Hands up if you know or have known of at least one Avon lady? Somehow when you see that brochure, you know exactly what to expect.
Did you know that Avon and other businesses like it (Virgin at Home, Mary Kay Cosmetics, Kleeneze…) are all network marketing businesses?
What is an MLM?
MLM (Multi-level marketing) describes a business marketing strategy where the sales force gets paid for not only for sales they generate themselves, but they also get commission or bonuses for the sales of other people they recruit. This creates a hierarchy of multiple levels of compensation (commission, bonuses etc), where the higher up you are in levels, the more commission and royalties you earn.
MLM is also know as network marketing, pyramid selling and referral marketing.
MLM should not be confused with illegal pyramid schemes, which you can spot by watching out for the following signs:
1. Illegal pyramid schemes encourage people to make substantial investment by buying goods and rewarding participants for getting other people to do the same. The volume is far above what the Direct Selling Association recommend, and they are often too good to be true, so if you put your emotions and dreams of making a quick buck in next to no time you’ll spot it a mile off.
2. Illegal pyramid schemes make little reference to direct selling and the need to achieve consumer sales. Instead, they suggest that the main source of reward will come from getting other people to make substantial initial investments.
3. Companies of illegal pyramid schemes do not offer contracts to participants, cancellation rights or the opportunity to sell back any unsold goods to the company – all of which are required under UK law.
4. Illegal pyramid scheme operators are often very forceful and the deadline is always immediate. No legitimate business opportunity should put undue pressure on you to part with your cash without having the opportunity to think through what you are doing, and real, tangible results to show success.