7 Reasons Why There Are So Many MLM Companies.
There are thousands of mlm network marketing companies. Although Amway is credited with officially
starting the mlm network marketing phenomenon, other companies were involved
with direct selling to consumers such as Avon, Electrolux, Tupperware, etc.
Why are there so many mlm companies to choose from selling such products as cosmetics, juices or legal services? Off the top of my head, I can think of 7 reasons why a company would select mlm marketing as their primary distribution method over a more traditional “sell through retail” model.
1. MLM network marketing is the most effective way to distribute a product or service. Sales costs are fixed according to a comp plan as opposed to variable costs in a traditional business model (advertising, competitor price sensitivity, shelf space, etc.). Plus with so many members in the network marketing distribution team, they are able to develop a product today and have instantaneous sales tomorrow.
2. No sales by a network marketer, no money has to be paid to that network marketer. Compare this to training and pay for a traditional sales force. Think of the advertising dollars saved by having an army of MLMers promoting the product or service rather than expensive paid media such as television commercials. Besides, anything more effective than word of mouth?
3. The mlm network model will have thousands (hundreds of thousands?) of loyal spokespeople who are consuming the products that they promote. They in turn will promote a company’s products to people they know further building a cadre of loyal, repeat buying customers who will not be swayed to another product over having seen the latest commercial or taking advantage of a special price offer.
4. Once an mlm network marketing system is created it is duplicated again and again. Almost all mlm companies have video training online meaning they only have to upload it once or send out an email blast and literally reach all of their networkers. Business presentation calls can be conducted by a staffer at the mlm company’s headquarters or by team leaders out in the field as opposed to relying on group presentations at hotels.
5. An mlm company will look at other successful mlm network marketing companies and salivate at their success. They will also realize that they too can experience explosive growth using this marketing model. How many times have you heard of a network marketing company going from zero to a gazillion team members seemingly overnight? It is not unusual to hear of an explosively growing mlm opportunity. People will always want a piece of success.
6. Guaranteed product distribution channel rather than fighting for a retailer’s shelf space and then hoping the marketplace responds by purchasing the product. With the mlm network marketing model, a company has guaranteed product or service distribution from all of its team members purchasing from themselves and then further expanding distribution with customers that they have acquired making additional purchases.
7. The mlm marketing method is highly profitable. The product gets manufactured and then sold through its network marketing operation as opposed to the traditional method of manufacturing a product, selling it to a distributor who will then sell it to a retailer before a retailer sells the product to you. Each step in the tradition method involves marking up a product’s cost whereas in the mlm network marketing model, the product will cost pretty close to what you would pay at retail but the company still makes more money even after paying its reps according to their compensation plan.
Multi level marketing (MLM) and network marketing are synonymous terms which can be viewed as the non-traditional way to bring products or services to consumers as opposed to traditional methods. Is one better than the other? We network marketers are prejudiced as we make money with the mlm model.
Have a question for Andy or want to leave a comment?