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What is mlm business. Network marketing or MLM: what it is, how it is earned and why it is dangerous How network marketing firms work

Hello, dear readers of the financial online magazine "RichPro.ru"! The topic of today's material is network marketing (MLM): what is it, which MLM companies in Russia have a high rating, how does the network business work, and so on.

After all, for many centuries the model of distribution of goods and services " manufacturer – large wholesale. – small wholesale. – retail – buyer' was the only possible one.

ButV30s years XX century in the United States, a product distribution system was born and subsequently developed " manufacturer – distributor — buyer».

At the same time, the activities of MLM companies have been covered with various rumors, comparisons with financial pyramids and ambiguous public opinion for many years. Based on this, for an objective look at this type of business, you should consider in more detail all aspects and nuances of network mlm marketing.

So, from this article you will learn:

What is MLM - the history of the network business industry;
The main advantages and disadvantages of network marketing;
What network companies of MLM business are the most popular (ranking by sales volume in the world).

After reading this article, you will determine for yourself whether it is worth doing network multilevel marketing, find out which companies are better to choose and why, read the reviews of "experienced" mlm marketers.

What is network marketing and how it works, what is the basis of the scheme of cooperation with MLM business, which MLM companies have high ratings and much more, read below in the article

Network marketing is a system for the sale of goods and services from the manufacturer to the buyer, which is carried out through recommendations from person to person.

The core of the MLM business is in non-store retail, in which the distributor independently establishes contact, advertises and sells the product to a potential buyer.

In addition to earning from retail sales, a sales agent offers consumers, for a percentage of sales established by the company, find new buyers , which, under similar conditions, "attract" regular customers. The result is a multilayer network.

Network Marketing Tasks

Product pricing optimization. Before 70% the retail price of everyday goods is the cost of the distribution network and advertising. Changing the distribution structure allows you to reduce costs.
Providing the customer with quality, genuine products. With traditional product promotion, there are obvious prerequisites for the emergence of fakes on the market, and they are absent in the direct sales method: the product is not as widely known as its analogues from the traditional market, the manufacturer, distributor and buyer are not interested in the appearance of counterfeit products.
Improvement of the product delivery system. The manufacturer's control over the logistics and storage of goods allows us to provide the consumer with a product of the proper quality and in the optimal time (read the article at the link).
Improving the distribution of profits of the manufacturing company. Reducing costs allows you to direct financial resources to incentive programs for sales agents, various bonuses and incentives, as well as improve product quality.

Let's take a look at how network marketing works.

2. How network business (marketing) works - the principle of operation of MLM companies 🗺

Multi-level marketing is an interaction between a manufacturer, an entrepreneur and a buyer.

How multilevel network marketing works - 3 sides of profitable cooperation with MLM

2.1. Network marketing by MLM company

An MLM company manufactures products in its own factories. She also develops a marketing and sales plan, based on which the proceeds from the sale of products are distributed.

As a rule, a business plan motivates distributors in several ways:

a) consume the products themselves;
b) sell goods to customers;
c) create a network of entrepreneurs.

Manufacturers organize the delivery of products to their own warehouses in different countries and cities, and also ensure that distributors receive goods at home.

For proper efficiency, entrepreneurs receive all the necessary materials for products, master classes, seminars are held aimed at developing various skills.

2.2. Consumer Network Marketing

A distinctive feature of the direct sales method is the creation of convenient conditions for the buyer:

Delivery. Entrepreneurs, as a rule, bring goods to their homes.
Service. Before buying, the buyer receives all the necessary information about the product. Also during the operation it is possible to consult with the distributor.
Quality Assurance. Most MLM companies guarantee the quality of the products, with the possibility of a full refund if the client is not satisfied.

2.3. Network Marketing by the Entrepreneur

Multilevel Marketing - a very attractive activity for people who do not have a lot of initial capital and business experience.

The entrepreneur has the opportunity to independently plan his employment based on his capabilities. Most employment in this type of business is observed among students, housewives and pensioners.

Some terms and definitions used in the network marketing business:

Distributor - a sales agent who has an agreement with a direct selling company and receives a commission for the sale of products, as well as a percentage of commissions for the turnover of the network created by this entrepreneur.

Sponsor (partner) of the 1st level - a sales agent who introduced the consumer to the possibilities of this business and helped to conclude an agreement with a network marketing company.

Sponsorship (affiliate) line - a list of entrepreneurs directly interested in the success of the distributor, which includes a 1st level partner, his sponsor, etc.

Side businessmen – a set of distributors that are not part of either the sales agent's subnet or the sponsor's line.

Bottom line partners – a list of agents included in the distributor's network.

Organization Width - a set of partners of the 1st bottom line.

Depth of organization — all agents of the 2nd and subsequent bottom lines in the distributor's subnet.

Active income - monetary compensation for the work performed by a person. Income depends only on the quantity and quality of labor invested.

Passive income- profit received by a businessman constantly, for one-time work performed. To receive this income, a prerequisite is the availability of assets, which can be real estate, bank deposits, shares, etc.

8. Advantages and disadvantages of network marketing - an overview of the main pros and cons of MLM business 📃

MLM - business has a number of advantages and disadvantages. The assessment of this type of activity in the media, among reputable businessmen, and politicians varies greatly.

Advantages of MLM - business and its advantages

Let's consider the main ones:

Low entry barrier to the market. When opening any business, an entrepreneur evaluates the resources that he needs to start in the market. In a direct selling business, little money is needed to start a business. Also, there are no costs for renting premises, warehouses and other fixed costs.
Possibility of doing business on the Internet. Since the end of the 20th century, more and more consumers, manufacturers, and businessmen have been making purchase and sale transactions on the World Wide Web. Doing business online is an indisputable advantage of business.
Product quality. Thanks to the peculiarities of MLM marketing plans, companies are able to allocate large sums for the manufacture of quality products compared to competitors who use traditional marketing to promote their goods.
Tutorials. To develop the skills of sales agents, direct sales companies are implementing training programs that include books, CDs, seminars, and a variety of trainings and presentations. This information allows you to develop not only in sales, but also contributes to personal growth, improvement of family relationships, etc.
Part-time employment. Opportunity to work in your free time and at the same time have an income from your main activity.
affiliate program. Sponsorship (partnership) line is interested in the success of the distributor. More experienced partners support, help and advise newcomers in every possible way. Relationships are built on equal terms, regardless of income.

As you can see, there are significant advantages for which you should start this business. We also suggest reading the article - "", perhaps you will find useful information there for yourself.

Disadvantages and cons of network marketing

Consider now the main disadvantages:

Reputation. Due to the lack of restrictions and the selection of agents, sometimes new entrepreneurs conduct business incompetently: they impose products and the business itself, give false information and thereby compromise this type of activity in every possible way.
High likelihood of worsening relationships with friends and loved ones. Most of the population prefers employment. In the case of doing business without an office, warehouse and employees, friends and relatives have a negative attitude towards this business.
Slow or no business growth. As a rule, the entrepreneur receives the first significant results in the period from six months to two years, subject to systematic work and training. A very large number of distributors have not been successful in this business.
The vast majority of proposals for cooperation are rejected. Active participation in business building 80 — 95% of the work does not bring results.
Only a few entrepreneurs achieve significant success. On the way to success, a sales agent encounters a lot of difficulties, overcoming which requires perseverance, education and work on oneself. Not everyone is ready to overcome all possible obstacles.

Above, we presented the main disadvantages and disadvantages of conducting cooperation with MLM companies.

9. Rating of network companies in Russia - a list of the most popular MLM companies 📑

The first mentions of network marketing in Russia are dated 90s of the XX century and associated with the company Herbalife". The company's products quickly spread throughout the country. Tempted by new business opportunities, thousands of people have decided to cooperate with this organization. Expecting quick success many distributors endured collapse , attributing to the fact that the activity of this company is illegal .

At the same time, many financial pyramids appeared in our country that have an external resemblance to MLM companies. All this affected the reputation of this type of activity.

Despite these factors, the direct selling business in Russia developed significantly in the following decades.

By the beginning of the new millennium, all global leaders in network marketing are present on the Russian market.

In this table, you can consider the most popular network companies in Russia.

No. p / p	Company name	Brand country	Products	Share of MLM market in Russia (%)	Sales volume in the world, billion $
1.	*Amway*	USA	A wide range of products: household goods, cosmetics, vitamins, dishes, water filters.	8,1	9,5
2.	*Avon*	USA	Inexpensive cosmetics for the middle class	28,8	6,16
3.	*Oriflame*	Sweden	A wide range of products: from cosmetics to diet food	27,4	1,35
4.	*Mary Kay*	USA	Cosmetics	4,9	3,7
5.	*Faberlic*	Russia	Oxygen cosmetics from natural ingredients	4,8	no data
6.	*Herbalife*	USA	A variety of products for a balanced diet, weight management and beauty care	3,0	4,47

The table shows that the world leader in this industry, the company " Amway» in Russia ranks only third in terms of sales.

Corporations have the largest market share. Avon" And " Oriflame».

Is it possible to make money in MLM, what is needed to make money in network marketing

10. Is it easy to make money in network marketing, and what is needed for this 💰

Due to its merits, network marketing is a fairly popular activity.

According to the Direct Selling Association of Russia, following the results of the last five years 6% population was employed in business based on multi-level marketing.

Distributors have significantly different earnings, which do not depend on the level of education, profession, number of children, marital status and other factors.

A small percentage of sales agents quickly and easily achieve results. This is due to the fact that knowledge and experience are necessary for success.

To achieve significant results in business, you should follow the following tips:

A dream is the main factor that allows an entrepreneur to overcome difficulties and achieve success. To maintain motivation, you should “break the path to your dream” into intermediate goals.

The sales agent must realize that the result of his activity depends only on his efforts and dedication to the cause.

Tip 3. Learn and develop

Most network marketing companies have training programs. They include business literature, CDs of business leaders, and training seminars are periodically organized.

For effective activity, you should write a list of acquaintances in a notebook and periodically replenish it.

Tip 5 Present business and product

Based on the list, you should "get in touch" with potential partners or customers. The number of presentations affects the final result.

Tip 6 Consult with the sponsor line

Better to learn from other people's mistakes. Top line partners have more experience and are always ready to help the distributor, as they have a personal interest in the success of the entrepreneur.

Tip 7. Build a business based on the developed strategy

A stable, long-term result can only be achieved if there is a balanced development of the "width" and "depth" of the structure.

Tip 8 Repeat actions and methods of achieving success used by higher partners.

It is also worth noting that downline partners are also watching the distributor and will repeat his actions.

11. FAQ - answers to frequently asked questions

Before engaging in multi-level marketing, potential distributors have a number of doubts and questions.

Question number 1. Should a newbie start?

Worth it, but don't expect quick success. No risk of "being in the red", small initial investment, high-quality educational programs, partner assistance - factors that can affect success.

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

When starting cooperation with a "network" company, sales agents strive as quickly as possible. Activities should start with simple retail sales.

Buying goods at a wholesale price, and selling at a retail price - distributor makes money . First of all, products should be offered friends, relatives and acquaintances, as they will be more loyal to an inexperienced seller, and in the future they will be able to become regular customers or business partners.

Question number 3. Network Marketing: Is It Legal?

The direct selling business is a legitimate activity, which confirms the existence and development of these companies for decades.

Many illegal structures disguise their activities under the guise of network marketing companies.

Important! The potential client is invited to deposit an initial fee, pay for the mandatory training and purchase the minimum lot of goods. This is accompanied by the absence of checks and invoices confirming the purchase of products or the provision of services.

Also, the consumer should alert the poor quality of the goods or its absence.

Network companies offer good quality products and do not require significant financial investments to open their business.

Question number 4. What are the reviews of network marketing - is it possible to really make money on it?

There are many different opinions about network marketing on the Internet.

Here are some of them:

Review 1."At first 2000s a colleague at work offered to try the company's products " Oriflame". I really liked the product, and I became a regular customer. A couple of months later, she invited me to become her business partners and told me how to make money.

At the first stage, I managed to have a fairly large income, but then everything changed. I am raising two children alone, and as my network grew (at that time I had 34 people in the team), it was increasingly difficult for me to combine household chores and business.

As a result, incomes began to decrease, and at some point 12 people “left” my network. Later, I decided to switch to the classic business. In order to have great success in this direction, you need a lot of ambition, determination and activity. One girl from my structure has achieved great success in " Oriflame". I do not regret anything, the knowledge and experience gained at that time allow me to successfully do my job now.

Olga, Samara»

Review 2.“In our sophomore year at university, our stream was 'covered by the virus' of network marketing. Earning opportunities from Faberlic fellow students discussed everywhere. I have never been a fan of sales, but still decided to try.

Over time, I realized that it is hard to make money in this business, the bulk of the income from your turnover is received by superior partners. To be successful, you need to be able to impose products.

I don't recommend network marketing to anyone.

Alina, Rostov»

Review 3." IN 2009 I had to close my own business and ended up in debt to the banks $40,000, of which 2 000 I had to pay every month. I urgently needed to get out of this situation. I was in search of a solution, I considered various options for earning money.

Suddenly, I was approached by an old friend, whom I had not seen for many years, with an offer to go into business in cooperation with the company " Amway". At the presentation, he told me about the possibility of a decent income in a year or two. But I was as quickly as possible, which was suggested to focus on personal sales of expensive products, which have a significant margin. So I started in the business selling water filters and dish sets.

I have enough wealthy acquaintances and, in order to get out of my situation, I had to actively promote products. In my first year in network marketing, I spent weekdays 2-3 meetings with clients, and on weekends - 6-7. The result was not long in coming - I paid off my debts and, without actively "attracting" partners, reached 9 – 12 % achievement levels.

Then I studied the company's marketing plan in more detail and began to develop my own network of distributors more actively. At the moment I'm at the level Platinum Independent Business Owner.

I agree that making money in this business is not easy, but if you have the motivation, then anything is possible.

Andrew, Peter»

Question number 5. How to distinguish network marketing (MLM business) from a financial pyramid?

Most conduct their illegal activities under the guise of direct selling companies.

The table shows the comparative characteristics of these organizations.

Comparison criteria	Network marketing	Financial Pyramide
1. Initial investment	Typically a small initial investment. The distributor for this money receives "tools" for activities: catalogs, information about the company, product and a detailed presentation of the business plan. For many companies, with a certain amount of initial purchases, these materials are provided for free .	Significant upfront investment from 100 to 6,000 dollars. From this money, "bonuses" are paid to the higher "agents" of the pyramid.
2.Product	All activities are based on the sale of products. The product is of high quality and is in great demand in the market.	The product is missing or of little value to consumers.
3.Priorities in the activities of the organization	Receiving profit from the sale of products and its fair distribution between distributors and the manufacturing company.	Attracting new participants and distributing the profits from their contributions between the higher "distributors" and the organizers of the pyramid. Emphasis in activities on quick earnings.
4. Paperwork	Making money in a legal way: accompanying the purchase with checks, invoices. Drawing up an agreement between the company and the sales agent.	Lack of documents or their improper execution.
5.Distributor motivation	The business plan is based on the promotion of the manufacturer's products on the market and the corresponding remuneration of sales agents.	The plan involves only attracting new "agents".

Question number 6. How to choose an MLM company to start?

For newcomers who consider the direct selling business as a suitable activity, there is a question of choosing an organization for cooperation.

For an optimal solution, a number of aspects should be taken into account:

Reputation and age of the company. It is better to opt for an organization with a good reputation and significant experience in this field.
Products. The basis of any trade is a product. Its quality will directly affect the result. It is also worth paying attention to the features of the product. It is important that it ends after some time, and customers contact the sales agent again. The diversity of the assortment is also an essential factor when choosing a company.
Tutorial. The education system has a significant impact on business success.
The presence of the company's business on the Internet. Being offline greatly reduces the opportunity for business growth.
Business plan. It is important to evaluate the company's marketing and sales plan in terms of the fair distribution of the profits of the organization. You should also check for restrictions. The best kind of business plan is " multistage plan with branch».

Question number 7. I want to try my hand at network marketing at Oriflame, Faberlic, Amway - what do I need for this?

In order to become a distributor of direct selling companies, it is necessary to draw up a cooperation agreement with this organization, the age of the applicant must be at least 18 years old.

To register the contract, it is necessary that the newcomer has a sponsor who will help draw up the documents.

12. Conclusion + related video 🎥

In recent decades, various methods of promoting products have been rapidly developing in Russia, one of which is network marketing. Despite the controversial reputation, this method of trading became convenient and popular among buyers.

Having a thorough knowledge of what is direct selling business , the consumer can make the best decision about its use - to access quality goods that are not available in retail stores, earn additional income or develop their own network business with the prospect of significant income.

In conclusion, we also offer you to watch an interesting video about business on the Internet:

MLM ( Multi Level Marketing) or network marketing is a method of marketing products from the company that made them directly to the final buyer. To promote and sell goods, as well as disseminate information about them, the manufacturer attracts the consumers themselves (agents, distributors), who are offered various types of rewards in return. In turn, consumers who have become sales agents also attract new participants, which ensures the constant growth of the network.

Network marketing from the position of the manufacturer

A well-built MLM business is able to quickly capture the market and build a stable network. The creators of this marketing scheme call the reduction in the final cost of products for the consumer the basis for the success of promotion and the fight against competition. So, the cost of production may differ from the final price in the store by 2-3 times. Such a markup is formed as a result of the formation of a complex structure of a traditional distribution channel, which includes dealers, stores and their attendants, the availability of service centers, and much more. By cutting them off, the network business reduces the market price without losing its own profits.

In addition, network companies do not have the problem of building and controlling a management system, as well as selecting qualified personnel and motivating them. Training in the necessary skills in the field of sales, attracting new employees and encouraging them to achieve high results has been transferred to the agents themselves.

Another important advantage is the protection of products from counterfeiting and maintaining the desired level of product quality. This is ensured by the manufacturer's ban on the sale of network products in brick-and-mortar stores or from mobile street counters. Thus, even if a fake batch is produced, it is unlikely to be sold without attracting attention.

Initially, network marketing was also based on the goal of providing faster delivery of goods to the end consumer, however, given the realities of the modern market, this side of the network business has become less pronounced.

Network Marketing as a Distributor

Entering the MLM business, an ordinary consumer receives three possible options for cooperation:

Attracting new sales agents (expanding the network) and receiving bonus remuneration;
Buying goods for yourself at a personal discount and without an agent's markup;
Selling products with a profit from the markup (the difference between the cost of goods at personal discounts and the final price for which the goods will be sold).

The work process itself consists of the following steps:

Conclusion of an agreement with the company;
Acquisition of a starter kit of goods and promotional products;
Search for buyers and new distributors;
Conducting presentations and sales at home, in a rented office, in person in public places;
Receiving commissions or bonuses from the company.

Relationships between the main company and distributors in network marketing are built according to a specific marketing plan, which determines according to what rules and calculation schemes remuneration will be paid. In practice, there are four main types of marketing plan:

Classic or linear- all invited new members of the network (not buyers, but new distributors) are the main (first) line from which bonuses are accrued. From the agents invited by the first line distributors, the initial agent is not entitled to bonuses.
Binary- is based on the fact that only two new agents can be attracted to the network, each of which also invites only a couple of distributors. As a result, balanced (ideally) branches are formed, called "legs". Such a marketing plan allows you to speed up the promotion process, but profit can only be made if the branches generate income in the ratio specified in the agreement (50x50, 60x40, 70x30).
stepped- the agent receives remuneration for all participants in the structure formed by him. After reaching a certain level, the branch founder gets access to elite bonuses and bonuses.
matrix- bonuses are paid only when a certain number of distributors are attracted to the first line and the specified number of levels is further built.

Also, in practice, combined methods can be used, which is determined by the strategy of a particular company.

Accounting registration system for agents

An important component of building an effective MLM business is an accounting system that allows you to control the relationship between sponsors and distributors, track sales and purchases, and also calculate bonus deductions. Initially, when most companies used a linear marketing plan, the use of standard spreadsheets was enough to accomplish this task.

With the advent of more complex structures, it became necessary to create specialized automated systems (Ritos, B2B-MLM, OKsoft, Easy Accounting MLM), which allow working with a load of up to a million network participants. Large companies with solid start-up investments often develop their own programs.

The difference between MLM companies and financial pyramids

Network marketing is based on the construction of a pyramid, in which each superior receives income from system participants located at lower levels. This principle is also used by fraudulent organizations that have received the name financial pyramids. The fundamental difference between them and network marketing is the emphasis of the policy of MLM companies on the sale of products that have real value, and not on attracting investment from new participants.

To distinguish network marketing from a financial pyramid, you need to pay attention to the following features:

The company offers high-quality goods that have value outside the company's activities and are in demand (household chemicals, dishes, household appliances, clothing, vitamin supplements).
You are given the opportunity to receive income only from the sale of goods, without recruiting new agents.
The company enters into an agreement with each agent, drawn up in accordance with the law.
The cash contribution is a payment for the starter package of products, and not an investment for participation in the project.

What is online network marketing

Adapting to modern ways of promoting products to the market, network marketing companies have very quickly mastered the Internet space, which is primarily used as a way to find new distributors and buyers of products, as well as a means of remote network management. The following channels are used for this:

Social media. Here, such activities can be implemented as an active mailing of offers about the opportunity to earn money in the MLM business, the sale of goods, the publication of advertisements in thematic and popular groups, interaction and work on motivation with already attracted distributors.
Landings. This type of site allows both selling network marketing products and registering for presentation meetings for future distributors, seminars and sales training.
Portals for registered distributors (online stores). Provide the ability to remotely form an order and track the availability of products in the main warehouse.

Thus, the essence of MLM on the Internet remains the same as in offline business, but there is a significant plus - the target audience is significantly expanding and the scheme of interaction with it is simplified.

How much can you earn in network marketing

The policy of MLM companies is based on the admission to the structure of all applicants who have shown interest, regardless of age, status, education and experience. However, choosing network marketing for making money, few people really understand what it is, and therefore a very large number of disappointed participants who do not have the proper qualities and do not want to learn, believe that it is impossible to make money in this area.

When you sign a contract with a network marketing company, when asked about earnings, they will undoubtedly answer that the level of income depends only on you. Such a calculation is quite abstract, because your time and effort are limited resources. Starting a career as a networker is very difficult, and your sponsor (upstream distributor) is unlikely to tell you that according to statistics, only 5% of newcomers who come to the network achieve a stable income of $200 per month, only 1% reach the $500 level, and only 0.5% have a chance receive 1000 dollars, after several years of painstaking work.

There is an opinion that you can get an acceptable income only in young MLM companies, since there is more chance to be at the top. But the truth is that the founders of the company earn the most, as well as the very first distributors, who are more involved not in sales, but in networking, building a corporate culture, conducting trainings and seminars. The rest of the participants in this business is constantly updated. So, every five years in large MLM structures up to 90% of distributors can change.

This means that if you are not a manufacturer ready to build your business on the network marketing model and among your acquaintances there is no such entrepreneur who is ready to take you on as an assistant, there is no difference in when you start working as a networker for you. If at the same time your goal is not millions, but several thousand dollars of stable income, the chances of achieving what you want are quite real.

Network Marketing and Legislation

Since network marketing is a fertile area for the development of fraud in many countries of the world, the activities of such companies are regulated by law. So, in the US, in the MLM business it is forbidden to set sales plans for agents and name specific numbers of possible earnings. Also, if they wish to exit the business, the distributor has the right to return unsold goods, receiving at least 90% of its original cost.

Unlike Western countries, domestic network marketing is not only not controlled by the state, but does not even have a corresponding definition in the legislation. This huge minus complicates the work of both distributors and manufacturers who want to sell through the MLM scheme. In the Russian Federation, the following format for legalizing activities is most often used:

The manufacturer is registered as an ordinary enterprise (LLC, JSC, CJSC). At the same time, since the network can grow indefinitely, IP registration is not allowed.
Distributors are registered as agents (with payment of taxes by the manufacturer) or as individual entrepreneurs (with self-payment of taxes).

Considering the question of what network marketing is and how it works, both positive and negative sides can be noted. It is not an ideal product promotion mechanism for a manufacturer, but at the same time it demonstrates fairly high performance and really protects unique products from counterfeiting. As in any business, it requires the participants in the system to put in a lot of effort and entrepreneurial savvy to stand out from competing distributors and partners.

Irina Davydova

Reading time: 12 minutes

A A

The term "network marketing" involves the distribution of goods or services through a well-developed and extensive network of distributors (note - independent representative of a particular company).

Is CM (Network Marketing) a "Pyramid" , what are its pros / cons, and how does this system work?

How network marketing works - its pros and cons

What is the essence and what is the scheme of network marketing?

The bottom line is simple: a person sells goods and invites other people to a similar position, from whose sales he receives interest. The more sellers he brings, the higher his earnings. Thus, a large network of sellers working for one organization is built.

The scheme of work of most network companies, as a rule, is the same (with minor differences in individual companies).

At the interview you are told about job prospects and "huge" opportunities (usually the possibilities are overestimated or greatly exaggerated). For example, about a solid income already in the first six months of work.
After registering, you may be asked to make a membership fee . It is worth noting that reputable network companies use exclusively legal schemes and do not require any fees.
Next, you look for and recruit new sellers who are already registered through you. This is the main feature of the SM.
Profit (the difference between purchases and sales) comes to you after the sale of the goods, which, as a rule, you have to redeem with your own money. Also, the profit comes as a percentage of the sales of the people you attracted to work.

Network Marketing - Benefits

Saving money on advertising. The network company's products are advertised mostly through "word of mouth" - direct contact between sellers and buyers. By saving on advertising, the market price of products is reduced and the income of the distributor is increased.
Acquisition of effective and high-quality products not available in conventional stores.
Possibility of part-time or full-time work with good income.
Free work schedule.
The amount of earnings depends directly on the time invested , human abilities and the desire for high incomes.
Opportunity for your own business. True, not immediately, but after you recruit people, train them and promote your own recruitment system. And without investment, of course, will not do. The only question is their size.
Help from professionals. As a rule, in each network company, along with the products, a person also receives a personal “guru” who helps, teaches, and instructs him.
No age restrictions. It doesn’t matter if you just turned 18 or you are retired - everyone can earn.
No high school diploma required . Instead, you will need such qualities as sociability, ingenuity, etc.
The presence of a system of "increase" (career growth).
No need

Network Marketing - Disadvantages:

Income instability. Especially, at first, when the work will resemble a part-time job.
material investments. It's unavoidable. Even if they tell you otherwise, accepting SM into the ranks. The amount of investment will depend on the situation, company, product. Pros: The investment always pays off.
Selling goods is not as easy as you might think. Until you find your way to effectively sell, you will draw a lot of negative emotions.
Not everyone will be successful. This point follows from the previous one. Much depends on your capabilities, abilities, experience, learning ability. Someone will become successful, someone will leave this opportunity for a part-time job, and someone will leave altogether, straining through his teeth - “you won’t earn anything here.”
You will work in the business, but you will not own it. Why? Because the products you sell do not belong to you. You will not be able to sell it as your own - for this you will have to develop your own product and open production.

Interesting job or financial pyramid?

Should I be afraid of working in a network company? What is the difference between SM and financial pyramids?

It is worth noting that the SM has nothing to do with the notorious "pyramids". The reputation of SM was badly damaged, "thanks" to swindlers who successfully disguised their companies as network ones.

How to distinguish a network company from a financial pyramid?

Signs of a "pyramid":

The idea is to attract a large number of people in order to collect as much money as possible in the piggy bank of the pyramid and disappear.
You get a profit for each person you invite who brought money to the pyramid.
The company's product (service) cannot be sold on the open market.
Consumers of products (services) - only distributors.
It won't work without investing your money. The size depends on the scale of the pyramid. Moreover, for your own money, you are buying not a real and high-quality product, but dummies, at best, simply not causing harm. And in most cases, you give your hard-earned money for “membership fees” or some “papers” that have value only inside the pyramid.
No printed materials.
By investing in a pyramid scheme, you only receive promises that “very soon” you will become rich, rich.
The pyramid teaches you to cheat.

Signs of a legally operating network company:

The idea is to attract a large number of people to grow the company and increase the income of distributors.
You get a percentage of the sales of the people you hire.
The company's product can be freely sold on the open market.
Consumers of products are ordinary buyers and distributors themselves.
Investing funds - only for the goods that you buy and then sell.
Printed materials are usually present. At least product catalogs.
By investing in SM, you get a quality product and a percentage of the sale.
SM teaches you how to sell.

The Most Popular Examples of a Business Built with Network Marketing

The first of the first in the SM were companies that appeared back in the 30s in the last century. They were involved in food supplements and sold only one product.

The most successful company in the SM was launched in 1959 AMWAY. She was one of the first to go beyond the sale of the "1st product", expanding the range of nutritional supplements with household goods.

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How does the online multi-level marketing industry work?

MLM stands for multi-level marketing - 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, form an image, and then wait for buyers to come to them. In the MLM business, they look for clients on their own: they call, go to apartments, turn on the street. This is called direct selling.

What is MLM

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

Essence of MLM

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

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

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

Benefit from its structure. You invite your acquaintances 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 is also inviting people to become your third level. That's why it's multi-level marketing.

Members of your team can receive goods from you directly, or they can buy 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 occurrence

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

A semblance of a network was formed through which nutritional supplements were uninterruptedly supplied. The company had only three people, including Rehnborg himself. The company also did not bear the cost of advertising the product - instead, it had independent distributors and people's word of mouth. People who sold goods received income, and those who found new sellers of the product received additional rewards from the total turnover.

Between the end of the 1950s and the middle of the 1970s, about 30 firms 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.

Now, according to the MLM system, biologically active additives, cosmetics, household chemicals, kitchen utensils and insurance are most often sold. Well-known MLM companies: Amway, Avon, Herbalife, Mary Kay, Oriflame, Faberlic, Green Terra, n el international”, “Metlife”, NSG.

Network Marketing Principles

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

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

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

Typically, network companies do not hire their representatives, but conclude 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 hold seminars, publish methodological literature, managers take newcomers to work with them.

MLM - is it legal?

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

It is perfectly legal to sell cosmetics, nutritional supplements, or insurance through network marketing, as long as 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 by

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 is to attract a new member. 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 earn if new people come. When newcomers run out, the pyramid collapses. Those who joined last lose money. If you are invited to network marketing, but the company does not sell anything, this is a pyramid scheme.

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

Some financial pyramids, in order to be mistaken for honest business, also sell goods or services. There are four signs of pyramid schemes: low cost of goods at a high price, delayed sales, unclear purpose of the goods, separate payment systems for the sale of goods and customer acquisition.

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

For example, the Advokard company sold subscriptions for legal services for 50,000-70,000 R, although such services cost 3,000-10,000 R. But it was possible to make good money on attracting new customers. When those who wanted to overpay ran out, earnings stopped. The last buyers were left with subscriptions bought 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. A starter package in MLM is also a purchase of 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 bought at market prices in his hands - it is easier to sell them and return the costs.

Postponed sales. Ponzi schemes may offer to buy goods now and receive them later. At the same time, for the same purchases of beginners, the agent receives a reward immediately.

One company sold apartments in Sochi at attractive prices. It was necessary to buy urgently, until the apartments ran out, and they promised to issue them to the buyer in a few months. But right now it was possible to earn 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. Gullible candidates soon ran out, 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 for now, build a network. When a store opens in your city, you will receive interest on the 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 start of supermarkets.

The top leaders were telling their distributors to wait a little longer. Stores really appeared in St. Petersburg, Samara, Barnaul, Tyumen, Yaroslavl and Kazan, but in other cities the opening date was constantly postponed. Then those who wanted to buy air ran out, and people were left with useless souvenirs, printing and "shares" in their hands. The shops have closed.

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

Unclear purpose of the product. When a product is just a cover for a financial pyramid, its purpose and content can be incomprehensible. 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 to friends.

In legitimate MLM companies, 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 trade. In such companies, you can receive a small reward for selling a product, but they promise larger earnings for attracting new members. At the same time, 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 Avtoclub company sold network marketing cards 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 structure made a purchase using this card, he received a 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 promised a larger reward for newcomers who also made an entry fee. When the influx of people decreased, they stopped paying rewards. Now Autoclub deals only with discount cards, but it had to change its name to Aunite Group.

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

Why people don't like MLM

Millers are taught to offer their products to as many people as possible, to work with objections and “squeeze” the client. This gives the impression that they are being imposed.

Networkers constantly call their friends, approach people on the street and in transport, invite them to presentations. If the answer is simply “I don’t want to”, the mlmschik may require an explanation of the reason for the refusal, and then he will begin to work it out. Not everyone likes it.

Cons of network marketing

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

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

Over time, the problem of finding customers grows: the agent begins to stumble upon those who already know about his product and even belong to someone else's structure. He works hard, recommends, but people brush it off because they are already tired of 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 earns, but he does not.

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

Networkers annoy a lot of people. You can’t know in advance who will be interested in the offer, and who doesn’t like network marketing. Therefore, the networker has to constantly offer goods to different people and often encounter negativity.

There may be deposits of products, when the goods are taken badly. This is due to the fact that companies require the networker to purchase a minimum number of products. If he does not have time to use everything, they will accumulate and deteriorate.

Not everywhere networkers are paid with money. In companies that give remuneration 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 the price for it is 50% lower. He buys products and suddenly he cannot sell them. As a result, you also have to give at discounts in order to recover the costs.

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

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

Advantages of network marketing

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

You can earn on personal purchases. In an ordinary insurance company, the agent does not always receive a commission if he buys insurance for himself. In MLM, you can write out a policy for yourself and make money on it.

MLM has a free schedule and no boss. Obligations to the firm and clients exist, but there is no system of punishments. The agent cannot be reprimanded for absenteeism. If it does not work well, then it will not work, and there are few other restrictions. At the same time, the network company forces them to comply with their codes and can punish them for violating them. For example, some firms prohibit cooperation with competitors. An agent can be a representative of only one MLM company, or he will be excluded from the business. They can also “fire” if the mlmschik poachs people from other structures of the company.

Network business can be run 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 MLM business is combined with the main work. This is a good option for pensioners and women on maternity leave.

You can gain valuable knowledge and skills. In the course of training in network business 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 fail to earn money, knowledge and experience can then be applied in other areas. For example, in companies that sell cosmetics, they teach you how to properly take care of yourself. Companies selling dietary supplements explain how to eat right. Insurance companies give financial literacy lessons.

Is it possible to make money in MLM

A networker can make money in MLM under several conditions: he came into business among the first, he has a good product, he likes to do it and he has chosen the right company.

How to choose an MLM business

The idea of MLM is when a satisfied consumer recommends products to their friends. The networker must be such a satisfied consumer, so he needs to choose a company whose products he would buy regardless of the 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 the promised reward suits him. His mentor will calculate how many people to invite, what turnover to make and how much he will eventually receive for this.

An example of a calculation according to the marketing plan of one network company. 10 people from the first level buy for 3000 R each - the agent receives 300 R. 100 people from the second level buy for 3000 R each - the agent receives 6000 R

How to develop in MLM

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

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. They will offer to start work from a list of acquaintances: it can be made up of contacts on the phone, social networks, notebooks, and from everyday social circles. Mentors will recommend contacting acquaintances and talking about the business or inviting them to a presentation.

To be successful, it is important to keep learning. MLM companies teach how to sell and invite to business, describe the benefits of products. MLM training systems will help you set goals and determine the steps to achieve them. As a result, you need to calculate how many people you need to talk about the business daily in order to receive the desired profit.

The next step is an internship. It's good when a manager shows how he talks with clients, and then watches how a network manager does it and analyzes his mistakes.

When the agent gets used to it, he will start working independently, and when he reaches 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 earnings. If you ask this question during the presentation, the mlms will answer that the income is unlimited and depends only on your goals. They say so because in this business the agent receives a percentage of the sales of his structure, and the company does not set the upper bar.

When the manager calls the newcomer, they discuss the desired earnings. In such conversations, networkers boldly make plans to earn at the level of 100,000 R.

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

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 contribution. It happens that they pay not a percentage, but a fixed amount for each sale, for example, 1000 rubles per contract.

Doing an MLM business via the Internet also does not guarantee income. There are successful examples when, when switching to the Internet, networkers quickly build a team and reach an income of 100-200 thousand rubles a month. But many keep their blogs for a long time and do not get new customers. 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 in social networks, provide contextual advertising and sell goods through online stores.

How to start an MLM business on the Internet

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

If the mlmschik wants quick results, he makes a selling page, invents or finds the ad text, buys ads 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 whom he can hook on with something.

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

Advantages and disadvantages of MLM on the Internet

The Internet allows the networker to work only with interested candidates, gives a wide coverage. You can sell and recruit via the Internet automatically. There are other advantages of MLM on the Internet:

Less negative. If a person joined a group or followed a link, he is already interested. The likelihood of getting a bad reaction in the face is low, and rejections and negativity on the Internet are not so painful.
Contacts around the world. With the help of the Internet, a networker can sign people from anywhere in the world to his team. The main thing is that the company allowed to register distributors from there.
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, record a training webinar.

Working via the Internet has its drawbacks:

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

Briefly about MLM

MLM is a sales system where a buyer becomes a seller and invites other sellers. It turns out a multi-level structure.
MLM has a free schedule and constant training, but income is not guaranteed.
In network marketing, you can build a structure and sell over the Internet.
Financial pyramids also work on the network marketing system. The main thing in MLM is to sell goods, and in pyramids - to recruit more participants.

If you do not want to become victims of scammers, then you need to know exactly what an MLM business really is. Because here it is too easy to fall into the trap of a financial pyramid, and end up without money.

In this article, we will analyze how to distinguish a real MLM business from financial pyramids. And is it really possible to make money in MLM?

And for starters, let's look at what the essence of the MLM business is, and why it is so much disliked by "the people".

What is MLM business in simple words

The name "MLM business" comes from the English MLM - "Multi-Level-Marketing" (literally - "multi-level marketing"). Other names for the same phenomenon are network business, network marketing and the new "fashionable" name - "network marketing".

It denotes one of the options for organizing marketing - a scheme for distributing the company's products. Classic business is when there is a store where people come to buy our goods. The network business option is when a lot of people take our product and distribute it among their friends.

That is, in MLM we do not hire employees for a salary, we do not rent stores. Our task is to recruit as many volunteers as possible who will distribute our products themselves, receiving a percentage of sales for this.

In addition, these volunteers of ours will recruit their own volunteers. And then they will already receive a percentage not only from their sales, but also from the sales of all their “recruits”.

Who Invented MLM?

MLM as a type of marketing was invented, of course, in America. The early organizers of network companies realized that people are much more willing to buy certain categories of products when they are recommended to them by their acquaintances. These are products such as floor cleaners, shampoos, cosmetics (note that almost all of these are “for women” products).

And it turned out to be a good thing, in principle. The goods of network companies were usually cheaper, because there were no costs for renting premises and salaries for employees. And in terms of quality, they often surpassed analogues from stores. Thus, networkers were able to bypass the most severe competition in the market of household goods.

But here's the question. Why do “the people” dislike this very MLM and network business so much?

Why is MLM so disliked?

If you do not believe that MLM is not loved, look at the ads that they give in newspapers and on websites. They will never write directly - they say, we are recruiting people into the network business, come to the meeting then and then.

No, everything will always be hidden there and disguised as "opening a branch of the world's largest company" and under "need an assistant to the head of the business, I will teach you everything, salary from 50 thousand per month." Why such secrets and enticements? And because if you directly write that you are recruiting in MLM, no one will come to you. Because they don't like MLM =)

And there are two main reasons for that.

Reason #1 - Destroying Relationship Foundations

Have you ever wondered why we (humans) recommend anything to anyone at all? Why would we tell a work colleague where they make delicious sushi? Why should we advise a friend which car is better to buy? After all, it doesn't really concern us.

But nevertheless, we really want to run at least from the other end of the city, if someone needs our recommendation, and at least force him to listen to us. What is the reason for this behaviour?

Perhaps you think that it is because you are such a kind and nice person who simply strives to help everyone around you as much as possible. But actually it is not. We are happy to recommend, because in this way we dominate those to whom we recommend something.

Judge for yourself - we have some kind of Knowledge. that the person in front of us does not have (be it knowing where you can eat sushi and not get poisoned, or knowing which car is better in terms of performance). And by sharing this Knowledge, we show that we are better. Yes, yes, we are better and higher and smarter than a person who does not have this Knowledge.

And the higher the result a person receives on our recommendation, the stronger our dominance will be. Accordingly, we sincerely try to recommend only the best. And the one who asks us for advice subconsciously feels all this, and therefore believes our recommendation.

MLM should have been based on this principle, but here the whole thing is spoiled by money. When our familiar network manager recommends something to us, we always have a suspicion that he does it solely for his own monetary gain. Even if he really likes the product and would recommend it for free. But an unpleasant aftertaste remains.

Thus, MLM interferes with the fundamental set of unspoken laws of human relations (it is also called the "social contract"). And it destroys friendships, friendships and even family relationships. And that's why people don't like him.

Reason #2 - Remotivated Zombies

If you have ever met a real "networker", then of course you understand what I'm talking about.

The basis of MLM marketing is strong training and strong motivation of network members. Humans are by nature very lazy and shy creatures. Getting them to sell something to strangers and unfamiliar people is not an easy task.

And therefore, each new recruit undergoes intensive training, where the emphasis is on motivation. They are brainwashed with promises of huge profits. They are told that they are the chosen ones, and everyone else only envy them. And they are also very convincingly told that their product is almost the most ingenious invention since the light bulb.

And people are gradually "blowing the roof." Can you imagine what it is like to know the whole truth alone (that the best work is a network business, and the best cream is Oriflame), but no one believes you, and shies away from you like the plague?

As a result, it becomes very difficult to communicate with networkers. All they talk about is the network business and their product. All they do is try to drag everyone they meet into their structure, to the “bright side”.

And again, this leads to a split in friendships and family relationships. That's why they don't like MLM. In the minds of people, getting into MLM is like getting into some kind of sect. And the one who is “trapped” will soon begin to rewrite his apartment for some regular “Herbalife witnesses”.

But there are, of course, positive aspects as well. If you do not lose your head, then MLM business can be an excellent development option for you. And you will keep friends, and you will still find new ones.

How much can you earn in MLM?

Networkers are very fond of this joke:

A man comes to the city and sees that on one side of the street all the houses are big, beautiful, well-groomed. There are expensive cars near the houses, and all the people are cheerful and happy. And on the other side of the street, the houses are small, dirty, dilapidated. All people in rags, eat rats.

He comes to one of these dirty houses and asks a passer-by why the houses opposite are so beautiful, but here they are so bad.

A passer-by replies - "Ah, there are networkers living opposite who are engaged in MLM."

The man asks - "What are you?"

Passer-by - "But we do not believe them!"

The anecdote is hilarious. But, unfortunately, as in any other type of business, most people employed in MLM have absolutely no income. A very small percentage of networkers have an income comparable to the usual salary of a qualified specialist. And only tenths and hundredths of a percent of all mlmschikov make really big money.

How to develop in MLM?

Yes, you can make money in MLM, and even a lot. But only on the condition that you actually work. And to earn money, you will be mainly engaged in recruiting people to your structure, and not in selling the product itself.

If you want to develop in network marketing, you need to have a huge number of personal meetings every day. And we also need to ask friends to organize parties at their homes and bring their friends - for whom we could conduct an “impromptu” presentation of our product and business.

And most likely it will take you several years to build a large and loyal structure with which you can have large incomes. Therefore, please do not flatter yourself with promises of quick earnings. As elsewhere, you have to work here.

And most networkers eventually realize that MLM is not the option to which they would like to devote their entire lives. Therefore, they go into other types of entrepreneurship. But they retain the skills they have acquired while working in MLM.

And even today there are projects that masquerade as MLM, but in fact are something much worse.

How to distinguish MLM from a financial pyramid

If you haven't noticed yet, today there is a huge offer on the Internet to participate in some super innovative projects. As a rule, we are talking about decisions that will turn the whole world upside down in some area. In the field of housing, in the field of transport, in the field of the Internet or in the field of telecommunications.

The only problem is that this ingenious solution is still under development, and it cannot be used yet. Or you can use it, but it is so inconvenient, crooked and weak that it loses even to free counterparts.

And you are invited to either buy a share in this project, or buy a product and pay for it every month. And people do it, and with great joy. The question is why? And then, that they can attract new members, who will also pay every month, and you will receive some percentage from their payments.

Almost like in MLM, but with one difference - there is no specific product that you could use. That is, you pay not for the product, but for the opportunity to receive money from those who are below you in structure.

And such an organization is possible precisely because of the "virtuality" of the proposed product. It does not need to be transferred, stored. It may not be used at all. The main thing is to attract all new participants “for themselves”.

How financial pyramids collapse

All these projects always end the same way. One day, people who can be attracted to the pyramid simply run out. And then the members of the "lower layer" stop paying their monthly dues. And why should they pay someone if no one pays them (because there is no one below them)?

Then the penultimate layer stops paying, because the last one does not pay them. And so on, until the pyramid burns out to the very top.

Some pyramids appear and disappear in a couple of weeks. Some last for years. But the main thing is that they always have the same ending. And if you are offered to participate in some kind of "network business" where there is no product, or it is very complex (too innovative for a mere mortal to understand its idea) - most likely you are being lured into a financial pyramid.

Here are some more indirect signs of a financial pyramid:

Promises that it will not be necessary to sell anything and recruit anyone.
Mandatory monthly payments.
The impossibility of personally checking the quality of the goods (or the poor quality of the goods).

In general, it is the quality of the goods that distinguishes the real MLM in the first place. Recommendations are good. And your friend will probably buy something from you once if you advise her. But for her to pay you a second time - here it is already necessary that she really likes the product.

Therefore, pay attention to indirect signs, and do not fall for scammers. And then they feel themselves on the Internet like fish in troubled waters. Is it really possible to do a real network business via the Internet?

Is it possible to do network business via the Internet?

Here it is - the golden dream of any networker. No need to go to any personal meetings, no need to recruit anyone. Stay at home, spread links to your product on social networks and sites - collect the cream.

But personally it seems to me (and this is just my personal opinion) that the network business in its original understanding cannot exist on the Internet. There are two main reasons for this:

MLM business is a referral business. We recommend the product to our personal friends, and they recommend it to their friends, and they recommend it to their friends. This is how the structure is going. And if we recommend a product to everyone in a row, then this already becomes a regular advertisement.
MLM business rests on a quality physical product. That is, you can feel it, try it. And you definitely need to give the buyer the opportunity to "feel" before buying. Accordingly, you can’t get away from personal meetings.

And if you really don’t want to go to personal meetings with anyone, but work via the Internet, then it’s better to do affiliate programs. It's the same as MLM, but you just advertise some product and get a commission on sales.

That is MLM through the Internet is possible. And it is called - "earnings on affiliate programs." Look at my article, and you will understand a lot.

By the way, there are also multi-level affiliate programs. That is, there you can also earn from attracting new partners, and not from personal sales. Watch my video on how I make money on affiliate programs (opens in a new tab).

Conclusion

In no way do I want you to get the impression after reading this article that I am against the MLM business. In fact, I am a big supporter of people starting to take responsibility for their own income, and trying to provide for themselves by their own efforts, and not relying on "uncle".

And to start an entrepreneurial career, network marketing is a very good option. You will gain experience, fill the first bumps, learn to resist the pressure of the public. The main thing is that it approaches everything with a head, and look at things objectively.

Otherwise, there is a high probability that you will be disappointed in the usual MLM, and instead of using the acquired skills to open your own business, you will wallow in financial pyramids and financial bubbles.

Don't forget to download my book. There I show you the fastest way from zero to the first million on the Internet (squeezed from personal experience over 10 years =)

See you later!

Your Dmitry Novoselov