Multi-Level Marketing is a business model to increase with the seller as sales consultants, distributors, and franchisees and independent owners in harmony to sell the product, on a commission basis. This is more like a franchise agreement, if the sales of the product to the combined efforts of each franchise and regional manager from. There are several levels of people receiving commission. Usually there are seven or more levels. Multilevel marketing is basically a combination of franchising and direct marketing.
This concept was in the 1980s, when most businesses have begun dealing with the storage and distribution issues and began to recover all the people involved. This increased the interest of individual Member States in promoting the sales, because the chance to earn bonuses, and since then the multi-level marketing companies have taken responsibility for the orders, shipping of goods, the receipts and payments. Has it been easier with the transition to the Internet. Product promotion, advertising and sales were online and thus began the whole process as an Online MLM be known.
There are various MLM compensation plans. According to the uni-level or stairway breakaway plans, there are two types of distributors are involved management and non-managers. After the matrix plans, is governed by the width of the individual layers in the group of a dealer. In binary plans, the limit of the width of each level, the two legs. Commission was paid, if both the legs reached a specific goal. In the elevator system has been charged, the dealer shall be paid after a certain number of units.
Commissions are paid in two ways, says the first is that the Commission is only payable if the product is sold and the second is to pay a commission even if the customer has only signed up, do not require the customer to buy something . Began to appear due to the second method, illegitimate or illegal MLM pyramid. The intermediate members used to obtain proxy client drafts make-up, commission and use them to purchase the participants, more products to try as they may be sold. But since most of these companies present themselves as legal, precautions must be taken. It is better for the company that the first method of commission, where it necessarily make a sale and prosecute not only the attitude of a customer approach. Here, money is not sign-up for the customers paid at all. MLM Marketing is widely practiced in the United States and hundreds of other countries.
In 1979, Amway Corporation has been accused of price fixing. They exaggerated sales claims, while the dealer sells the products to a minimum. After FTC warned all multi-level businesses, whose commission was not on the recruitment and sales. In 2006, all divisions, including sellers MLM organizations have been asked to provide clients with comprehensive information, according to the Business Opportunity Rule introduced by the Federal Trade Commission, allowing them to save a delusion. Before that were started many motivational programs, which hid the truth. Such programs were known as cult programs.
Laws were made stronger. As a measure pyramid scheme in most countries is prohibited. To expose all newly hired sales employee costs for initial training and material. They even buy a large quantity of stocks. To test the legality of MLM marketing, the 70% rule is being implemented. The members come from over-loading, stopped to increase their commission. Only when seventy percent of the inventory is sold, can thus be made for new material.
