“Leveraging the efforts of many”
Advocates of multi-level marketing describe MLM as the more efficient and effective means of marketing and generating leads and sales. But the traditional marketing companies feel reluctant to adopt new network marketing strategies in order to run their business. Also many people don’t even understand exactly the differences between both the strategies. This is the reason why you see so many identifying the MLM model and businesses as scams.
Lets’ explore the major differences:
- The most significant difference between MLM and the traditional marketing is the role of the marketer. In multi level marketing, initially an individual is hired as a sales representative who is required to market the company and its products and/or services and generate sales, which is fairly similar to any traditional marketing business. However, on the other hand, under multi level marketing, he/she is also required to identify and recruit additional sales reps as his down line. The new sales rep in turn can appoint another person as company’s sales rep or marketer.
- Under MLM, a marketer has the authority to get customers and recruits and trains another sales person to get customers. However in a traditional marketing company, a sales manager and/or sales reps are hired by the company itself.
- Under MLM, an unlimited number of sales reps can be hired no matter whether they generate enough sales or not. Under a non-MLM company, sales reps are hired based on the financial resources of the company. Also a new sales manager is only hired when the existing manager is overwhelmed.
- In a MLM company the structure of the distributing network expands vertically, however in a tradition marketing company there is generally horizontal expansion.
- The MLM marketers are usually paid commissions, i.e. their compensation is usually based on number of sales made by them or by the people in their down line. This is the reason why MLM enjoys rapid expansion as the marketers can recruit as many sales reps as they like and the company doesn’t have to worry about fixed salaries.
- Also MLM companies usually do not require high start-up costs as opposed to the traditional ones that require huge investments to set up a whole marketing and distribution channel.
- One of the other major characteristics of multi level marketing is that the parent companies are making plenty of money. Sales force under MLM is so vast that even if no single promoter is selling at high levels but the group as a whole is selling at a very high level, the company would still enjoy the profits. However under traditional set up if a manager is not performing well the sales of the company are adversely affected.
- Under MLM the high performers earn high and reach to the top and the rest (the low performers) cannot survive and leave the market themselves. The MLM Company, like any other traditional company, does not have to worry about going through the tedious procedures of appraisals, hiring and firing etc.
Hence the above differences clearly manifests the advantages associated with the multilevel marketing over the traditional marketing methods as MLM is not only the most flexible way of marketing but also due to its network feature it has the tendency of expanding rapidly in the market and if directed effectively it can earn huge profits to the company.
Not only that people who can join the marketing team under MLM can work any time they like and reap the benefits on not only the sales they make but also on the sales made by the reps they recruit. Hence MLM has the characteristics of enjoying leveraged income and greater market penetration.
What are your thoughts and comments? Any major differences I forgot to mention? I would love to hear your feedback.
To Your Success!