What is MLM? – Demystifying an Often Misunderstood Term by Newbies


You WILL eventually get hit by a very confused person who refers to MLM as a pyramid. Get the following information clear in your mind, and you’ll easily be able to explain the difference to the ignorant. (The truth is, an MLM organization looks and grows like a DIAMOND!) – Wayne Gerald

MLM is an acronym for Multi-Level Marketing, sometimes called Network Marketing.

As the name suggests, multiple levels of people are marketing a product to consumers. A sales representative (also referred to as a distributor, member, affiliate, partner or associate) gets customers and recruits and trains another sales rep to get customers. See the illustration below the definitions.


1. A person who has signed an agreement to distribute a product or a service for an MLM company.  2. One that markets or sells merchandise, especially a wholesaler.

To enroll or seek to enroll as a member. Colleges recruit athletes.
The difference between recruiting and hiring is that when one hires another it means to engage the services of (a person) for a fee; to employ.  In MLM a person recruits another, or a company recruits a person but they are not hired as employees. They are paid a commission for products sold.
Sales Rep gets customers
Sales Reps Get Customers and Train Other Sales Reps to Get Customers
Multiple levels of marketing are actually what all companies desire (both MLM and non MLM companies). If you’ve ever heard a traditional company announce, “Refer a friend and you’ll receive a discount on your next purchase,” this is multi-level marketing. Health clubs, real estate, telecommunications, and countless other industries use this technique. Professionals (doctors, dentists, accountants) live or die based on their customers telling others about them. All these businesses are simply trying to get current customers to advertise and market their product or service to potential customers.
The Traditional Company
In a non-MLM company, a sales manager and sales reps are hired by the company. The company is limited to the number of sales reps they can hire based on the financial resources the company has to pay salaries and on the traffic the sales manager can handle. Once a sales manager is overwhelmed, the company can hire another manager or convert a sales rep into a manager. This could be called “Multi-Width” marketing because it expands the organization horizontally as compared to “Multi-Level” marketing, which expands its organization vertically.
Multi-Width Marketing
Traditional companies (non-MLM) use “Multi-Width” Marketing
The MLM (Multi Level Marketing) Company
An MLM (Multi Level Marketing) company “starts” by recruiting one person who gets customers and recruits sales reps (just as above in the traditional company). But each sales rep is also given the option to become a manager, who can also recruit sales reps. The MLM company only pays commissions, not salaries; therefore, there are no limitations on the number of sales reps or managers an MLM company can recruit. This is beneficial to the company because of rapid expansion by the number of trained sales reps. This is also beneficial to the sales reps because their income isn’t limited to only what they can sell – they can also earn commissions for having trained other sales reps.
multi-level image
MLM uses “Multi-Level” Marketing, which is similar to traditional marketing (see above illustration “Multi-Width-Marketing,”) except there is no limit to growth.
Multi Level Marketing: One of the Five Main Methods
Very simply and factually, MLM (Multi Level Marketing) is one of the five main methods used by a company to sell and distribute a product or a service to a consumer.All companies (MLM or traditional companies) have one main characteristic in common: they provide a product or a service that hopefully makes a consumer’s life better. Once a company has such a product or service they need to make it widely known. They do this by distributing it. Distributing a product involves finding customers and getting the product in their hands. There are five primary ways to distribute a product or service:
The Five Primary Ways to Distribute a Product Or Service
Each of the five methods above can use techniques from one or more of the other methods to get customers. Meaning, a Store Front isn’t limited to only walk-in traffic. The Store Front can also advertise on radio, television and in newspapers, magazines, and mailers (post cards, flyers, etc.) directing prospects to the store location. This can increase the number of people walking into their store.Similarly, a distributor in an MLM company can use some or all of the 4 other methods as well as getting customers through friends and family. And of course an owner of a store front (such as a restaurant) can also tell his friends and family about his store!So what is MLM (Multi Level Marketing)? The main point to understand is that distributing any product means to make it known. MLM and the other four primary ways to distribute a product are simply methods used to make a product known.MLM is OrganicOrganically, the MLM industry is a fantastic model. By “organic,” I mean that if you strip away all the hype and noise and just look at it conceptually, it is the purest way to move a product to a consumer and the purest way to be compensated. Here’s why… 

  1. In its organic state one person shares a valuable product or service with another (not because they will profit, but because the product is valuable). “I like it, maybe you will too.” That is clean and pure.
  2. A person shares a business idea with another – this is the foundation of all businesses throughout history. “I found a business I like and maybe you’d like to work on it with me.” That too is clean and pure.
  3. The person who shares the business with another ONLY profits IF the person they shared the business with succeeds – that is ultra-responsible, which is also clean and pure.

Those three steps are the organic concepts of MLM and are absolutely brilliant.

If you strip traditional marketing down to its core, it would be a person writing an advertisement and 98% of the people who review the advertisement not responding (a top marketer gets a 10% response; the average is 2%).

Look around and see what all it takes to move a product to the consumer in the “traditional” sense, and you’ll see a lot of wasted actions and resources. Can you imagine how pure a city would look if there were no advertisements? Think of the number of trees that get consumed in the name of advertising, and the materials that then end up in land fills.

Perhaps a good way to describe MLM is to demonstrate how MLM is the same as a traditional company, and also how MLM is different. Look at this diagram for a visual.

Please understand that I am not criticizing the use of trees, the cluttered environment, or advertising – I’m simply asking you to look at the amount of unnecessary actions that go into moving a product to a consumer, as compared to the simplicity of one person communicating with another.

Brilliant Compensation

Next week, we will explain HOW MLM actually works.

I also want to make sure that you are aware of one of our core products: Brilliant Compensation.
This audio or video presentation has helped to sponsor more than a million people into the mlm industry.  It is a presentation that I put together to handle once and for all the biggest objections you have to deal with day in and day out.  If you don’t have it and use it, you are probably wasting a lot of very good prospects.

Used with permission …

“Hello Fellow Network Marketers,

Just to recap, in recent months it has come to my attention that many new people have subscribed to our website and information. My staff have informed me that many of you are relatively new to the MLM industry and have a lot of the questions about the Industry as a whole. This series is also useful for Uplines to forward to their downlines to help explain the industry.” – Tim Sales

“I know all about MLM. This is one of those ‘Pyramid’ deals.”

Is network marketing a scam or a pyramid scheme? It’s one of the most common questions asked by people looking into network marketing. Clearly, there is a lot of confusion. In this video, Simon Prentice explains the difference between a legitimate multi-level marketing (MLM) business (more commonly referred to as “Network Marketing”) … and an illegal pyramid scheme/scam.

Here’s another way of explaining the difference between MLM and a Pyramid:

What is MLM? - Demystifying an Often Misunderstood Term by Newbies by
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Wayne Gerald

MLM Productivity Expert at Purium
Wayne Gerald is a MLM Productivity Expert, Copy Writer, Web Designer, and Network Marketer. He opened Japan Neways, and built an organization of 100,000 distributors resulting in 8M in sales each month. After that, he was #1 Top New Volume Producer in Life Force International. Today, he's building his last empire with Purium whole-food superfoods. His mission is to help the "little guy" (M/F) build a great lifestyle, where family health and wealth can be passed from generation to generation.

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