What is an MLM? And How Does it Work?

Multilevel Marketing (MLM) or sometimes called Network Marketing is a direct sales business model where distributors, called Independent Business Owners in this industry, both make money by selling products from their affiliated companies and by recruiting aspiring prospects to be IBO’s themselves.

How the Multilevel Marketing / Network Begins

Whenever an IBO recruits people to successfully join the MLM they then become part of their network or downline. After that, any sale that the downline makes, the IBO who recruited them receives a commission.

As you can see, this then makes a large chain of people or a hierarchy of sorts. This then eventually creates what is called a leg. A leg is the whole order of people that make up a downline. The MLM then gives monetary incentives and the mechanics to the leg based on the various compensation plans there are. The ways that the leg can operate are many and each one would affect the IBO differently in terms of commissions received.

Are MLMs Really a Pyramid Scheme?

Due to the focus on recruiting new members, many people dismiss MLMs as nothing more than a disguised shady pyramid scheme. However, despite the many lawsuits that many MLMs go through or put onto one another, there are legitimate companies in the business.

One of the primary reasons MLMs go through expensive lawsuits is because they continue to make false claims on what an IBO can financially realistically make or they make statements about products that are simply not true.

MLMs have to be totally transparent on exactly what their compensation plan details to a promising IBO not only to avoid lawsuits but to gain the trust of their IBO. After all, a company cannot operate without trust and that is for any business, not just for MLMs.

Network Marketing Keeps Growing Their Downline

It was found by Cision that 20 million Americans participate or have participated in an MLM company. The first MLM has its origins in America in the 1930s and the stigma that MLMs have been portrayed as just scams has been going on for decades.

However, the global MLM direct selling market size was valued at 189.71 billion USD in 2021 and is expected to keep consistent growth for the foreseeable years to come.

So why is it that these companies are not only thriving but people continue to be a part of them despite all of these negative perceptions of them? Well, that answer has to do with the other part of the industry.

Not All Recruiting but Also Selling

One of the reasons MLMs continue to succeed is because the company that the IBOs are affiliated with have products that consumers actually do want to purchase. 

What needs to be known is that these companies sell a wide variety of products. These products can range from many things but they are usually convenient everyday household items that people will find themselves using on a daily basis.

Amway is one of the largest, if not the largest MLM out there. At the time of this writing, has a staggering 575 products spread from its 4 categories of Nutrition, Beauty, Personal Care, and Home.

Now obviously not every product would have the same quality as each others, that’s just a simple fact. The more popular products would be under more quality control than the not-so-popular ones. This can be potentially problematic since companies in this industry already have a reputation for not having the best overall quality or outright deceptive.

Be Cautious With Your Choice

Monat is infamous for one of their products from their shampoo line causing hair loss. The consumers of this product then launched legal action against Monat in the form of a class action lawsuit.

Whether it’s true or not that Monat products actually do cause hair loss, you can’t ignore the fact that even it by itself is controversial. It is something to think about and hurts integrity as well as reputation.

A sure bet is to choose to purchase or sell products if you are looking to be an IBO with a small selection. A small selection may look like a negative but it most likely will mean that the company gives more value, benefits, and more importantly quality with each product.

A Promising MLM to View 

As mentioned not all MLMs are deceptive or pyramid schemes. There are companies that do prioritize selling quality products over a recruitment focus, have a good reputation, and have a mission that is worth spreading. It may seem unlikely at first considering the industry’s stigma, though there does seem to show promise.

Nuvi Global is a health and wellness company based in Ontario, California. Their expertise is in adult Stem Cells, promoting cellular regeneration in the body and boosting immune system activity. Stemforte® Plus is their flagship product but they sell other wellness products too such as coffee, protein, and even something designed for mental wellness.

The product reviews match up to its reputation as well many having 4 or even 5 stars. Also, many of their products sometimes have low stock so they must be well-liked by their customers. Compared to Amway, Nuvi Global keeps a modest 22 quality products.

The Many Monetary Incentives to Become an IBO

Aside from commissions earned from selling and recruiting new members with starter kits or packages, many MLMs offer a large range and often times intricate compensation plans. These plans are more or less the same though some do have their uniqueness to them.

Many of them have traits like

  • Levels to the payment plan depending on criteria like Volume.
  • Profit from product Retail markup.
  • Bonuses.
  • Incentives based on Growth.

Some compensation plans are known to be better than others and many IBOs switch companies (and take all their clients with them) when the opportunity arises. It would be for the IBO to compare and contrast all of the major MLMs and choose one that best fits either their needs or niche.

In Conclusion, it Pays To Be Skeptical but Not To Dismiss the Industry.

Many MLMs promise too much and as the popular saying goes, “If it’s too good to be true then it probably is.” However, this industry shouldn’t be dismissed outright. There are legitimately real people that have found success within this industry.

With hard work and some luck, maybe real success with an MLM is right for you. Keep following Guest Blogging Pro for more top trending business blogs.

Ashok Kumar

Digital Marketing Expert With 7 Years of Experience.

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