In practice, it is a fully legal way to achieve financial freedom, but often, albeit in error, associated with a pyramid scheme. MLM, or network marketing, allows you to gain some kind of independence and break away from the proverbial part-time.
WHAT IS MLM?
The full name of the MLM abbreviation is Multi-Level Marketing, also referred to as multi-level marketing, direct sales, soft marketing, direct marketing or network marketing.
MULTI-LEVEL MARKETING
It is based on extensive sales networks, where the main distributors of the company’s products are independent sellers, who can either deal with direct sales in the circle of their friends, family, or can also build their partner structure and derive passive income from the activities of their team. Multi-Level Marketing is one of the newer ways to reach the customer. To explain the origins of its creation, you need to trace the history of sales. One of the first forms of sale was 24-year-old stalls owned by merchants. They were created to deliver products to customers and meet their needs. Then came multi-branch stores (over time specialized), markets, discount stores and wholesalers, as well as mail order, direct and television sales. MLM emerges from direct sales. The task of the partner (also called an independent distributor or collaborator) is to sell products to its customers and recruit new people to cooperate. A multi-level structure is then created. The partner receives a commission fee for his own sales (active income), as well as through the work of his structure (passive income, passive income). The method of remuneration is determined by a gratification plan also called a compensation plan or compensation plan.
GRATIFICATION PLANS
- Amway e.g. Point Plan
- Differential plan used in companies such as Akuna
- Binary plan used in Jeunesse
- Matrix plan used e.g. at DuoLife
- A contract plan used by companies
- Mixed plans
HOW DOES MLM WORK IN PRACTICE?
You become a business partner of a given company and your main task is to sell certain products. If you’re a good seller, you can make a lot of money from it. But the most effective earning model in MLM is direct sales combined with building your team, called structure. This can be compared to a geological tree. At the top you are you, you yourself have recruited 3 other people who are located directly below you. In this case, you earn money from your sales and get a certain percentage of your team’s sales. For example, it could be 5%. Each person earns 1000 PLN on their own, that is, from their sales you earn (for example, we assume that you earn 20% from sales) 200 PLN, and your team (that is, 3 people under you) earned 3000 PLN, that is, for you it is an additional 150 PLN. Let’s say that each of these 3 people from your team has recruited another 3 people, so in total your structure has 12 people, which gives you an additional 1200 PLN.
