Advantages and Disadvantages of Multilevel Marketing – MLM
Multilevel marketing or MLM is years old business model of selling commission-based services and adding people to the hierarchy. That’s why they are also unfamiliar with the Advantages and disadvantages of Multilevel Marketing. Multilevel Marketing is Network Marketing, which would cease to exist if there’s no network. Selling the goods and services through a non-salaried workforce sounds like a rather more attractive earning option for people of any age. The MLM process works in an all-around manner, such as referrals, branching, and online marketing. As more and more people invest in this business opportunity, the following are some pros and cons of Multilevel marketing one needs to consider before setting their foot into this business.
What is MLM?
Multi-level marketing is a business model where investors and agents get commissions on the sale of every product or services and receive compensation for others' sales in the hierarchy. Sales in a Network marketing depends on its distributors and agents' ability to share with and sell products and business ideas to others through direct selling, referrals, and sometimes, through online marketing.
The business model breaks into multiple layers, and the most important one is the distributor, who can either be non-salaried or self-employed. A distributor earns through MLM in two ways; by selling the product directly to the customer and recruiting new distributors. The income generated by the downline distributors gets the upper-level distributor a percentage of sales they make.
What are the Advantages of Multilevel Marketing or MLM?
There’s a reason why Multilevel marketing business is on the rise in countries like India where persuading people to invest in different schemes is quite easier. Here are some notable advantages of MLM business that attract many people.
1. Passive Income generation
Multilevel marketing is a great way to generate passive income for homemakers, students, regular employees, and retirees. You just got to place the bricks in the right place to meet the right customers and pitch the business scheme to others who seem interested. The next step is to familiarize them with the possible income benefits and help them earn passive income as they add more distributors and customers in the downline. Literally, anyone can start earning within a couple of months after joining the network marketing and understanding its model.
2. Easy way to start a business
Working extra hours can be stressful; working on a different business model with complete freedom, and opportunities is the alternative to ease your way to start a business on your own with a bit of investment. You can buy products as a customer with a little cost and once you are eligible to be a distributor, you can start selling the product or let others join in to extend the network.
MLM has proved to be beneficial in uncertain times like the COVID pandemic. According to a Vietnam Investment Review study, MLM business has flourished during the COVID 19 pandemic more than ever. MLM opportunities come with a low-risk investment into the first products or services that will be sold, which lets you start making money right away.
3. MLM is the Best Work from Home Opportunity
Work from anywhere, log on from your computer, check the progress status, contact new prospective customers via phone, and crack the deal. That’s all you need to do being an MLM distributor. The freedom to work from home is probably the best possible advantage of Multilevel Marketing you can have.You don’t have to learn additional skills to promote the products or service as compared to real marketing. Starting with your friends and family is the right way to get on board.
4. Income Growth
Add a little more to your regular income by joining a network marketing business. Provided you have the freedom to meet customers and sell products anytime you please, you get a chance to boost your overall income.
The income keeps adding further even if you cannot find time to sell the products because the other end is secured as you join more distributors in the downline. All that matter are downline commissions, and bonuses earned when the subordinate distributors meet their performance goals.
5. Meeting New people
There are always new people to meet and new contacts to make in the Multilevel marketing business. If you like to participate in personal meetings, MLM business benefits you in many ways, and converting leads is one.
Meeting new customers and potential distributors helps you build your income and contributes to your and your company’s goodwill. On the plus side, interpersonal and communication skills can play a vital role for you.
What are the Disadvantages of Multilevel Marketing?
Every business may face its downsides given several factors: trust, brand value, and income aspects. Multilevel marketing business is also a flop strategy to earn money due to several reasons. That’s why people have started looking for its alternatives. Some of the disadvantages of MLM are briefed below.
1. Network marketing is not for everyone
You need to dedicate time, invest money, and participate in understanding the business model if you are entirely new to MLM. That’s where multilevel marketing business can fall short. Most of the distributors are part-timers, and it’s hard for them to find time to get face-to-face with the customers and other marketing professionals when required.
If you want to be a representative, you’ll have to pay the fee to become a member and entertain benefits. This creates competition pockets that saturate markets with the represented goods or services and limits profitability.
2. Face-to-face interaction can be difficult
Work from Home or this work is for everyone irrespective of their age are common catchphrases of MLM companies.
These words are commonly used to lure new people to join and invest in the business. Given that not everyone is fit to deal with unknown people and pitch the perfect scheme, people with no public speaking skills may find it difficult to socialise with the customers.
Sociable skills are highly required in the multilevel marketing business, and if you don’t have them, there are fewer chances to grow. Many people who enter the network marketing field for the first time aren’t used to talking to strangers or discussing the pros and cons of their product. That’s why a majority of representatives sell to their families and no one else.
3. It takes time to grow
Income can never generate overnight; you go to work for it. It entirely depends on your skills and convincing power how to make the most of it. MLM Network might seem like an easy way to make money, but as an independent agent, what you’re doing is creating your own business without it officially being your own business.
You receive promotional materials and access to an experienced team, or maybe a customized dashboard at some amazing portal, but the best product in the world won’t sell if people don’t know about it. It takes time to grow a network marketing presence just like it does any other business.
4. Not every Customer will agree to the Schemes
It’s a difficult part to explain to the customers how a scheme will be helpful to them. “I don’t have time for it,” “No,” and “I already have a job” are some common words to hear from people you approach at first. The average person who starts with this challenge may have a conversion rate of 1%. That means out of 100 people who are approached for sale, 99 of them will be disinterested. For those who get discouraged by such negativity, the rejection can cause a good network marketing opportunity to go away.
5. MLM Scams Alert
It can sometimes be challenging to determine when something is real or just a scam with modern network marketing. India is home to start your MLM venture with companies like Modicare and Vestige, but it’s also a hub of MLM scams and Ponzi schemes. Network marketing scams are the modern-day problem that even the educated sections of society have to face.
There are a total of 3181 companies in India alone recognized as scammers so far. If a tangible product or service is being sold, then the opportunity is usually safe. If investments are being requested for no real return at all except for “information,” then that will be avoided.
Given that people pay their full attention to a scheme including investment and time, a network marketing business is likely to boost their income. While a few get wealthy through MLM marketing, others succeed with 6-figure incomes. As you come to know about the advantages of Disadvantages of Multilevel Marketing Business, you know to take the necessary action.