Beginner's Guide to Network Marketing (MLM)
Network Marketing or Multi-Level Marketing (MLM) is a marketing strategy by which individuals promote the sale of products directly to end-users through referrals and direct sales. A fundamental feature of MLM is that distributors make their income not only from selling products, but also from the recruits they have recruited, referred to as downline. This provides incentive for recruits and distributes company profits among all company members rather than an individual's sales, which means that each member of the network has an incentive to work toward building a team of motivated sellers rather than on promoting individual products.
According to the Direct Selling Association, "MLM companies have assets of $36 billion and generate sales of $22 billion per year."
In addition to economic benefits, participants in direct selling experience personal benefits that may be unattainable by other means.
The Direct Selling Association and other sources have reported that sellers in MLM can make an average total compensation of about $19,000 per year, with a median annual gross income of about $34,000 per year. In addition, the Direct Selling Association reports that nearly 95 percent of direct sellers earn additional income from full or part-time employment.
According to the Direct Selling Association, "The median annual income for direct sellers is $34,000."
The United States Census Bureau estimates that in 2008, there were approximately 15.7 million representatives of MLM companies worldwide, and that these representatives earned an average of $39,000 per year. The median annual income of MLM representatives was $2,400 in 2010. According to the DSA and others, this represents less than 1 percent of total U.S. household income and less than one-tenth of one percent of national income. In some cases, the income is less than $100 per month. As of 2010, $1.3 billion in annual direct selling revenue was reported by the Direct Selling Association.
Network marketing has a long history throughout the world and it is easy to define the roots of network marketing in the United States. The first direct mail sales offer was made by Wallace Fard and was called "The World's Greatest Salesman". This was followed by Avon at 18th and Chicago.
While a lot has changed since then, network marketing continues to evolve today as brands in MLM use social media and mobile technology to reach what they estimate is over 25 million potential distributors and customers each week from their websites or apps .