How MLM Works Pt 2

Ok let us continue with this MLM thing... The way MLM works, I believe you all should know about it right? And the meaning of MLM, if no then read back the post, here they are :

1) What is MLM?

2) How MLM works?


Lets get started! The MLM ranking purpose if for you to work up to a certain rank and attain a certain commissions.... The higher rank you are the more commissions you get from your downline... Usually you earn the commissions through the multi-level of referrals! Which means your downline will have to keep recruiting which if they don't then you might not get the commissions that you want!

Once you achieve a certain target, some MLM company will offer a certain sales profit percentage to be distributed among the highest ranks(Top). The more Top, the less dividend you get!

Now since you are at the Top, your downline have many lines, and some of them became highest ranks, this is when your real reward comes in. Oh yeah, I forgot to tell you the catch behind the ranking in MLM....Silly me....

The catch is that after you reach the Top, and your downline had filled up the limited multi-level referral. In this time, you get lesser income, and I believe you need to continue recruit again.... About the share of company sales profit, is too less for you because too many of them sharing the same profit, this lead you to have no choice but to keep recruiting.

My conclusion is that MLM plan is a brilliant plan for the company to keep earning money and expanding the business..... Although its a bit of lie as they told you they are selling business when they are selling the company product....This is a cruel world, you got cheated, you have no one to blame but yourself.

Any comment is accepted. If there is any question then please do ask. Thanks for reading! Have a nice day! Read More.....

How MLM Really Works?

Please understand what is MLM first before continue reading this post. http://prevalentco.blogspot.com/2007/03/mlm-again.html

Like I said it the last post(http://prevalentco.blogspot.com/2007/03/mlm-again.html), MLM is not a scam, in reality the way people use it makes it looks like scamming. Hmm, although there is some facts that I see makes me not to think of it that way.

Ok I will tell you the reason before I give you the conclusion. Whenever the recruiter( I call it recruiter because they focus on recruiting more than selling) talks to you, they do offer you the membership AND THE PRODUCTS. My conclusion is that it is a trick which blind those people who didn't see the catch behind it. They trick people by using the franchising term, they adapt and come out a new plan....

Although you may not realise this before but as you can see they do sell you something in the end right? The amount you paid for the membership is equivalent to the product value that you obtained. Can you say that is a scam? You have the product and the membership for just paying a one-time fee. Then you can recruit again, by doing the same process next your downline doing the same and you get the commissions.....the cycle goes on and on and on....

Now what is the catch behind it?

If you can't see this, then the money or return on investment(ROI) has already blinded you. Because every membership fee you paid is for the product! Now you had the product which I had stated in the last paragraph "The amount you paid for the membership is equivalent to the product value". And you do the so called "recruiting" when you are selling the product. Do you see it now? You told them the so call business but the reality is that you are selling the product. Not many realise this I believe. Because they gives you the commission and the product and the membership. To gain commission, you need to have that membership....

Now the company earn from the sales of the product, instead of the membership this is how recent MLM works. You pay the so call business, but in reality you are buying the product then you do the same process to your friends or peers. Your peers become your downline, you get a small portion of the sales profit. Then the rest goes to the company, then the company pays your upline a small portion of what you earn, not by taking your income.

After that, you will be ranked to some position because you had achieve to a particular target or goal that is set by the company before they give you the rank. Why must this happen? Any idea, because this is really pretty obvious. =) See the answer in the next paragraph.







Until the next post =P I will tell you what is the catch behind the ranking..... So be patient. Bye now! Read More.....

MLM =.= Again....

How well do you know about this? I am 99% sure you freaking had no idea of it, you know it as a direct selling, this is only a part of it for those of you who thinks you know....

Extracted from "Wikipedia"

Multi-level marketing (MLM) (also called network marketing or NM) is a business model that combines direct marketing with franchising. In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor or franchisee and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business. This is like many franchise companies where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager.

In a legitimate MLM company, commissions are earned only on sales of the company's products or services. No money may be earned from recruiting alone ("sign-up fees"). One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is an illegal pyramid or Ponzi scheme.

Now the above statement is only generally about the MLM. Now let me extract the important point of the MLM compensation plan from the Wikipedia :

Compensation plans

Companies have devised various MLM compensation plans over the decades.

* Unilevel or Stairstep Breakaway plans are the oldest and most popular. They feature two types of distributors -- managers and non-managers -- and three types of pay:

• o Baseshop overrides are overrides of managers from their subordinate non-managers, collectively called a baseshop. This is the same as any other sales organisation.
• o Generational overrides are overrides of managers from the baseshop of managers who were previously their subordinate. Most plans compensate at least three generations of such managers.
• o Executive bonuses are commissions for managers who exceed a sales quota. For example, 2% of the total company sales revenue may go to a bonus pool that is shared monthly pro rata to managers who exceed $10,000 in that month.

* Matrix Plans limit the width of each level in a distributor's group, forcing strong distributors to pile ("spillover") their recruits over people who did not sponsor them.
* Binary plans limit the width of each level to two legs. Commissions are based on "cycles," where a distributor is paid a fixed amount whenever both legs achieve a certain number of sales units each. Commissions are paid incrementally when the sales volume in each leg matches.
* Elevator or Matrix schemes feature a game board or a list on which each distributor pays in one or more product units to participate. When a certain number of units have been paid in, the structure splits and the earlier participant receives consideration. The Matrix scheme article discusses the legality of this plan. You must do your own research as with any other investment.

So I wanted to stress that MLM is legit because everything uses this even the large organisation uses it to expand their business.

For example Coca-Cola company selling the franchise license to you and you will produce the product and sell to the retailers finally the products arrived to the consumers, and the Coca-Cola company will get some of the percentage(%) from the sales of the Cola drinks, am I right? Now is that a scam? Nope I would say it's how the business goes. If the product do not have anyone buy it then the business will went down or liquidation.

MLM is not a scam! But the person who uses it to lie others, now that is a scam! Get it right..... Thank you for reading it.


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