Multi Level Marketing: You may remember some brands that hired (or still hire) resellers to market their products directly to customers. This strategy, called multi level marketing (MMN) or network marketing, is a modality that is part of direct marketing.
Direct marketing emerged in the 1940s in the United States. Unlike attraction marketing, it has the objective of going after the customer directly and more aggressively. For this reason, multilevel marketing and other techniques within this modality (telemarketing, cold calls, direct mail) can be seen with evil eyes.
In this article, we will analyze MLM so that you can draw your conclusions about this technique. We will bring the following points in the next topics:
- What is multilevel marketing;
- Advantages of Multilevel Marketing;
- Disadvantages of Multilevel Marketing;
- The difference between MMN and pyramid.
What Is Multilevel Marketing?
Multilevel marketing is a sales model in which a reseller earns a share of the profits made by him and his reseller network. Therefore, this strategy aims to encourage salespeople to perform better and better and attract new distributors to the company in question.
Here’s how it works: resellers directly contact the customer, either in person or online. The reseller must believe in the product. Otherwise, their results will not be effective. Therefore, the reseller becomes a sales manager for a specific region or group.
Mary Kay and Herbalife are examples of brands using this strategy. The problem is that many resellers of these famous brands are inconvenient or pushy, and so many people get a terrible impression of multilevel marketing.
Advantages Of Multilevel Marketing
Now, let’s see some advantages of this marketing model. Then we’ll move on to the disadvantages.
Freedom Of Schedule
By becoming resellers, professionals have much more freedom to define their work schedules. Therefore, he has more schedule flexibility and can still work from home. For those who want to spend more time with their family and need to manage their own time according to their needs, MLM is the ideal model.
Indeed, the sales professional will have more autonomy and independence. However, the benefits of a CLT job are lost, as the relationship between company and dealer is commercial, not work.
Also, multi level marketing does not require huge investments. Many people want to have their own business but don’t have the money to invest in their venture or franchise. In this way, MLM emerges as a viable option for those who like to deal with sales, want to have more freedom, and, at the same time, do not want to spend a lot.
Multilevel marketing is also an easily scalable business: this is its most significant advantage. When a reseller recruits a new distributor, that new member can create their network. In short, every new person who joins the business can have a team.
This causes the levels of sales forces to multiply and, thus, sales leaders have their earnings boosted. However, it is essential to remember that most companies limit a leader’s profits after exceeding a certain number of levels.
Disadvantages Of Multilevel Marketing
Now, let’s analyze the disadvantages of this model so that you can organize its pros and cons side by side.
Long Term Growth
Despite being an attractive and low-investment option, network marketing can generate results only in the long term, especially for salespeople with little or no experience. Conquering customers is already a complex task, so imagine having to attract new distributors?
Thinking in this way, getting a return by building a reseller network can be a slow activity, taking months or even years.
One of the problems with multilevel marketing is the indoctrination that some companies instill in their salespeople. This can lead to obstinate professionals who refuse to see possibilities other than the “truth” of that brand. In addition, some resellers even defame the products of competitors.
The dealer mustn’t employ unethical or overly aggressive practices to convince the customer that the product is good even because the customer can detect the seller’s lies, which would damage both the brand’s reputation and that of the sales professional.
Also Read: Inbound Marketing In E-Commerce