Understanding Network Marketing/MLM and Direct Sales

by Jeri Taylor-Swade, Independent Distributor for SeneGence Cosmetics with the title of Queen.

Network Marketing/MLM (Multi-Level Marketing) is a proven business model. It is taught in colleges all across America.

Robert Kiyosaki, Donald Trump, Warren Buffett, Bill Gates to name a few all agree that Network Marketing is the wave of the future to create wealth for yourself and your family.

Over 16 million in United States embrace the concept of this business model with $30 Billion in sales per year ...Whether it is to earn a supplemental income and bring in a few extra dollars a month to help with the family budget, or to build a truly large business that teaches others to do the same...It truly is the American dream.

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There is NO ceiling as to how much a woman or man in a home-based business can make...it is up to the person to work the business.

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant's "downline", and can provide multiple levels of compensation. Other terms used for MLM include pyramid selling, network marketing, and referral marketing.                                                                                                               

Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing. Some people use direct selling as a synonym for MLM, although MLM is widely referred to the compensation plan payout associated with network marketing or direct sales.

In contrast to MLM is single-level marketing, where the person is rewarded only for the immediate income between the exchange of a product and monetary benefit.

Definition: Multilevel marketing (MLM) is a business structure in which products are marketed directly to consumers (which is known as direct selling) by sales representatives (or distributors) whose compensation is based on their own product sales as well as the sales of the distributors whom they recruited to the multilevel marketing company. These recruits are called their downline. MLM sales reps do not receive a salary. Compensation is based on commissions and/or bonuses; no salary is given.

Definition: Direct selling (also known as direct sales) is a form of marketing in which products and services are sold directly to consumers without the use of a fixed retail outlet. Direct sales take place through person-to-person contact, often at home parties hosted by the distributor, who can also be known as a sales representative, associate and/or consultant. Most direct selling operations are also multi-level marketing organizations, which feature compensation arrangements in which sales reps earn money for both product sales and for recruiting other sales reps. However, a small number of direct selling companies are single-level sales organizations.                                                                                     

Definition: Upline is a term used in multilevel marketing (MLM) to describe the people who are above a person in the organization. This includes the person who recruited the sales rep, sometimes know as a sponsor, and those above the sponsor. Upline is the opposite of downline, which are an MLM sales reps' recruits. A MLM sales rep’s Upline receives compensation based on her sales as well as their own.

Definition: Downline is a term used in multilevel marketing (MLM) to describe the sales representatives that another sales rep has recruited to the direct selling company. In an MLM, the recruiting sales rep receives compensation based on her downline as well as own sales.  And conversely, her Upline is compensated on her sales.

Companies that use MLM models for compensation should not be lumped into the "Illegal Pyramid" category. Although some Illegal Pyramids call themselves Multi-Level, and try to disguise themselves as legitimate. The Federal Trade Commission warns "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It's best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan (Direct Sales) who intend to use the products." and states that research is your best tool, giving eight steps to follow

 1.Find — and study — the company’s track record

 2.Learn about the products

 3.Ask questions

 4.Understand any restrictions

 5.Talk to other distributors (beware of shills)

 6.Consider using a friend or adviser as a neutral sounding board or for a gut check

 7.Take your time

 8.Think about whether this plan suits your talents and goals

Check with the DSA (Direct Selling Association) a 100 year association that monitors legitimate companies and other info www.DSA.org  Direct Selling Association

     Tax write offs for a home-based business can be substantial...Tax savings can be huge...Tax write-offs that you may not normally be able to take, all because you have a home-business...

     Consult your CPA...find one that specializes or is familiar with Home-Based Business.

Do you know your "why"...why you are considering joining a Home-Based Business model?

The Business Model of Direct Sales can give freedom, life-style change, income, fun, friends, personal growth and more to those that choose this pathway