Trying to distinguish between the direct sales and multi-level marketing business models can be confusing. Typically, the direct sales model is based on the sales of retail products to consumers via independent representatives. The representatives are paid a commission on the products they sell. Sometimes the model will include a residual commission on the sales of the products that are sold by the representatives you have introduced to the business.
This is not always the case. Many top tier direct sales companies do not pay out a residual commission on team sales. Top tier companies usually operate on the philosophy of paying their representatives a very high commission in lieu of residual commissions. This is proving to be a popular alternative to the traditional models of direct sales and multi-level marketing.
The multi-level marketing model usually assumes that their customers will also become distributors and that distributors make up the main customer base. They commonly pay out commissions from the sales of a distributor’s “downline”. In theory, this allows distributors to sponsor new representatives into the business, thus building up a long term, residual income over time.
There are pros and cons to each business model. Generally speaking, the top tier direct sales model requires a higher initial investment. However, the commissions are very high and it requires very few sales to recoup your investment and be in profit.
The other models usually require a lower up front investment and are easier for the average person to get into. However, it takes a long time to recoup their investment. Most people never make their investment back. On paper, the residual income model looks great, but in reality, it is not about the numbers. The model is dependent upon the efforts and skills of a very large number of people. The fact that most people who get into a multi-level type of model usually quit within 90 days having produced no sales. This means that a distributor needs to continually recruit new distributors to replace the people who have quit.
In the end, you can actually be successful using either of the models. Your success doesn’t rest in the company or compensation plan or the product line. Your success depends on your effort, commitment and skill. Most would-be entrepreneurs seem to overlook the fact that their business is not the company or the products. Their business is marketing. Marketing is the skill that makes or breaks a business. If you know how to market, you will succeed. If you do not develop marketing skills, you will fail. It doesn’t really matter what business you are in.
Personally, having been involved with network marketing, traditional direct sales and multi-level marketing, I chose a top tier product line to market. It is a pretty simple deduction. Both business models require you to become a proficient marketer. Top tier product lines pay out commissions of $300 to $20,000 as opposed to $10 – $100. It takes no more work to sell a top tier product as it does to sell a low tier product. While the network marketing model theoretically allows you to build a residual income, in practice, that is rarely the case. There is simply too much attrition to keep your downline full of enough productive people to produce the income I require.
The choice was simple. Top tier direct sales has provided me with the vehicle I needed to produce the income I required.
You will find an introduction to the product line and marketing system that I use by clicking on the link below. If you are considering a business and you are enamored with the network marketing business model, you owe it to yourself to investigate further. Click the link below and do some due diligence.