OR Multi-Level Marketing (MLM) Simplified PRESENTS Network Marketing OR Multi-Level Marketing (MLM) Simplified

What is MLM A Business Model that uses Customers as the Sales and Marketing Department. Generally used by a Manufacturer or Supplier of consumable products sold directly to Consumers. Most often operated as a home-based business.

MLM Definitions Company: The manufacturer or supplier of products. Has made a conscious decision to use an MLM business model. Distributor: A consumer or Customer who also wants to sell the companies products. Sometimes called a Representative or Consultant.

Today’s MLM Company Sells directly to customers via Web Store. Customers must have a distributor reference in order to buy from the Company Web Store. Has Tiered Pricing based on Customer’s Commitment. One time buy Commitment to Periodic Volume of Business Commitment to be a Distributor or Representative

Distributor A Customer who makes a Commitment to help the Company sell their products. A Person who Establishes an Independent Business to Represent the Company based on the MLM Business Model. Signs a contract with the Company. Company pays commissions and bonuses to the Distributor based on Personal and Group sales volume.

Incentives Distributors buy products at the lowest price, generally called wholesale price. Distributors are paid commissions on product sales they influence by Sponsoring Customers and/or Distributors. Customers buy directly from the Company Web Store. Customers use a distributor’s Reference ID when buying. Company collects and pays Sales Tax to various Cities and States – Distributor is relieved from this task.

Multi-Level Structure In order to provide sufficient incentive to Distributors for them to build a business the Company pays commissions based on a multi-level compensation structure. All Customers must be Sponsored by a Distributor, to qualify to purchase Products from the Company Store. Distributors Sponsor Customers and/or other Distributors, Distributors are paid commissions based on what they and the people they Sponsored buy. Distributors are paid commissions for Sales on Multiple Levels of Sponsorship.

MLM Example John Sponsors Jane Jane Buys Products and Sponsors Sue Sue Buys Products and Sponsors Bill. Bill Buys Products and may sponsor others. Bill is 3 Levels below John or on John’s 3rd Level. John is paid Commission based on products purchased by Jane, Sue, Bill and others they may sponsor. Jane is paid commission based on products purchased by Sue and Bill and others they may sponsor. This structure continues, generally, at least 3 levels and most often several levels. John is Upline to Jane who is downline to John, etc. All of the people in this line of sponsorship, from John down, are considered John’s Group. From Jane down is Jane’s Group etc.

MLM Leverage The previous example shows that there is an incentive for any Customer to become a Distributor and Sponsor other people who want to be Distributors. Any Customer can build a Home Based Business by building an Organization of Distributors who also build an organization of Distributors. Not everyone who is a Customer will be a Distributor. Customers who commit to minimum volume are generally offered a substantial discount and their purchases are credited to the Distributor who is their sponsor. KEY: All Customers must have a Sponsor. This protects the Company’s Distributor Base. Customers/Distributors receive education and support from their Sponsor and the Company.

MLM Vs Pyramid Scheme “Pyramid Schemes” are Illegal. This is a Business Plan that Pays people a Commission for bringing other people into the Organization without selling any Product. The Person on Top of the Pyramid collects the most money. There is no opportunity to build a business because the emphasis is not on selling consumable products. MLM is a legitimate Business Model that Pays people Commission for Selling Products. The KEY to Legitimacy is Commissions are paid based on Product Sales. Higher Volume Product Sales may result in bonuses, etc. but all payouts are based on Product Sales.

WHY Why would a Company choose to use MLM Vs Traditional Retail Outlets? Cost and Cash Flow. Traditional Marketing through Retail Outlets. Hire Sales Force Generate Product Brochures Advertising, Newspaper, Magazines, Radio, TV MLM Generate Product and Business Brochures Start Word of Mouth Advertising Sales Costs are paid as Commissions on Sales Most Traditional Marketing Costs are Up Front Before any Sales. Most MLM Marketing Costs are Post Sales. This structure allows the Company to spend more money and effort on product development. MLM is a very good business model for unique consumable products.

Young Living Young Living manufactures readily consumable Essential Oils, Dietary Supplements, Personal Hygiene and Personal Cosmetic Products. Young Living uses the MLM model to sell their products through independent Distributors who are compensated for their effort. Young Living conducts sales and education events in the Americas, Asia and Europe.

Young Living Sales Structure Customers buy directly from the Company via Phone or Web Store. All Customers MUST have a SPONSOR. Customer: An occasional Buyer or someone who wants to make a one time buy to try a product. Pays Retail Price. Preferred Customer: A Consistent Buyer but doesn’t want to be a distributor. Commits to a Monthly Order. Receives a substantial Discount from Retail Price Distributor: Someone who agrees to Promote the Product and Business Opportunity to Other People. Commits to a Minimum Monthly Order. Receives the best Price. Builds a business based on the MLM concept. Gets Paid a Commission based on Sales they and their Downline are Responsible for Generating. The Multi-Level Team Concept results in Residual Income for any Distributor who builds an active team of distributors and Customers. A Distributor may buy at Wholesale price and Resell the product if they so desire, however, most sales are made directly to the Company.

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