Direct Selling involves the marketing of products and services directly to consumers in a person-to person manner, away from permanent retail locations. Depending on the company, the salespeople may be called distributors, representatives, consultants or various other titles. Products are sold primarily through in-home product demonstrations, parties and one-on-one selling.
What is Multi-Level Marketing?
Multilevel marketing, also known as “network marketing,” relationship marketing” and “multilevel direct selling,” is an important component of the Direct Selling industry. More than 80% of all direct selling companies worldwide now employ some form of multilevel compensation in their sales plans. It has proven over many years to be a highly successful and effective method of compensation used by direct selling firms for encouraging the distributing products and services directly to consumers. This direct distribution of products provides sales network commissions and retail profits to independent salespersons or distributors.
Multilevel marketing is simply one of a variety of methods of organizing and compensating salespeople in a direct selling business for their management, training, motivating and recruiting of a network of sales persons who will sell their companies’ products to consumers.
Therefore, it may best be described as a direct selling compensation plan in which salespeople may receive compensation in two fundamental ways. First salespeople may earn compensation from their personal sales of goods and services to consumers including retail mark-up profit.
Second, they may earn compensation from the sales of those persons they have personally recruited or sponsored into the plan; and they may also earn compensation from the sales of the group or network recruited or sponsored into the plan by those they have personally recruited.
Thus, multilevel marketing offers a direct seller the opportunity to build one’s own independent business selling goods and services to consumers and developing and training an organization or network of direct sellers to do the same.