Advantages and Disadvantages of MLM
Advantages of MLM
MLM marketing holds many advantages, mostly for the business. A business that uses MLM marketing as a means to market a product or service gains the advantage of not having to hire full time salespeople. Marketing is done through a multi tiered system of independent representatives, each in business for him or herself. These are the people responsible for selling the product or service offered by the company and for recruiting new independent salespeople into the business.
One distinct advantage for the independent representative is low overhead. The affiliate does not have to keep inventory on hand. Most orders are taken either online or through a campaign of catalog distribution. The affiliate takes these orders and combines them into a single large order from the company. Then the affiliate is responsible for distributing the product back to those who have placed orders.
Disadvantages of MLM
MLM is often a very attractive business model to those looking to supplement their current income. The major draw is, of course, the idea of getting paid for someone else's work. Unfortunately for most, this means that they will be very disappointed with the results achieved. A truly successful MLM affiliate gets results in direct proportion to the amount of effort put forth as a salesperson. If more time is spent recruiting than selling, the affiliate is doomed to failure. This is the fate of about 90 percent of MLM affiliates.
If a person is serious about getting into an MLM business, he/she really must do some research into the company he/she is considering joining. What sort of promises do they make as far as income? What product or service do they provide? How do they support the affiliate in terms of customer service or product guarrantees? Do they want you to sell a product or service, or their business model? All of these questions must be answered to make an informed decision about joining an MLM.
One major disadvantage of MLM/affiliate programs is also its biggest draw for new people: the downline. Many people will not stop to look at this from the angle of a disadvantage because they are focused in on the idea of making money off someone else's labor. The truth, however, is that an affiliate makes, let's say 10% profit off a sale he makes. He makes 1% on sales from his downline. This means he has to count on people under him doing ten times the work to make the same income. This rarely happens because the people under him are doing the same thing he did and recruiting new people under them. The sad truth is that most MLM affiliate programs promise huge residual income from downline affiliates and never deliver. Exceptions, of which Avon is one, are very very rare.