What is Multi Level Marketing?

Deborah Ng

If you're looking for a home-based business, you've probably seen plenty of ads for multi level marketing or MLM. Multi level marketing, also known as referral level or network marketing, offers you a a commission not only for your own product sales, but also for the sales of those you recommend for the program.

Man climbing a rope
Man climbing a rope

You've also probably seen articles and news programs warning you to stay away from multi level marketing business opportunities. While it's true that many of the multi level marketing opportunities out there aren't on the up-and-up, you might be interested to note that not every multi level marketing opportunity is a scam.

Here's how it works: after making an initial investment, you receive the supplies necessary to sell a particular product. In many cases, the products are vitamins or weight loss supplements. In addition to selling, you refer others to the program. Every time you sell a bottle of vitamins you get a commission, but so does the person who gave you the initial referral. You'll also earn money from any vitamins sold by people you referred into the program.

Multi level marketing doesn't only require you to sell products; you also have to be able to recruit as many people as possible into the program. In fact, multi level marketing probably puts more emphasis on the recruiting part than the selling part. The more people you bring into the program, the more money you're likely to earn through their commissions.

As with any business, multi level marketing has its pros and cons. For instance, you can make your own hours. You can also work out of the comfort of your own home. You're your own boss and get to make all the decisions regarding your business. Who wouldn't want that freedom?

While working for yourself might be attractive, you have other considerations. What happens if you put out anywhere from $25 to $100 for a vitamin selling kit and there are no takers? The failure rate with multi level marketing is very high. The reason for this is that most people give up after a few months when it might take longer than that for the sales to roll in. You'll have to make the decision as to whether or not it's worth it to work hard for a long period of time without anything to show for it.

One last consideration is that many people see multi level marketing as a scam. Because of this, you might have trouble recruiting others to join you in the program. If you're interested in investing in a multi level marketing program, you'd be well advised to research the company and product thoroughly. Don't forget to check the Better Business Bureau. There are a lot of scams out there, and if you're not careful you can fall prey to one of them.

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Discussion Comments


Lisbethcalan- I agree with you. I want to add that many MLM companies provide a comfortable living for its consultants.

They often use perks like vacations and cars to retain and motivate its members. The most famous MLM, Mary Kay is famous for offering its consultants pink Cadillac’s for reaching higher than average sales goals.


I would like to add that one of the considerations for choosing an MLM should be one's values. I have been approached for various MLM's but was not interested in the products. Of course MLM is about building a team as well as selling products.

But like anything else, it helps to like what you're selling. As a business consultant, anything I can use to help my clients promote their business is appealing. The past couple of years have brought amazing technology to MLM.

Check out the MLM company before you buy.

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