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What is Network Marketing or the MLM Industry?

I listened to an interview with Tim Sales the other day and I think he did are great job of describing the MLM industry so I wanted to share it with you here on my blog.

But first a little about Tim Sales.

Tim Sales

After a eleven years tour with the US Navy with an underwater bomb squad team Tim  Sales answered an ad  in the Washington Post and joined his first and only Network marketing company  in 1989 . Within five years Tim’s  income had risen to a level of $ 150,000 per month with an organizations of 65,000 people.  At that time his organizations were growing by 2400 reps  in some 20 country each and every month.

Today Tim Sales is one of the most sought after trainers, in the MLM Training industry and has been a features guest on the Larry King Live show to discuss the

Difference between an illegal pyramid or ponzi scheme and a legitimate  MLM Business.

Tim Sales is also well know for his signature training on topics from prospecting, to presenting and is a master at taking  a complex topic and making it simple.  He is also know for teaching a MLM Certificate Course at the University of Chicago with Dr Charles King a Harvard Educator Professor of Marketing.  Tim has a huge desire to make a significant impact in the MLM business industry and helping people live an empowered life.

So how does someone in the network marketing industry crush their prospects skepticism? Somewhere along the way Tim Sales realized that the only way he could ever have any success in his MLM business was to help people become successful.  He realize that first he had to learn how to bring people into the business and had not a clue on handling objections.  He attribute his success in the MLM industry to having great mentors and people who taught him about the MLM business.

Tim talked about the difference between  what a pyramid scheme is and the legitimacy of an MLM Business. 

Tim says that it’s a crime that people view the MLM industry as a pyramid scheme at times and offered his explanation of why they are different.

If you are new to the MLM industry you must know what this industry is and what it’s not.  Also you need to know how to handle some common objections that people are going to give you.  It ‘s not enough to have a comeback for the pyramid scheme questions. What you really want to do is to know and understand the objections so you can move forward with your prospect.

If you are in the MLM industry you must know the MLM industry, along with your company,  and also know your products .  In additons it is crucial for your success to know how to train people .  These are the fundamental skills on being successful in the MLM industry.  You must be a professional.

Many time with a prospect you only have one shot.  If you really  look at what you have to offer you are bringing your company and opportunity which can possibly be a solution for this person and forever change their life. Be it with your product or your business opportunity. That is why it is important to be a professional, you can either wing it or you can know it.

The MLM industry or the Network Marketing industry are interchangeable terms.  Basically it  defines the fact that of when a company pays on more than one level it is considered a Mulit-level Marketing Company.

To begin to describe the MLM Business  let’s start by looking at the Direct Sales industry.

MLM is a Sub-Category of Direct Sales

All Multi-level Marketing is is a subcategory of the Direct  Sales industry and the place where the MLM industry evolved from .  All Direct Sales is a way of selling a product to a consumer away from a store front.

If one sells a product directly to a person in their home or on the internet that is a direct sale.  When a vendor or inventor creates a product he will look for someone to sell it for them.  In return for selling this product the creator or product developer will offer a commission on each product that they sell.  Very simply right?

How a company pays their sales reps is called a compensation plan.  So a Direct Sales company can choose to pay one rep or it can go out an find 10 , 20, 100 reps and pay each one a commission for a sale of their product.  That’s is how a Direct Sales Company operates.

They can also allow their sales reps to find and train other sales reps and then pay them a commission on the total sales of their sales team.  This level of compensations would be considered a uni-level  pay plan.

If you look at the real estate business you can see that a real estate agent/broker  can hire other real estate agents and get a percentage of their sales.  Would you say that that is a pyramid scheme?  In the Direct Sales industry you can pay a representative not only on the first level but on levels 2 and 3 and so on.  This is where the term Mulit-level marketing comes from.  People will be compensated on more than just their own customers but they will also be compensated on the  sales volume of the entire team.

The reason why a company would want to do this is because it is very efficient for the company.  They use this type on marketing and compensation plan to bypass the traditional way of hiring a Human Resource  person who would go out and hire a sales rep and a Director of  Sales and then comtinue to hire and train more sales reps.  This can be a very expensive proposition for a company.  Now compare this to having a sales rep or a representative in a MLM company and train them to recruit and train their own team of sales reps.  This way the company only has to pays a commission/salary only when a product get sold and doesn’t have the others expenses of hiring and training an entire sales team.  These saving can go to pay their representatives in compensation.

Mulit-level marketing is just a way to describe the way someone is compensated in the Direct Sales industry.  So MLM is really not it’s own industry be actually a subcategory of the Direct Sales industry and is only a descriptions of how the company pays its’ reps.

Tim Sales did speak some more on the subject of a legitimate MLM business is and what a pyramid scheme entails, along with the Landmark Case between the US Federal Government and Amway in 1975.   I will write more about the significant of this in another post.

For now you have plenty to understand What is Network Marketing which is really a simple business model.

To Your Success.

Douglas Paul Alp

It’s About Your Success

602 714 2773