What Is Multi Level Marketing?
If you sell some company’s products to someone else online using a special link they give you, you earn a commission on that sale.
This is simple Affiliate Marketing.
Now imagine a way of selling products or services where people make money not just by selling products but also by recruiting others to sell.
It’s called multi-level marketing (MLM) or Network Marketing.
The company’s income comes from a lot of people selling its products, and the folks selling those products or services earn money not just from sales but also from the people they bring into the sales team.
It’s like building a money-making pyramid where everyone gets a slice. 🌐💸
And in some countries, MLM programs are also known as Pyramid Schemes with all the negative connotations that term brings.
Pyramid Schemes are designed to enrich the people at the top only.
Once they’re bags are filled, they’ll close shop, hop on a plane to somewhere warm and sip margaritas.
MLM programs try to avoid the pitfalls of Pyramid schemes and typically provide a real product and the company doesn’t need to have new referrals coming in all the time.
In a Pyramid Scheme, new members’ fees go to pay the commissions of the people above them.
With MLM, if run right, the product alone will be profitable and sales of it will keep the company alive and healthy.
To learn more about Network Marketing and how it works, I recommend reading Russell Brunson’s free Network Marketing Secrets book (but you will have to pay shipping as it’s a physical book).
How To Get Started With Multi-Level Marketing
First, identify some multi level marketing programs to consider joining – here are a couple I’m in:
- Gotbackup online backup service for files, PCs, Macs, laptops and mobile devices
- LiveGood which supplies health related products
Look at what the program is selling and how it is selling.
The one thing you don’t want to sign up with is a pyramid scheme where the funds paid in by new members are used to pay out the commissions of those at the top of the pyramid who joined the program first.
Any worthwhile program will offer actual products that can be bought.
These need to be quality products not token, low-quality products added to get around the program being a pyramid scheme.
Ask yourself if you’d join the program yourself as a customer, not as a network (multi-level) marketer.
And, if you wouldn’t, identify why not.
The reasons you come up with, other people will also have.
So that might make it a harder program to promote.
How popular do you think the MLM program will be?
If it has a big potential audience, then it could be a potential winner for you.
Gotbackup, for example, has a massive audience – anyone with a computer or mobile device where they can’t afford to lose it or the files and data on it.
LiveGood also has a massive, though smaller audience – people who are looking to stay fit and healthy.
If a program has a small potential audience, even though it might be a fantastic product or service, there just won’t be enough people to sell it to, especially if there are other network marketers promoting the same program.
You have to be a member of networking programs in order to be able to promote them (at least as far as I’m aware).
If you’re not interested in the actual products available through the program, how much are you willing pay per month to remain a member/affiliate while you try to turn the program into a profitable business for yourself?
Try to contact whoever promoted the network program to you in the first place and ask their true opinion about it and whether they use the products themselves or are just in it to be network/affiliate marketers.
Unfortunately, you can’t rely 100% on what they say in their answers.
If they can provide proof (e.g. earnings screenshots, subscriber numbers and so on), then that might make you more confident about promoting the program yourself.
Even if the person you contact is making bank promoting the program, there’s no guarantee you’ll have the same success.
How you promote will determine your level of success.
Do additional research
Look for reviews of the program in Google and on YouTube from both customers and affiliates.
Take a look at TrustPilot reviews as well if there are any.
If there’s significant negative feedback, it’s probably a program not worth putting your time into.
Try to find out what the refund rate is.
This isn’t always possible, but if you can get this info, anything with a refund rate under 10% is worth thinking about promoting.
Take a good hard look at the program’s compensation plan.
These are often complicated and include direct commissions from people you refer, commissions from spillover from your sponsor, matching bonuses, a matrix of one sort or another and payment from a set number of levels.
Once you understand how that plan works, calculate how many paying customers you need to recruit to start seeing profit (i.e. enough to cover your own fees with a bit to spare) and real profit (where you’re earning $100s, $1,000s or $10,000s per month).
How easy do you think it will be to achieve those numbers?
And remember that every program has a churn rate.
There will always be people who drop out so you need to keep recruiting to replenish those losses as well as add a few extra new customers each month.
Promoting network marketing programs takes time and you have to find the right audience for it…
…and be willing to to commit at least time to promoting it, if not money in terms of paid advertising or web assets (like web pages or sites) to get people interested in the program.
If you’re not prepared or haven’t the time to put in the work, then network marketing is not for you.
There are other ways to earn money online.
Check out my favourite resources page for more info for some network and affiliate marketing ideas.
All the best,
Gary Nugent
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P.S.: Don't forget, if you want to create an internet income of your own, here's one of my recommended ways to do that:
