Companies with good products choose to use an MLM distribution method instead of an independent sales rep method because MLM or Multi-level-marketing is a controversial marketing strategy. This method is also referred to as network marketing or referral marketing. The profit is derived from the distributors of the company.
Generally, distributors at MLM’s have two ways of making money -
"Sell the product itself and recruit other people into the company, and " get money based on their sales or the people they recruit in return."
The industry is actually very profitable. Most companies look legitimate from the outside and even have celebrity endorsements like the one below.
If you look at the other side of the spectrum, this strategy might have some appeal. You could argue that MLM empowers people to try and establish their own business, which might look very enticing to some entrepreneurial-minded person. You have the structure of an organisation without having a boss to look over your shoulder. There is also staff training, bonuses and different kinds of rewards.
If you are looking for a new MLM opportunity try to find a representative that has or is actually using the product. There are many reasons for this. Many network marketing opportunities promote hype, and making claims that are bigger than it is. I feel that some representatives will spit out all these facts that it sounds like a hyped up sales pitch that isn't real. Even myself being in the industry, I am always suspicious of an MLM Network Marketing rep that talks about how great the product is but never used the product that he or she is trying to sell. Here are seven reasons why you need to be a product of your product to be successful in MLM.
Reasons behind using product strategy of MLM
1. It builds trust:-
When an affiliate or customer knows that you have actually used the product it builds some trust. It shows them that you have faith in the product and that you have confidence in it. This will increase their confidence in the product, as you aren’t just some guy trying to sell something, but a user that has real experience.
2. It shows how the product works:-
By using the product yourself you will actually be demonstrating how it works. Instead of just “telling” someone about something you will be “showing” them, which is always more effective when it comes to MLM.
3. The power of before and after:-
One of the great things about using the product that you sell is that you can use the power of before and after shots. If you are using a diet supplement you can show how much weight you have lost, which illustrates to affiliates and customers how effective the product can be.
Some advantages behind using MLM product strategy :-
A startup can hire them and they are usually very experienced (which means you can also learn from them a lot). On the other hand, training them can be costly and they often sell more than one line or brand of products and might lose interest in you.
In general, external sales force have more freedom to chose what product they want to focus on or completely drop you at any point. From a company’s perspective it is not the best option 100% of the times.
Bottom line is… it depends…as with everything else. It depends on what do you mean by “companies with good products”, it depends on the actual company and what makes sense for their business model, it depends on the situation…it depends.