Apr
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What Is The Difference Between Direct Sales And Multi-level Marketing (mlm)?
April 2, 2008 | Leave a Comment
Many people are confused when they are first exposed to home based businesses and are trying to understand the different compensation models that each company has to offer. By far the two most common compensation models are “Direct Sales” and “Multi-level”.
Both of these models use leverage to increase income and time for the business owner. Both models can generate a substantial income you take full advantage of the compensation plan. Every company will have variations with each type of model, but this article will explain the basics.
Here are some key differences between the two:
1. Direct sales is a horizontal model. This means that people who get started in the business can quickly be free of any financial obligation to the person who introduced and trained them in the business. Then they can very rapidly reach or exceed the income level of someone who has been with the company for years. In direct sales, the profit or commission goes to one person only. People who are new to the business and going through the training process will pass up a set number of sales to their trainer. Once they have gone through this process, they are free of any future financial commitment to their trainer or anyone else in the business and will keep 100% of the profit from their sales from that point on.
Once you are trained and making sales yourself, you will then be compensated by getting the first sales of the people who you introduce to the business and train to become successful. Once they have fulfilled their obligation to you, then they too are then free to go off and build their own business with no further financial obligation to you.
2. MLM is a vertical model. This means that you have an ongoing financial obligation to the person who introduced you to the business and also the person who brought him or her into the business and that obligation can go up for “multiple levels”. That also means that as you build a “down line”, you will be getting a percentage of each sale for several levels down. This is why it is advantageous to get into an MLM program early because those who are at the top of the compensation model are typically making the most money and it is difficult to ever make more money than those who are successful in your “up line”.
In the MLM model you will always be getting a percentage of the sales that occur for many levels below you. However, you are usually not responsible for directly training everyone in your down line, so you can really leverage your time and your income with this model.
Both models have distinct advantages and both models have made many people very wealthy. Both compensation plans are considered network marketing which is one of the top 3 industries in the world to produce millionaires
Some people may think of “Pyramid Scheme” or even “Ponzi Scheme” when looking into theses types of business models. In reality both pyramids and ponzi’s are illegal and if you are dealing with a company who has a history of being in business and tangible products to offer, then it is not very likely to be either a pyramid scheme or a ponzi scheme. Both a pyramid and ponzi scheme are defined as the exchange of money without a useful or tangible product. Using common sense will often separate out the people who are just looking to get your money.
Finding the right home business can be confusing to people who are new to the industry and who don’t really know what they are looking for. Do your homework and do your due diligence before making any decision and you will be rewarded accordingly.
Finding the right home business for you can make a huge difference in the quality of life you experience after you have made your decision. It can be one of the most rewarding decisions you ever make, or one of the most challenging…. just be knowledgeable of how the money is made and choose wisely.
Keri Just is a Home Business Professional and coaches others on how to have success working from home. You can contact Keri and get additional information through his website at:
http://www.justforfreedom.net
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