MLM Multi-level marketing is an advanced marketing strategy which operates with a lot of preciseness and data. It can be described as the pyramid sale in which the owner builds a network luring customers who resell or promote his/her products building a chain.
MLM has been used for centuries in the offline realm. However, it is slowly getting acquainted with the online marketing. Several companies are openly using this strategy by offering affiliate programs to their customers which usually demands them to share the company’s product or services with their friends. And the user gets a bonus or a commission for every friend that sign-up with the company or uses their services or products.
What is MLM?
Multi-level Marketing is a marketing strategy in which the company revenue is generated from the non-salaried workforce which can consist of salespeople, consultants, promoters, distributors, or participants etc. This non-salaried workforce sells the services or products of the company, and in return, they are paid with a commission system.
It can be described as pyramid system in which the top position is held by the company of course who distribute its products to participants or its promoter who are later responsible for making the sales as well as bring in new participants.
The commission level for MLM depends on the capital capacity of different companies. There is no limit to its bonus. Some brands also give its participants additional benefits like discounts or hampers etc.
Legal Issues & Criticism of MLM
Companies that use this strategy are often attracting a lot of lawsuits as well as criticism. Some of which include:
- Their similar structure which was used by traditional illegal pyramid companies
- Price fixing of services and products,
- High initial registration costs (of first products and marketing kit),
- Emphasis is focused towards recruitment other than actual sales (especially sales to non-participants)
- Complex and very exaggerated compensation schemes,
- false product claims
- No brand value
- Cult-like techniques
Conclusion
Multi-level marketing has great potential on the online platform as they have a huge audience that they can easily target who will also be up for referring their links to get some extra bonuses. Today literally everyone is online, which makes it so significant. Several companies are considering and have implemented MLM plans for the promotion and sales of their products and services and are getting some amazing responses.
