Multi-level marketing is a specific style of marketing that is usually referred to as a different form of direct selling. Also known as MLM, the process has been around for decades and its origin is disputed, but it has existed since the 1920s in various forms. In modern times there are a wide range of MLM business opportunities out there in both the UK and the US thanks to the creative initiative taken by American firms nearly 100 years ago.
The California Perfume Company was one of the pioneers of the business model, although we know them better today as Avon. Originally, the famous “Avon Ladies” would only have earned their profits from the sales they made personally. Working for the company but not given a salary, instead they would have been entirely dependent on the products they bought from Avon and sold on at a higher price to buyers in their homes or elsewhere. Not a huge amount has changed about this, except that now not only would the representative of the company earn profit from their own sales, but also a cut of the sales made by anyone they recruited to join the business.
This is how multi-level marketing works. It works on the assumption that the company’s structure is basically a binary tree. Each individual representative receives remuneration (indirectly, via the company) from the “downline” members of the tree below them, who they recruited into the scheme. The name given to MLM refers to these different levels of compensation, i.e. the money from direct sales and the money from other agents’ sales on top of that.
The reason MLM is now spreading more into the UK and other countries after starting off as an American business model is that it offers a tried and tested solution for people looking to develop themselves as entrepreneurs, but not willing to risk too much on their own project by starting from scratch. Referral marketing using the MLM model means agents can enjoy the freedom of deciding how hard they work on the direct marketing aspect of the job, while also getting the benefit of the additional income when they refer others to join the company, all without having to start their own business or even invest in a complete franchise. It can be a great model for some people and could provide a simple way of showcasing your entrepreneurial side.