. Be prepared for misunderstanding, for the fact that you will simply be banned on social networks, that you will be trolled and sent in personal correspondence - unfortunately, not all network users react adequately to network marketing on the Internet.

Network marketing on the Internet

If possible, you can sell goods. Or a website to attract people. True, this will require certain resources, and promotion will take a lot of time (unless, of course, you are an expert in).

Among other things, to succeed in network marketing, an employee is required to have certain character traits. First of all, he must be very persistent, not accept refusals, try to prove his point of view - and, at the same time, be able to retreat if he understands that the situation is taking an unfavorable turn for him. Confidence in this list should probably come first: if people feel that you know what you are doing and have no doubts, then they will follow you and work in the same company, generating income - or they will simply buy something -the quantity of goods.

Are people today interested in network marketing?

Despite the large number of standard “scams” ​​and a small percentage of truly successful people, everyone who surfs the Internet has at least once thought about this way of making money. Modern leaders in network marketing, such as Oriflame, Avon, Faberlic, Vision, Amway, LR, Tian De and Siberian Health, still make it into the top queries, according to a special service that determines which words and in what quantities and combinations users usually Google.

Before moving on to specifics, I would like to consider the main advantages and disadvantages of network marketing.

Pros of Network Marketing

• You can make a lot of money if you really try. To achieve your goal, it is enough to create a close-knit team that will gradually help you make a profit.
• Financial independence from the company and other people. In other words, you decide for yourself when to sell the product and receive your own revenue; the employer does not monitor this moment at all. Well, a bonus is financial independence from loved ones, for example, from a husband or parents. But complete financial independence cannot be achieved - all risks associated with force majeure will remain.
• Having your own business. This is not really a business, at least at the very beginning of the development of your particular network. In a year or two things will get better, and you will be able to call yourself a small businessman. Investments, by the way, will also be required, so all those who tell you about the complete absence of investments are either lying or do not fully understand the principle of operation of such systems.
• Close-knit team. There won’t even be any nasty “buts” here - in network marketing they pay special attention to this. The people there are quite friendly, but not everyone is ready to go beyond the boundaries of communication limited to work. There have been cases when very interesting people turned into workers who were no longer interested in anything but profit. It shouldn't come to this.

Cons of Network Marketing

• Earnings are completely unstable. No one guarantees you that that woman who bought all the goods you purchased this month will do the same next month. If you suddenly get sick, miss a meeting with a client, or simply don’t like someone, you’ve lost money and now you won’t get it back. In general, this is a rather inconvenient scheme that requires constant work and saving in an emergency reserve.
• The moral burden associated with constant communication with clients. Even if you are extremely sociable and friendly, people will not always be happy to see you. Not all potential clients with whom you communicate will behave appropriately, and if you gather in person for a meeting, you may get injured or damaged equipment and goods.
• Material investments at all stages. They may be insignificant, but this is not so important - the main thing is that you still have to spend money. And it’s not a fact that the purchased product will pay for itself, so at first distributors try to buy something that they themselves will be able to use later. A few thousand rubles is the normal price to start a career in network marketing. If they are not currently available, we suggest that you familiarize yourself with the information.
• Responsibility for the people whom you invited to work according to the same scheme. In principle, if a person’s moral principles are not the highest, he may not pay attention to this point. So, he will train a couple of people and forget about them until they leave and his income drops a little.

Myths and fictions about network marketing

This paragraph contains the most common myths about network marketing and a brief description of the facts that debunk them. Read carefully, and if after this you are not disappointed and are ready to start working, proceed to reading the next paragraph.

Myth: The network is the best way to quickly and practically without initial capital open your own business, stopping working “for someone else.”

Reality: Since you will be at the very end of the network, you will have to do a lot of work. Constantly look for interested people, monitor bonus programs and discounts, in general, for the first six months at least life will not seem like sugar. Then you will either be completely tired or reach a more or less normal level of earnings. At the same time, you will still not earn mountains of gold.

Myth: Online shoppers love it when products are offered to them by online retailers rather than official stores.

Reality: Not everyone is comfortable buying such products from online sellers. If you are going to sell such products to your friends and family, you risk ruining your relationship with them. No one will like it if someone decides for him that now he needs just such a shower gel, and no other.

Myth: The whole world will soon abandon trading through regular stores and switch to online trading.

Reality: Pure nonsense. Companies of this kind appeared in the United States in the early 1960s, and until now even a percentage of all sales are not sales in networks. Thus, in the near future you don’t have to worry about regular trading.

Myth: With the help of network marketing, you will free up a lot of time, you will be able to change your lifestyle and just be happy.

Reality: Never believe motivational posters and videos because they often tell lies. In addition, energetic and constantly developing people are unlikely to like sitting at a computer all day and selling a useless product to strangers.

Myth: Trading online allows you to maintain peace of mind.

Reality: There is absolutely no connection. Moreover, if you are a fairly irritable person and cannot calmly respond to rudeness and remark, any call to clients will most likely bring you out of your state of mental balance.

Myth: You don’t even need to look for a permanent network of clients, because you have your friends and acquaintances - they will provide a constant income.

Reality: Now let’s imagine ourselves in the place of such a person: he has lived a conscious life, choosing the means and things that are convenient for him, and then bam - a salesman comes who offers to throw the years of selection into the trash and start buying completely different, untested products.

Myth: You practically do not work, spending only an hour or two a day on sales.

Reality: No no and one more time no. Selling in the initial stages will require a lot of time, which many people probably don’t have. At the same time, you will have to look further, since combining network marketing with your main job is simply unrealistic - if you want to get at least something.

Myth: The employees who are already online are interested in your successful work and development. Working in network marketing allows you to strengthen your spirit and understand that you can run your own business and not depend on anyone.

Reality: Many people play on this, saying “why work for someone if you can open a business right now.” Remember, business and network marketing are different concepts, and such a scheme is unlikely to have anything to do with personal freedom.

What to do if you are still interested in network marketing

Criteria for choosing a network company

Before going to an interview and buying a product, it is recommended to look at the following characteristics of the network company:

• The product they offer. It should be safe and reasonably affordable so that people can buy it without going broke. Of course, there is a possibility that you will want to sell the same product as very expensive and high quality, but this will be on your conscience.
• Company age. If it was organized a week ago, then the likelihood that this is another scam, after which the organizers will disappear into the sunset with your money, is very high. The most reliable companies are those that have been operating on the market for at least 5 years. This criterion allows us to filter out financial pyramids: a financial pyramid, even the most organized one, will not last five years. Unscrupulous network companies squeeze all the juice out of users in the first five years and also stop working; in the rest, you can try to make money (although the competition will be much more serious).
• Marketing plan. It's best to compare it to plans from other companies you choose to consider. Compensation payments through the network are the most important thing; you should find out about the conditions of accumulation and payment first of all.
• Training in the basics of distribution work. A very important point: if they demand payment from you, then most likely you will not be able to do any work with them. It’s the same if the imposed courses do not help in any way, but simply take up time. Just stop going to them, and if suddenly they refuse to pay you without taking courses, get out of there - no one guarantees that after training you will be paid what you earned.
• Fame matters too. If a company is known in at least three countries, it means it is more reliable than a company with the same characteristics, but without representative offices in other countries.
• Legality of the company. If you cannot find a full-fledged representative office (not an office for a day with poor repairs) or an official website, then feel free to break all ties with the company, because nothing good will come from such cooperation. Be sure to check the site for functionality and content: if it was created a long time ago and is updated periodically, then everything is in order.
• Good team. If you see that these people are really passionate about the idea, and are actively involved in sales, and not just pretending to interest you, if their pages on social networks are more like real ones than advertising, then you can trust them. Remember: you don’t need to evaluate a team during the first meeting; it is advisable to at least learn a little about them before the interview and take a closer look later.

Independent rating of network marketing companies

Also, when choosing, you can focus on the rating of companies, which was compiled based on sales volume in recent years:

• Amway;
• Avon Products;
• Herbalife Ltd;
• Mary Kay Inc;
• Vorwerk & Co. KG;
• Natura Cosmeticos SA

And now more details about each company.

Amway

An international company offering customers more than five hundred types of products that allow them to maintain beauty and health at the proper level. At the same time, the quality of each unit of goods is strictly controlled, which is rare among network companies in principle.

Features of work

• If a person personally buys a large number of company products, he receives an additional reward;
• Products are purchased at wholesale prices from the company, and the distributor must sell them at a 30% markup. It is these percentages that are the main income of a person at the initial stage of working in a network company;
• Additional earnings begin if a person invites his friends to the team. The more distributors and consumers he brings, the more profitable it becomes for him to purchase goods, and the greater the amount he will receive from one transaction.

This company is a real example of how people can earn money without actually leaving their home. Of course, you won’t be able to achieve the same thing in a couple of weeks, but if you advertise yourself properly and find regular customers, you’ll get a good increase in your basic income.

Avon

One of the network marketing companies in Russia, which has been known on the market since the 2000s. Representation in more than a hundred countries around the world, so there will be no problems with reliability, unless, of course, you contact a real representative and not a charlatan hiding behind a well-known brand.

The company is famous for offering more than just cosmetics: in the catalogs you can find jewelry, perfumes, small nice accessories for women, etc.

Features of work

Cooperation with the company can be carried out on two bases:

• As a regular customer with VIP status. Registration is free, each such client receives the opportunity to purchase goods with a standard 30% discount. Every time a client places an order (starting from the first time), he receives gifts from the company;
• As a coordinator. In this case, MLM (multi-level marketing) takes place: the main task of the coordinator is to attract new representatives to the company. The coordinator also has a fixed discount of 30%, but in addition to it, he receives another 12% of all sales made by his referred friends. It is worth remembering that for each coordinator there are unique incentives and additional discounts. The only thing is that you need to constantly monitor such promotions.

Herbalife

The company is relatively young, it is not yet forty years old, but there are already representatives in almost a hundred countries around the world. If you want to cleanse your body, improve your health and earn a little extra money, then distributorship with this company is the best option. Natural cosmetics are also available.

Features of work

• To get started, you need to purchase a special kit. It will not be possible to collect cosmetics in separate packs, at least for the first time;
• The percentage difference is only 25%, unlike previous companies;
• Above each distributor is a person who receives a commission once a month.

Mary Kay

A company that has been presenting products for skin care and makeup on the market for fifty years. Fame in other countries is not so great, representatives are in less than forty countries, but this does not prevent the company from stubbornly holding on to the first places in the top network marketing in Russia.

Features of work

• Only women over eighteen can get a job;
• The consultant is required to purchase a starter kit, without which he will not be able to make further purchases. Income consists of money received from the sale of products and interest that accrues for each new employee invited;
• If you plan to use these cosmetics for a long time, you can become a direct client with all the attendant bonuses. Discounts can reach forty percent, and the company also provides all customers with gifts and a monthly magazine. Those interested take several courses absolutely free of charge, in particular, training in makeup techniques and the basics of doing business.

Vorwerk

This company, unlike the ones listed above, is in no way associated with cosmetics and body care. The catalogs present appliances, kitchen equipment, etc. There are representative offices in more than 60 countries around the world, and in Russia specifically, similar products have been available for purchase for more than ten years, so the company’s reliability is at a high level.

Features of work

• If a person has just started working in a similar direction and does not quite understand what they want from him, the company provides the opportunity to take good free courses, thanks to which even beginners understand the scheme very quickly;
• No one monitors the implementation of the plan; the consultant himself decides when and how much he should work. Of course, only a percentage of sales is paid.

Natura

A Brazilian company that has been successfully selling cosmetics and perfumes for almost fifty years, including in Russia.

Features of work

• Both consultants and advisors receive exclusively a percentage of sales. There is no additional income for recruiting new employees;
• The consultant can receive preliminary free training in the basics;
• The company constantly holds some promotions aimed at encouraging good employees.

Unsuccessful examples of network companies

You must understand that there are different types of network marketing, and not all systems work as they should. This list contains several examples that show that not all areas are suitable for network marketing, and not all organizers can organize the required level of work.

• Majerik. Initially, the money was invested in some kind of scientific development, but then the company began to offer completely strange projects, which, for obvious reasons, did not pay off. At the moment, the company has not rehabilitated itself in any way, the reviews are purely negative, the network has practically collapsed.
• A company that dealt with fuel additives for cars. The manufacturer itself did not inspire confidence, plus, among men, people who are ready to work according to such a system are less common, in general, the idea did not take root at all.
• Internet market Inmarket. The same market, but with a certain commission given to the owners. Prices naturally increased, as a result of which the site fell into disrepair.

How not to break down and work

A few final tips:

• Always find out complete information about the product you are going to offer to customers.
• Don’t advertise everything at once, let the buyer get used to you, explain what you do, find out about preferences and only then start the presentation.
• Watch your appearance and manners. People who look bad tend to sell much less.
• Practice. Read books, attend trainings, do everything to become more confident and calm.
• Analyze your mistakes and don’t be afraid to ask more experienced friends for advice.
• Don't neglect the Internet. There is a great opportunity to advertise yourself and your product.
• Find your sales method, and under no circumstances bring aggression into it. If the seller starts to put pressure, people feel it and almost immediately “merge”.
• Do not under any circumstances spoil your relationships with loved ones, friends and colleagues. You can stop being interested in network marketing, and then your entire team will forget about you - but the people who were with you before all this will no longer be able to treat you the same way.
• If possible, use the products yourself. Make additional advertising in this way - believe me, potential clients will be interested.

Results

So, let's summarize briefly. First off: be extremely careful. Never get involved in an initiative if you don’t like it, never pay money if you are not sure of the integrity of the company, etc.

If possible, google reviews about network marketing, in particular about the company you are interested in, check every word the representatives say, look for the people they are talking about on social networks - sometimes you can find a lot of interesting things in photographs or in groups. Such a brief investigation may well save you nerves, time and money.

If you suddenly fail to earn the expected money, try to think: yes, you can make money in network marketing, but for this you need to have a special mindset and attitude. Perhaps it's just not your thing? There are people who cannot bring themselves to do mathematics - and this kind of work is simply not suitable for you.

This means that no one is forcing you to run to the next network company, in the hope that mountains of gold will begin to fall now - just return to your old place of work and try to console yourself with the fact that many people besides you also cannot stand such a race and refuse from “easy” earnings.

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How does the online multi-level marketing industry work?

MLM stands for multi-level marketing. This means that in an MLM company there are several levels of sellers who contact the buyer directly.

In an ordinary company, as a rule, they act like this: they advertise a product, offer a gift for a purchase, create an image, and then wait for customers to come to them. In the MLM business, they look for clients on their own: they call, go to apartments, and contact people on the street. This is called direct selling.

What is MLM

MLM is a direct sales system. MLM is also called network marketing, and the company that uses it is a network company.

The essence of MLM

The idea of ​​MLM is to turn the buyer into a seller and head of the sales department. Here they benefit in three ways: for their purchases, for their personal sales and for the sales of their structure.

Buyer's benefit. You become a partner of the company. The company supplies the product, you buy it at a discount. If a company gives a discount for everyone, the price for partners will be even lower.

Seller's benefit. You can use the product yourself, or you can resell it to others and receive a percentage of purchases.

Benefit from your structure. You invite your friends to become the same consumers and sellers, train them and receive a percentage of their personal purchases and sales. These people are your team, or structure. They also build their own structure. Their structure is the second level of yours. This second level of your structure also invites people to become your third level. That's why it's multi-level marketing.

Your team members can receive goods from you directly, or they can buy them themselves from the warehouse or order delivery. The purchase of each “your” person is automatically taken into account for you and brings you profit.

History of origin

Network marketing originated in the USA. In 1934, chemist Carl Rehnborg began producing nutritional supplements and selling them to friends. People liked the products, they bought them themselves and recommended them to their friends, who through them also began to purchase the products of the American chemist. Subsequently, those consumers of the product also told their friends about it.

A kind of network was formed through which nutritional supplements were uninterruptedly supplied. The company had only three people on staff, including Rehnborg himself. The company also did not incur costs for advertising the product - instead, it had independent distributors and word of mouth. People who sold goods received income, and those who found new sellers of the product received additional compensation from the total turnover.

Between the end of the 50s and the mid-70s, approximately 30 companies were already working on this technology. In the 80s and 90s, hundreds of MLM companies appeared, tens of millions of people around the world became distributors. Herbalife was the first network company to come to Russia in 1989.

Nowadays, the MLM system most often sells dietary supplements, cosmetics, household chemicals, kitchen utensils and insurance. Well-known MLM companies: Amway, Avon, Herbalife, Mary Kay, Oriflame, Faberlic, Green-Terra, NL International", "Metlife", NSG.

Network Marketing Principles

The principles of network marketing are also called a marketing plan. With the help of a marketing plan, an MLM company determines how many people there should be at each level, how many people need to sell, and what reward the seller will receive for his sales and the sales of his structure. Rewards are money, gifts or discounts on your next purchases.

Often, to become a representative of a network company, you need to buy a starter package - this is a mandatory set of products. After this, the networker gets to the first stage. The more the agent and his team sell, the higher the level they occupy.

Many companies require you to purchase a minimum amount of goods for yourself every month. No matter how much the agent's structure sells, he must purchase goods for himself, otherwise he will not receive a reward.

Typically, network companies do not employ their representatives, but enter into cooperation agreements or agency agreements with them. A networker can work as a self-employed person or an individual entrepreneur, which is why MLM is called a network business.

Network companies have a training system. They conduct seminars, publish methodological literature, and managers take newcomers with them to work.

Is MLM legal?

MLM is a sales system, and it can be used for legal business, or for fraud.

Selling cosmetics, nutritional supplements or insurance through network marketing is absolutely legal if the cosmetics are not defective, the dietary supplements are not harmful, and the terms of the insurance do not violate the law. With the help of MLM they sell goods, but often this system is also used

How to distinguish MLM from a financial pyramid

With the help of network marketing, you can easily attract new people, and this is what financial pyramids need. The main difference is in the goals. The goal of network marketing is to sell a product, the goal of a pyramid scheme is to attract a new participant. There is no product in the pyramids or it does not play a major role.

In financial pyramids, the main thing is the contributions of the participants. Here agents make money if new people come. When the newcomers run out, the pyramid collapses. Those who entered last lose money. If you are invited to network marketing, but the company does not sell anything, it is a pyramid.

In MLM, the seller receives a percentage of the structure’s turnover. He earns as long as people need the company's products.

Some financial pyramids also sell goods or services in order to be considered an honest business. There are four signs of financial pyramids: low cost of goods at high prices, deferred sales, unclear purpose of goods, separate payment systems for selling goods and attracting customers.

Low cost at high price. Often a pyramid scheme sells cheap goods at high prices. Or the product itself is inexpensive, but only a company representative can buy it, and to become a representative, you need to make a large contribution.

For example, the Advocard company sold subscriptions for legal services for 50,000-70,000 RUR, although such services cost 3,000-10,000 RUR. But you could make good money by attracting new clients. When there were no more people willing to overpay, earnings stopped. The last buyers were left with season tickets purchased at exorbitant prices. It was possible to get legal advice on them, but not to sell them for the same price.

In a legal MLM company, goods will be sold at prices close to market prices. The MLM starter package also means purchasing products at reasonable prices. If a networker in a pyramid cannot sell a product, he loses money. There is no such thing in MLM: the agent has goods purchased at market prices in his hands - it is easier to sell them and return the costs.

Deferred sales. Financial pyramids may offer to buy goods now and receive them later. At the same time, for the same purchases by newcomers, the agent receives a reward immediately.

One company was selling apartments in Sochi at attractive prices. It was necessary to buy it urgently, before the apartments ran out, and they promised to register them for the buyer in a few months. But right now it was possible to make money by attracting people to this topic. At the presentations, they gave examples of participants who invested six months ago and now received their real estate, and even earned money because they told their friends about it. There were soon no more gullible candidates, no one got an apartment, and the pyramid collapsed.

The Edosha company promised to open supermarkets where they would trade using the MLM system. At the presentation, people were told that the supermarket was about to appear, but in the meantime, build a chain. When a store opens in your city, you will receive interest from purchases of your structure. People bought discount cards, calendars and business cards to attract newcomers. They also bought “shares” that were supposed to soar in price after the supermarkets started operating.

Senior leaders told their distributors to wait a little longer. Stores actually appeared in St. Petersburg, Samara, Barnaul, Tyumen, Yaroslavl and Kazan, but in other cities the opening date was constantly postponed. Then there were no more people willing to buy air, and people were left with useless souvenirs, printed materials and “shares” in their hands. The shops were closed.

Unlike a pyramid scheme, network marketing tries to deliver products as quickly as possible. The faster the seller tries it, sells it or uses it, the faster he will buy more. Deferred sales to companies are unprofitable.

Unclear purpose of the product. When a product is just a cover for a financial pyramid, its purpose and content can be unclear. But they will say that this product is the future or that the market for these products is growing rapidly, so you need to invest yourself and offer it to your friends.

In legal MLM companies, the products are tangible and can be used.

Separate payment systems for sales and attracting newcomers. Some companies consist of two parts: a financial pyramid and trading. In such companies, you can receive a small reward for selling goods, but they promise larger earnings for attracting new participants. In this case, you need to pay an entry fee for a place in the network and the right to build your own network, and not for a set of products.

For example, the company "Avtoklub" sold cards through network marketing that could be used to get a discount in various stores, cafes and gas stations. According to the marketing plan, every time a person from the agent’s structure made a purchase using this card, he received cashback. This is the honest half of the business.

But if an agent bought a card and made an entry fee, he was given access to a second marketing plan and was promised a larger reward for newcomers who also made an entry fee. When the influx of people decreased, they stopped paying remuneration for them. Now Autoclub deals only with discount cards, but they had to change their name to Aunite Group.

A network company has one structure and one marketing plan. In a legal MLM, they can also periodically pay for the registration of a newbie, but these will be one-time promotions, and the main income will always come from turnover.

Why don't people like MLM?

Millionaires are taught to offer their products to as many people as possible, work with objections and “put the squeeze” on the client. Because of this, it seems that they are being imposed.

Networkers constantly call their friends, approach people on the street and in public transport, and invite them to presentations. If you simply answer “I don’t want”, the MLM manager may demand to explain the reason for the refusal, and then begin to work on it. Not everyone likes this.

Cons of Network Marketing

Networkers have to purchase a lot of products, and the MLM market is quickly becoming saturated. There are other disadvantages to network marketing.

You have to look for clients on your own. This is the main problem for a networker. Although the company teaches you, the mentor gives you advice and conducts internships, it is still your responsibility to find clients. The company doesn’t care whether you go door to door, call or advertise via the Internet. They give you a product - sell it however you want.

Over time, the problem of finding clients grows: the agent begins to stumble upon those who already know about his product and are even members of someone else’s structure. He works a lot, recommends, but people brush it off because they are already fed up with such offers. Others buy on his recommendation, but not from him, but from their friend, who also works in his company. As a result, the top of the structure makes money, but he does not.

At the first levels they pay little. Another drawback also arises from the peculiarities of MLM technology: companies often pay consultants at entry levels several times less than those at the top. To make good money, you need to work hard: constantly build a structure and acquire regular customers.

Networkers irritate many people. You cannot know in advance who will be interested in the offer and who does not like network marketing. Therefore, the networker has to constantly offer the product to different people and often encounter negativity.

Product deposits may appear, when the goods are received poorly. This is due to the fact that companies require the networker to purchase a minimum number of products. If he doesn’t have time to use everything, they will accumulate and spoil.

Not everywhere networkers are paid in money. In companies that give rewards in the form of discounts, the agent is forced to buy goods in order to use these discounts. For example, it worked well and now its price is 50% lower. He buys products and suddenly cannot sell them. As a result, you also have to give it away at a discount in order to recover the costs.

It is more convenient to buy in a regular store. Often a purchase through MLM looks like this: you tell your friends about the product, they place an order, and a few days later the package arrives. This parcel needs to be picked up from the warehouse. It’s easier not to wait and not to travel anywhere, but to buy a similar product in a regular store, often cheaper. The networker has to persistently advertise the product and persuade customers to put up with a less convenient purchasing process.

You can't stop. A networker first works hard to build a structure, and then has to work even harder to maintain it. Usually, without the efforts of a leader, even a large structure quickly falls apart, consultants stop working and go to other MLM companies, and buyers are lazy to place orders. At presentations they talk about passive income from your team, but in reality, the more successful things are, the more you need to work.

Pros of Network Marketing

The main advantage of network marketing is that agents receive money for their own purchases and recommendations.

You can make money from personal purchases. In a regular insurance company, an agent does not always receive a commission if he bought insurance for himself. In MLM you can write out a policy for yourself and make money from it.

MLM has a free schedule and no boss. There are obligations to the company and clients, but there is no system of penalties. An agent cannot be reprimanded for absenteeism. If he doesn’t work well, he won’t earn anything, and there are few other restrictions. At the same time, the network company forces compliance with its codes and can punish for their violation. For example, some firms prohibit cooperation with competitors. An agent can only be a representative of one MLM company, or he will be excluded from the business. They can also be “fired” if the MLM manager entices people from other structures of the company.

You can run an online business from home, Or you can move to another region. The structure remains with the agent, and new consultants can be recruited at a new location. Often the MLM business is combined with the main job. This is a good option for pensioners and women on maternity leave.

You can gain valuable knowledge and skills. During network business training in MLM companies, they talk about sales technologies and business communication skills. This can be immediately consolidated in practice under the supervision of an experienced mentor. Even if you don’t make money, your knowledge and experience can then be applied in other areas. For example, companies that sell cosmetics teach you how to properly take care of yourself. Companies that sell dietary supplements explain how to eat properly. Insurance companies provide financial literacy lessons.

Is it possible to make money in MLM?

A networker can make money in MLM under several conditions: he was one of the first to enter the business, he has a good product, he likes doing it and he chose the right company.

How to choose an MLM business

The idea of ​​MLM is when a satisfied consumer recommends products to his friends. A networker must be such a satisfied consumer, so he needs to choose a company whose products he would buy regardless of business opportunities.

First, the agent studies the marketing plan and tries to imagine whether it will be easy for him to achieve the levels laid down in it and whether he is satisfied with the promised reward. His mentor will calculate how many people need to be invited, what turnover to make and how much he will ultimately receive for it.

How to develop correctly in MLM

Mentors will tell the agent about this. He will have three tasks: sell, recruit people to his team and train.

First, the networker will be invited to a presentation, where they will briefly talk about the products and the company and offer to join the business. You will be asked to start with a list of acquaintances: it can be compiled from contacts on your phone, social networks, notebooks, and from your everyday circle of friends. Mentors will recommend contacting your friends and talking about your business or inviting you to a presentation.

To be successful, it is important to constantly learn. MLM companies teach you how to sell and invite people into business, and describe the benefits of their products. MLM training systems will help you set goals and determine steps to achieve them. As a result, you need to calculate how many people you need to tell about your business every day in order to get the desired profit.

The next stage is an internship. It’s good when a manager shows how he talks to clients, and then watches how a networker does it and analyzes his mistakes.

When the agent gets used to it, he will start working independently, and when he gets income, he will register as a self-employed or individual entrepreneur.

How much can you earn

It is very difficult to calculate this. Working networkers try to present their business in a favorable light, so they can inflate their earnings. If you ask this question during a presentation, MLM specialists will answer that income is not limited and depends only on your goals. They say this because in this business the agent receives a percentage of the sales volume of his structure, and the company does not set an upper limit.

When the manager calls the newcomer, they discuss the desired salary. In such conversations, networkers boldly make plans to earn 100,000 RUR.

In fact, earnings in MLM are not guaranteed. The more turnover the agent’s network makes, the more money he will receive. A networker’s earnings depend on many factors. Some earn from 100,000 rubles a month, but most networkers earn from five hundred rubles to ten thousand. Essentially, they are buyers who receive cashback and bonuses for recommendations.

Companies selling nutritional supplements and cosmetics pay 1-30% of turnover. Insurance companies - 10-50%, and if the insurance involves regular contributions, then up to 100% of the premium. It happens that they pay not a percentage, but a fixed amount for each sale, for example 1000 rubles per contract.

Running an MLM business via the Internet also does not guarantee income. There are successful examples where, when switching to the Internet, networkers quickly build a team and achieve an income of 100-200 thousand rubles per month. But many people maintain their blogs for a long time and do not receive new clients. Sometimes networkers spend more on contextual advertising than they earn.

What are the features of MLM business on the Internet?

Now this business model has moved to the Internet. Networkers maintain blogs and groups on social networks, provide contextual advertising and sell goods through online stores.

Where to start an MLM business on the Internet

Depends on the chosen strategy and willingness to invest. If an agent decides to work for the future and without investments, he creates a group or blog on a social network. There he posts interesting materials about business and products, and invites friends. Then, based on this, it will be possible to make a separate website.

If an MLM owner wants quick results, he creates a sales page, comes up with or finds ad text, and buys advertising from search engines and social networks.

Then the networker determines his target audience in order to understand which social network to choose, what materials to post, what texts to use. Usually he chooses people with whom it will be easier for him to work and with whom he can hook something.

As a rule, it is more profitable to join the team of a networker who is himself involved in MLM on the Internet - he can suggest the right steps.

Advantages and disadvantages of MLM on the Internet

The Internet allows a networker to work only with interested candidates and provides wide coverage. You can sell and recruit via the Internet automatically. MLM on the Internet has other advantages:

1. Less negativity. If a person has joined an MLMist’s group or followed a link, he is already interested. The likelihood of getting a bad reaction to your face is low, and refusals and negativity on the Internet are not so painful.
2. Contacts all over the world. Using the Internet, a networker can sign up people from anywhere in the world to join his team. The main thing is that the company allows distributors to register from there.
3. The work can be automated. A selling page or group on social networks works around the clock. You can set up a mailing list for beginners so that they regularly receive motivational letters, or record a training webinar.

Working via the Internet has its disadvantages:

1. Turnover. It’s easier to refuse and change your mind over the Internet. People from the Internet join the team and do not buy anything or disappear after the first purchase.
2. Newbies may not be available. You can’t meet in person and take on a newcomer for an internship. It is difficult to form team cohesion. If a newcomer lives in a region where the company does not have warehouses or offices, problems arise with the delivery of products.
3. The seller does not know the people from his structure well and cannot use an individual approach.

Briefly about MLM

1. MLM is a sales system where a buyer becomes a seller and invites other sellers. This results in a multi-level structure.
2. MLM has a flexible schedule and constant training, but income is not guaranteed.
3. In network marketing, you can build a structure and sell online.
4. Financial pyramids also work according to the network marketing system. The main thing in MLM is to sell goods, and in pyramids it is to recruit more participants.

What is network marketing, what are its pros and cons? Which MLM business companies are popular in 2018? How to make your first money in a network business?

Hello, friends! With you is Alexander Berezhnov, an entrepreneur and one of the authors of the website HeatherBober.ru.

Today, the network marketing industry is gaining a new wave of popularity, and the development of the Internet plays a significant role in this.

However, this concept still causes controversy in society. Some call network marketing almost the only opportunity to open your own business without investment, others are sure that this is all a financial pyramid, a scam and deception.

Some time ago I was involved in network marketing myself and I know firsthand what it is. In this article, I decided to dot all the i’s and cover this topic from all sides, including taking into account my experience in this industry.

After studying this article, you will firmly decide for yourself whether it is worth doing MLM business, what the pros and cons are, and you will also find out which companies are better to start with and why.

So, let's begin!

1. What is network marketing (MLM) and what is its essence?

I'll start with a definition and then expand on it and give examples.

For example, the production cost of ORBIT chewing gum ranges from 20 to 50 kopecks per package of 10 pads. However, while the chewing gum is on the shelf in the store, its cost increases by several thousand percent! It's all because of the intermediaries - large and small wholesalers who sell chewing gum to each other.

But it doesn’t end there, because, as you know: advertising is the engine of trade and intermediaries spend a lot of money on advertising.

Fact

In large companies, up to 50% of the final cost of a product consists of advertising and promotion costs.

Thus, we buy Orbit packaging for 20-50 rubles. Yes, this price, of course, includes the trade markup of the manufacturer itself, but the intermediaries also want to eat. So it turns out that the end consumer suffers, who overpays exorbitantly.

About a hundred years ago, people began to think about the problem of unreasonable markups by resellers and intermediaries.

Network Marketing Idea

Make the process of promoting goods (services) more convenient, cheaper and faster. Remove intermediaries and expensive media advertising from the promotion scheme.

This can be done if people themselves tell each other about the product of the network company, and their motivation will be the percentage they receive from sales of the MLM company's products.

But you just can’t earn much from interest. Therefore, multi-level marketing allows you to build your own business by creating a wide network of product consumers.

It is assumed that a person who has developed his network structure will receive a percentage of the entire turnover of his structure. This is how he can create tens of thousands of dollars a month for himself.

To learn how you can create such an income in MLM, be sure to watch the video below. This is a cartoon about Pablo and Bruno - ordinary guys who chose different ways to gain financial freedom, and both wanted to become millionaires. Let's see what they came up with.

Network marketing was designed to solve the following problems:

1. Reduce the cost of goods for the end consumer. This can be achieved by eliminating expensive standard advertising on radio, TV and the Internet.
2. Speed ​​up the process of delivering goods to the end consumer. This is achieved through well-thought-out logistics (a network of our own warehouses in different cities and countries).
3. Eliminate counterfeit goods. In the process of resale of goods, substitutions and falsification of large quantities are possible. An MLM company works directly with the end consumer, so the likelihood of product counterfeiting tends to zero.
4. Motivate company employees with money and business opportunities. In multi-level marketing there is an opportunity to make good money and build your business from scratch.

2. How network marketing works

First, I’ll tell you about the general principles of this industry.

The manufacturing company has its own factories for the production of goods.

She sells these products without stores; the products are distributed thanks to a built-in recommendation system. In everyday language this system is called “word of mouth”.

A large number of people like this principle and are happy to buy products from the company.

Nowadays, all orders of an MLM company can be placed via the Internet, and paper catalogs, which were popular some time ago, are fading into the background with the development of information technology.

The client uses the products and can start building a business with a direct sales company. To do this, he needs to find several people who will constantly buy products and attract new partners to the business to develop the network. That is why this type of marketing is called network marketing.

Having its own warehouses and delivery services, the network company delivers products to the warehouse, and then these products are distributed to offices that the company’s partners (distributors) have personally opened for themselves. Sometimes the company delivers the order directly to the client’s home, which is very convenient.

Now I will talk about the features and principles of multi-level marketing for the manufacturer of goods (company), for the end consumer (client) and for the person who decided to open his own business (entrepreneur) using the capabilities of mlm.

From an MLM company's point of view

A distinctive feature of promoting goods online is the reduction in advertising costs for your products. The company cares more about promotional materials for its distribution partners (sometimes called independent entrepreneurs) and building a system of professional training (mentoring).

It is on the high-quality transfer of the MLM idea from person to person that the business of the enterprise ultimately depends.

From a consumer point of view

It is convenient for the client to receive products with a quality guarantee; he likes affordable prices, samples, and catalogs. Direct selling companies often have exclusive products and accessories that cannot be found in regular stores.

From the point of view of the distributor (entrepreneur)

People who want to start their own business without investment can succeed here. After all, the entire system has already been built, the market has been formed, most large companies are already well-known among the population. In addition, the powerful system of training and mentoring in network marketing companies makes the opportunity to build your own business more than real.

3. MLM business industry - history and development trends

Network marketing originated in the West in the USA.

In 1945, American entrepreneurs Lee S. Mytinger and William S. Casselberry opened their own business, becoming national distributors of Nutrilite Products. The basis of their activities was the principle of recommendation (network) marketing.

Further, in the late 1950s, two companies were created in the United States: Shaklee and Amway. In Russia and the CIS countries, people are widely familiar with Amway products and the features of its business. The company itself was created in 1959 by Rich DeVos and Jay Van Endel, and was originally called American Way Corporation.

The industry developed especially rapidly in the 1980s - 1990s. The range of products grew and by the mid-1990s, mlm-manufacturers offered their customers literally everything: from cosmetics and detergents to automotive products, household appliances, long-distance communication services and computers.

Today, the network marketing industry has undergone great changes and almost all mlm companies have gone online in one way or another.

In 1996, it was created in Russia Direct Selling Association(rdsa.ru), which contributes to the development of the industry, its self-regulation and maintaining the reputation of the network business at a high level.

According to the Association for 2015-2016 in Russia, multi-level sales are involved in one way or another 6% of the total population(distributors), and these are millions of people, not counting consumers.

The Internet space has allowed the industry to develop at a rapid pace. And this is quite logical.

Example

You can now build your business in a network marketing company not only through face-to-face meetings at home or in a rented office, but also via the Internet, using the capabilities of Skype, electronic mail and social networks. Advanced entrepreneurs create their own websites.

This is exactly how “networkers,” as distributors of multi-level companies’ products are usually called, are now actively processing the online space in order to expand the number of participants in their group (branch).

However, the development of digital technologies has also given rise to another side of this industry - the emergence of fraudulent companies and financial pyramids, which, under the guise of investment funds or simply respectable mlm firms, drag honest people into illegal and immoral schemes.

Below in the course of the article, I will also touch on the issue of fraud and tell you what not to do and how to distinguish a reliable network company from a scam.

4. Why do many people today associate network marketing with a pyramid?

In continuation of the previous paragraph, as promised, I will reveal the “pyramid question”.

The association with pyramids, deception and fraud among people arises rather out of inexperience.

I’ll say right away that there is the concept of “classical marketing” and “network marketing”, although it is very conditional. Let me tell you how they differ for completeness.

1. Classic marketing

These are all the ways and means of promoting goods that we are used to seeing around us - advertising on TV, radio, outdoor advertising, and so on.

Selling goods in stores is also a standard way of promotion. As a result, all this can be attributed to the concept of “classical marketing”.

2. Network marketing

This is simply an unusual way of distributing goods for the majority of people. As you know, it is also called multi-level marketing.

In this promotion concept, there are no retail stores that are familiar to many, there is no standard advertising in crowded places, and the products themselves, as a rule, are of higher quality in comparison with our familiar analogues.

The model of distribution of goods, which is unusual for many, instills fear in those who have heard about various kinds of deceptions or have already fallen into financial pyramids.

Dear readers, remember!

Network marketing has nothing to do with a pyramid scheme, fraud or illegal activity.

Associations with the pyramid arise because in both a pyramid and an MLM you need to attract people in order to make money.

Only in the first case do you receive money for the “heads”, that is, your earnings depend depending on the number of people involved who invested money in the pyramid, and in the second, the income depends on the turnover that the clients you attract will make.

That is, if we are talking about normal multi-level marketing, you can sign up at least 1000 people into your structure, but if they don’t buy anything, then your income will be zero.

In a pyramid, everything is the other way around, where everyone involved is required to make a contribution, usually quite significant (from 500 to 5000 dollars) and you are guaranteed to receive a percentage of his money, but your client will not receive the real goods. He pays only for the opportunity to make money by attracting new “victims”.

Below, in the answers to frequently asked questions, I clearly outlined the criteria with which you can distinguish a good mlm company from a financial pyramid.

5. Network marketing on the Internet without investment - myth or reality?

There is no myth here and there cannot be. Building your own network business via the Internet is a new trend that is gaining momentum every day.

How to find a client for your MLM structure via the Internet - 5 proven ways to attract:

1. Social media. One of the most popular methods. You can create a group (community) here on the topic of making money and self-development. The people who join will be your potential clients. You can also “spam”, that is, send messages to everyone, but then you risk getting your account blocked by the administration of the social network.
2. Thematic forums. On forums about earnings and personal growth, you can also find future partners in your multi-level structure.
3. Contextual advertising. You can create a website and set up contextual advertising on it, thereby attracting targeted visitors. There is already an article on our website. However, this method can be quite expensive for such a purpose.
4. SEO - promotion. By analogy with the previous method. You can make your own Internet resource and write articles on it containing keywords related to success, earnings and network marketing. Gradually, these articles will be promoted through the subscription form located on the site, and you will receive people loyal to your activities.
5. Lead generation. This method consists of creating a flow of contacts (applications) of potential clients whom you will attract using various advertising tools. You can learn more about what advertising is and what types of advertising exist from. You can process applications from potential clients (leads) and attract them to your multi-level marketing company.

You can use these and other ways to attract potential participants from the Internet to your network structure.

6. Pros and cons of network marketing - an overview of the main advantages and disadvantages

Network marketing, like any phenomenon, has a number of advantages and disadvantages.

This is why there are people who vehemently campaign for mlm, and there are those who are afraid of “networking”. To make the picture clearer, I have compiled a corresponding table that reflects almost all aspects of the SM:

Pros and cons of network marketing:

If you have not yet decided whether to engage in SM, then the criteria described in this table will help you once again understand whether it is for you or not.

7. Rating of network companies in Russia - list of TOP-5 market leaders for 2017-2018.

The most interesting thing is that the first two companies Avon and Oriflame occupy 31% and 30% in this ranking, respectively. This means that these companies are by far the leaders among our citizens in the MLM industry.

As you can see, Mary Kay and Faberlic occupy almost the same market share, and Amway is somewhere in the middle.

In any case, I am sure that you have heard, if not about all of these companies, then about most of them.

I consider them reliable and it is these companies that I advise you to work with if you decide to start an online business.

8. FAQ - answers to frequently asked questions

These questions are often asked to me, and here I present them with answers as the most popular.

Question 1: Should a beginner start his own network marketing business?

Yes, it’s worth it, but only if you are willing to wait a long time for results (from 6 months to 3 years) and have a cash reserve that will “feed” you during a cash-strapped period. I also advise you to analyze your strengths and weaknesses, objectively assessing your capabilities.

But if you get tired of communicating with people and have a hard time with rejection, then it’s better not to rush into this pool headlong.

Question 2. How to make your first money in network marketing?

To do this, find 2-3 clients and simply sell them your company’s products, having first registered as a partner.

Then you will feel the “taste” of your first money. Perhaps it will be a very small amount: from 100 to 1000 rubles, but this will already be your money earned in direct sales.

If you want to get a more serious amount, then find 3-5 people who plan to build a business with you. Help them find 3-5 more people for each and in a few weeks your income will grow to several thousand rubles per month and will increase as your “branch” grows.

Question 3. What and how can you attract people to network marketing today?

Today, as always, you can attract people to network marketing with the idea of ​​earning prospects, creating passive income and a free (flexible) work schedule.

The quality of products and the range of direct sales companies is constantly growing, so to say that our products are of high quality is no longer so appropriate.

But if you show the ease of working with the company’s website and the possibilities of doing business via the Internet, this will definitely not leave your potential partners indifferent.

Question 4. How to distinguish network marketing from a financial pyramid?

It is no secret that some fraudulent companies discredit the honor of decent MLM enterprises and disguise themselves as them.

How can you spot scammers? There are some characteristic signs of dishonest companies:

Here they are:

1. Unreasonably high entry fee. As a rule, it is from 100 to 5000 dollars. It is from this money that the remuneration to the “distributor” is paid.
2. The product as such either does not exist at all or has no market value outside this organization.
3. There is no documentary evidence of the receipt of money and other appropriate documents (invoice, agreement, checks, etc.);
4. You are told that you will receive money from number of attracted participants , and not from the turnover of the structure.
5. The main point in the organization’s work is the emphasis on make money quickly , and the product (if it exists) is needed only as a cover in the activities of the pyramid.

If you notice at least one of them in the company where you are invited, it is worth thoroughly studying it for deception and the legality of its activities.

Network marketing or MLM business has existed for a long time, but nothing is taught about it in schools and universities, so this topic is still covered in a veil of myths and stereotypes. I wrote this article for those who have encountered network marketing themselves and are considering it as an option to make money, become an entrepreneur and earn passive income. I will try to reveal the truth so that you are not hostage to myths and stereotypes and will share my vision of how to earn the maximum in this business. If you think that I am wrong about something, write about it in the comments.

MLM business what is it decoding

For those who are not in the know: MLM stands for MultiLevel Marketing, which translates as multi-level marketing. This is a scheme for distributing goods and services in which a company attracts distributors who have the right to attract new distributors for a fee.

1. Scam for suckers, financial pyramid

Network marketing or MLM business – what is it really?