The Multilevel Marketing (MLM) or Direct Selling sector offers a range of opportunities to earn a livelihood flexibly or earn extra by doing part-time. With the advent of the MLM model, a scheme disguised as an MLM strategy called Pyramid has emerged on the scene, which you should be aware of and stay away from. This write-up discusses the difference between the Multilevel Marketing and the Pyramid model that will help you make a wise decision when you opt to step into the Direct Selling Industry by collaborating with a genuine MLM Company.
The Multilevel Marketing (MLM) Model
Multilevel Marketing model, also referred to as Network Marketing or Direct Selling, involves collaborating with a company to sell its products or services and hire further Sales Representatives who work independently and not on the company’s payroll. By hiring representatives for the company, you gain a commission and sell its products or services. Recruiting a big chain, also called your downline, you earn big! And your biggest gain is, you also earn when a new or existing Sales Representative in your downline purchases or sells the company products or services.
In Multi-level Marketing, the Independent Representatives or Sales Representatives often sell company products or services through word of mouth and direct sales. The MLM strategy is mainly to create a maximum number of distributors and grow the sales force. The Sales Representatives, as mentioned above, earn by way of commissions on the sales they make along with compensation for sales which their downline recruits make.
In Multi-level Marketing, the compensation plan is so structured that commission is paid to individuals at multiple levels – even when it involves executing a single sale!
The Pyramid Model – Risky and Fraudulent Schemes
The Pyramid business model does not involve any real product that the Independent Representatives or Sales Representatives sell. Instead, they earn money exclusively by recruiting new individuals. These fraudulent schemes is known to promise big in a short time.
In the Pyramid model, the company asks you to do nothing except recruit others to do the same! However, most Pyramid model companies ask you to pay a registration or joining amount. Doesn’t it seem to be modelled like an MLM scheme without offering any products or services?
Companies that implement the Pyramid Model crop up suddenly and vanish in no time. Beware – one needs to be wary of stepping into such schemes. These fraudulent schemes and disguised as an MLM strategy.
Safeguard Your Interests from Fraudulent Schemes
Whenever you decide to step into the world of Direct Selling or MLM, it’s always advisable to check the legitimacy of the company you wish to partner with. Learn more about the company. You can do so by studying its track record and finding how long it has been in existence. You can do an online search about the company. Check the review of registered representatives or find out if there is any scam or complaint against the company. Try to find the buzz about the company products.
And do not forget, always ensure by asking your sponsor about the terms and conditions of the business plan, the compensation, expenses involved, if any, and a few references who are enrolled in the company. Further, you may also want to know the contact details of key personnel in the company who can clarify your doubts or answer your queries.
Step-in with Confidence into the Lucrative MLM Business World
Now that you know the difference between a genuine MLM company and a company that disguises itself as an MLM company. By implementing the Pyramid model, you can confidently make a foray into the Direct Selling Industry. Now that you know how to safeguard your interests before signing the contract on the dotted lines, you know what you want and what your expectations are. Many have earned their livelihood, and many continue to do so by collaborating with the Direct Selling companies. It has been a relief, especially for those who have lost their jobs or taken a salary cut due to pandemic. And many others are taking the opportunity to generate a second income. So, go ahead, make that informed decision, and step in – you will never regret going forward.
