More than 80% of consumers tend to trust the recommendations of their friends when making purchasing decisions. Accordingly, personal connections and recommendations turn into powerful tools for attracting new customers, and the implementation of an MLM strategy contributes to faster business growth. In this article, you will learn about what MLM is and how this strategy will help your business to scale successfully.

What is MLM?

MLM (Multi Level Marketing) is a marketing strategy that involves selling products or services through multi-level networks of distributors instead of the usual retail stores and other sales channels.

Based on the principles of referral marketing, this business model encourages the company's existing customers to actively recommend its products to family and friends, stimulating sales and receiving certain rewards for doing so. The MLM strategy has its own characteristic features, including:

  • Sales of products. Sales are made by independent partners (distributors), most often through personal contacts and social networks. Distributors choose how and where to promote their products to attract as many customers as possible and increase their sales.

  • Recruiting. Distributors are also involved in expanding business networks, attracting new partners and forming their own networks. By becoming mentors for newcomers and managing the established team, they ensure its high productivity and, as a result, increase their own and the company's profits.

  • Commission income. Network partners receive income in the form of commission percentages from personally made sales and sales of attracted participants. Multi-level commissions motivate distributors to develop their own team to generate passive income.

One of the key components of an MLM strategy is a well-calculated compensation plan, which consists of creating a transparent remuneration system. It includes not only direct commissions for sales but also additional bonuses for recruiting new partners or achieving certain goals. An attractive bonus system increases the motivation of distributors, ensuring more efficient development of your business.

How MLM helps businesses grow

The widespread use of the Internet and the dynamic development of online commerce continue to transform consumer preferences. Consumers are increasingly choosing online shopping instead of visiting physical stores, and the growing distrust of traditional advertising increases the value of personal recommendations. These trends require entrepreneurs to adapt their business strategies to succeed in a highly competitive marketplace.

Network marketing, built on the power of social connections and trust between people, opens up great prospects for your business. Implementing an MLM strategy will help it grow faster thanks to:

  • Cost effectiveness

Distributors are independent entrepreneurs, not full-time employees, so they do not need to pay a fixed salary every month. The company also avoids the additional costs of renting office space and maintaining physical stores.

  • Increasing customer retention rates

When you give customers the opportunity to become your trading partners, they will not only recommend your product to others, but also make regular purchases. This approach turns ordinary customers into regular loyal customers.

  • Controlled marketing expenses

Setting fixed compensation terms allows you to predict the necessary expenses for product promotion and sales without going beyond the budgets set in the product's PNL.

  • Building a network of brand advocates

A referral system helps to create a network of brand advocates who increase brand awareness. By communicating directly with potential customers, they also address their objections that are not covered by advertising and product descriptions in other sources.

  • Reducing promotion costs

In a network partnership, members independently promote products and attract new customers to increase their sales. Thanks to this, the business minimizes advertising costs and the need to customize it.

  • Global reach

Distributors use their social networks to communicate information about the brand and its products to a wide range of users, attracting customers and partners from different cities and countries. This leads to a continuous growth of coverage and the company's gradual entry into the international market.

  • High sales conversion

Understanding the needs of a particular person, network partners reveal the benefits of a product in a personalized way, often at the moment when a person needs it. In addition, customers attracted through personal recommendations are much more loyal to the brand and are more likely to make repeat purchases.

  • Easier promotion of products

An MLM network is a great option for promoting products with complex applications and high competition in the market. Also, for innovative products, the purpose and value of which are not entirely obvious to a potential consumer. Creating a recommendation system and building a network of partners who provide customers with support or training helps to increase trust in products and their sales.

  • Active market expansion

Professional networkers often have an asset in the form of their own structure, which is ready to join the project, make the first purchases right away, and guarantee further activity in attracting customers and partners. This gives a strong impetus to the development of a young company or a new MLM sales channel for an existing project with a reputation.

MLM strategy is one of the most effective tools for rapid business growth. It makes it possible to attract a huge number of loyal customers in a wide geographical range without spending much money. However, for the effective implementation of a referral strategy in business and efficient management of distribution structures, it is necessary to develop a competent compensation plan and use appropriate software.

If you want to successfully integrate an MLM strategy into your company's activities,  follow the link https://flawlessmlm.com/en/referral and submit your application. The FlawlessMLM team will create a referral program and develop a convenient MLM platform taking into account the unique needs of your business.