Multi-level network marketing is a business model used by many successful companies to increase the number of customers with the help of distributors, sales personnel, etc. This is also called network marketing as the company forms a hierarchy of promoters for their product or service. Recruiting people who can promote the products, who in turn hire some more people who will support thereby increasing the total number of customers, form this hierarchy.
The people who work in multi-level marketing are ordinary people who are paid in terms of commission for their work. These independent individuals are called distributors, franchise owners, consultants, associates, etc. They represent the company and promote its product or service.
They are given commissions based on the capacity of sales of the product due to their endeavor. The commission is also paid if they can hire new associates to promote the organization’s business.
This is also called home-based business franchising because the distributors can do it working from home. Through the Internet, they can increase the traffic of the site of the organization by catching the attention of the customer.
If a purchase is made because of it, they will be paid commissions. Hence it is also referred to as affiliate marketing and the people involved in it are called affiliates. As it is home based the people involved in it can earn extra income apart from their regular job.
MLM is gaining momentum because many companies require distributors to introduce their company and make them famous among customers. Using this technique one can reach a customer in a faster way and multiply.
Multi-level marketing is also prone to criticism due to some of the problems like an illegal pyramid scheme, recruitment of low tier sales personnel, price fixing of products, and high initial costs. But many companies have increased their profit in spite of all these criticism as they properly use this technique.