Multi-Level Marketing

A direct sales organization is a viable way to sell Internet service—under the right circumstances—but it's not a path to be undertaken lightly.

by Jason Zigmont HowToSell.net [November 19, 1999]

Last January, AOL took the plunge into direct marketing—or multi-level marketing (MLM) as it is also known. [Click here to read all about it.]

In adding a MLM side, AOL gained access to thousands of sales people whose job will be to interact directly with the mass of potential end users who currently do not have Internet access. However, adding a direct marketing arm also carries along the negative connotations many people have with MLMs.

Location is everything
Although I'm not particularly an MLM advocate, I did have the opportunity of receiving an in-depth look into direct marketing while training the technical and sales staff of what would have been the Internet's first MLM, in Idaho Falls, Idaho. The first thing I learned was that direct marketing's acceptance varies widely depending on your location: For example, the mid-western U.S. is much more accepting then the East Coast.

In Idaho, most residents participate in a MLM company at some time in their life, and therefore they understand both the pleasure and the pain of being a direct marketer. When Idahoans are approached by direct marketers, then, they are likely to listen. In contrast, residents of the eastern U.S. have been burnt by 'pyramid schemes', and therefore consider all MLM companies to be underhanded, and crooked.

Regardless of your personal feelings about direct marketing, it's an undeniable fact many millionaires have been created by direct marketing organizations— Amway, for example. Amway states that the average direct marketer makes $56,500 per year. MLMs have made people money. Unfortunately, MLM's evil brother, the pyramid scheme, has tarnished the image of legitimate direct marketing by bilking ordinary people out of a lot of money.

Sales org with a difference
The structure of a true MLM company is really not very different from that of a a corporate sales department. With a VP of sales, several sales managers, and large contingent of salespeople, you basically have the same resources as an MLM's downline. The salespeople are the ones dialing for dollars and making the sales; they are paid a commission on each sale. The sales manager is responsible for a group of sales people, and typically receives a salary and a percentage of total sales of that group. The VP then manages the sales managers and receives compensation (be it salary, commission, bonus, stock, etc.) for the production of the sales managers and the salespeople.

In an MLM setup, the structure is the same but thet titles differ. As with a standard company, the people at the top three levels are the ones who make the most money. People below them make money, but have to work just as hard for it as a 'normal' salesperson. Perhaps the key difference is that in an MLM organization, there are ways for the bottom-rung salesperson to 'move up the ladder,' building a sales team below them and essentially graduating into what could be considered a sales manager position.

For better or worse, it is practically impossible for an ISP to add a MLM division without outside help. The business and billing systems have to be huge to be effective; just dealing with the tax laws is a major undertaking. If you are interested in investigating direct marketing, proceed with caution—and enlist the help of an established MLM organization.

The dark side
Unfortunately for the MLM industry, many direct marketing companies are positioned as 'get rich quick' schemes, crossing the thin line between a true MLM company and a pyramid scheme. When you cross that line, you loose everything you have worked for—your reputation, and even the trust of your employees and customers.

Get rich quick schemes are seductive, it's true. The allure of not having to work as hard as we do on a daily basis is hard to resist. To keep these issues in perspective, I look at a poster sent to me by Harvey Mackay that hangs on my office wall as a daily reminder. Its message is simple, yet one so many people forget:

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