Finding and Keeping Customers in Multi Level Marketing (MLM)
February 12, 2025
CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become ‘customer emphatic’ rather that ‘product emphatic’. Birth of CRM was because of this heedful perceptiveness. The famous writer and management consultant Peter Drucker wrote; ‘The true business of every company is to make and keep customers’. […]
Many companies have misconceptions about CRM in regard to assessing customer satisfaction in order to enhance business. There are several misunderstandings in Customer Relationship Management to be checked otherwise these may cost the organization revenue and profits. Identifying CRM with a software system- CRM is a business strategy which consists of people and business processes […]
Customer Relationship management is the strongest and the most efficient approach in maintaining and creating relationships with customers. Customer relationship management is not only pure business but also ideate strong personal bonding within people. Development of this type of bonding drives the business to new levels of success. Once this personal and emotional linkage is […]
Introduction: Why is Relationship Management Important? If you are working and have a bank account, chances are that you would have heard of the term Relationship Manager who is tasked with the responsibility of attending to your banking needs as well as proactive account management. Further, if you are working for a corporate and are […]
The previous articles in this module have discussed how Corporate Social Responsibility (CSR) as a business imperative is no longer a luxury and instead, it has become a necessity. We have also discussed how companies can no longer afford to pay lip service to CSR and the time has come to take the concept seriously. […]
Multi Level Marketing or Network Marketing as it is called world over happens to be a fast growing phenomenon. The fact that anyone, anywhere can become a distributor and earn income from building the network without having to sacrifice any other occupation or additional investment into this business makes it very attractive for people from all walks of life to attempt at joining the network. It is estimated that in US alone over 70 percent of the Direct Selling Revenues come from Network Marketing. Though no figures are available to confirm the revenue figures at national level, over 50 million people are estimated to be engaged in Multi Level Marketing all over the world.
Though there is no documented history of Origin of Multi Level marketing, generally it is believed that this concept owes its origin to ‘Nurtralite’ or formerly known as California Vitamin Company which produces food supplement products. In the early part of 1940s, the Company used to engage in Direct Selling.
The concept of Multi Level or Network selling seems to have emerged accidently when the Distributors discovered that they were generating more sales for the Company by referring their friends and known people to the business opportunity available with Nutralite. At this point of time, there was no system in place to recognize and reward the distributors for their efforts in recruiting other Distributors for the company. With the realization dawning on the Distributors and the Company, the system of paying 2 percent bonus to the sponsor Distributor on the sales that were achieved by the Distributor and the network that he sponsored or built was introduced. This then led to the birth of modern day system of ‘Pyramid Selling’.
Nutralite achieved unprecedented growth and profits in the following decades thanks to the fast growing network not only in the US but across other continents as well. In early 1960s, two men Richard DeVos and Jay Van Andel,c who were the Distributors of Nutralite broke away to build their own company which grew to be the biggest in MLM business world over called ‘Amway’. This company initially made a foray into House hold and cleaning products and went on to buy Nutralite Company and merge the food supplement products into its portfolio.
Yet another distributor named Dr. Forrest C Shaklee too broke away from Nutralite at the same period that ‘Amway’ took birth and found the new Company named Shaklee dealing with Nature’s sunshine products.
Today there are several hundreds of Companies that are practicing Pyramid selling or Multi Level Selling and compensation methods to sell their products. Numerous brands such as Avon, Tupperware, Electrolux, Discovery Toys, Herbal life, Kleenez, Oriflame, Reliv etc have been highly successful in growing their business globally using this concept of sales.
Though there are a lot of criticisms and charges levied against this system and companies both by the industry watchers as well as the trade and Governments, the figures reveal that the concept has been successful in the growth of more businesses in recent years. The Direct Selling Association of US reported that about 25 % of its members were engaging in MLM channel of selling in the 1990s whereas by the year 2009, it was found that over 94% of the members had been practicing this method contributing to about 97% of the total Direct Sales.
While the figures are showing progressive trends and the Companies often promote the success stories of individuals who have become millionaires in the business, it is to be noted that there is growing concern in the trade and Governments of various countries which have been raising questions about the authenticity of the pyramid compensation method which they believe is inherently faulty model and that the revenue or income generation does not happen due to sales of the product but is due to the recruitment of distributors. China has banned this form of Direct Selling since 1998. The trade however seems to be growing unprecedentedly all over the rest of the world.
Your email address will not be published. Required fields are marked *