BlogIT tools for businessesMLM or multi-level sales system

MLM or multi-level sales system

Multi-level marketing or network marketing, abbreviated as MLM (Multi Level Marketing), is a way of operating a company that involves the sale of products or services by non-employed salespeople. MLM is a sales model in which the earnings of participants in the structure depend on the company’s marketing plan, and on the volume of their own sales and those of their subordinate salespeople.

MLM is often mistakenly associated with a financial pyramid scheme, in which participants’ profits come from initial payments from newly recruited participants. In multi-level marketing, salespeople earn commissions exclusively from their own sales and the sales of participants in their sales network.

It may seem that through such a sales model, the customer will get an unfavorable, artificially high price, but this is not true. The consumer receives products at standard prices. He receives the product by home delivery or in person from the merchant. A company selling products or services does not need to open and maintain stationary stores, warehouses or wholesalers, so it has funds to pay sales commissions to salespeople. Thus, each side gains from such a model.

An example of a multi-level sales network

Compensation Law Firm “A” employs agents “B” who sign contracts with victims of traffic accidents, accidents at work and other accidents throughout the country. For each contract signed with a client, this person receives a commission from the pure earnings of the law firm, as specified in the cooperation agreement. An agent wishing to increase profits has the opportunity to recruit more “C” agents, whose job will be to seek out new customers. By forming a network, the agent offers subordinates a cooperation agreement. Thus, the agent receives an excess commission from the law firm on each contract signed by subordinate agents. More people can build their own network of further “D” and “E” agents on a similar basis. So we are dealing in multi-level marketing.

  • Compensation Law Firm “A”
    • Agent “B1”
      • Agent “C1”
    • Agent “B2”
      • Agent “C2”
        • Agent “D1”
          • Agent “E1”
          • Agent “E2”
      • Agent “C3”
    • Agent “B3”

In what industries is multi-level marketing used?

Many industries use multi-level marketing to help the company steadily increase the number of customers and sales. This is the sales structure most often encountered in the industry:

  • Cosmetics – sale of cosmetics, perfumes.
  • cleaning products – household chemicals for cleaning and household chemicals.
  • Household appliances – small and large household goods, kitchen appliances.
  • medical – sales of medical equipment, dietary supplements, drugs and other products.
  • Insurance – sales of liability, AC, NW policies and other services.
  • Compensation – legal services for assistance in obtaining compensation from Civil Liability, Social Security, KRUS, NNW and other sources.

Multi-level selling on the Internet

For the past few years, we have seen rapid growth in the e-commerce, or online sales, industry. Modern technologies and systems make it possible to sell products and services online, which has many advantages for both sellers and consumers. The coronavirus pandemic has further accelerated this development and caused more and more companies to choose online channels for sales and virtual contact with customers. Many companies hold conferences, training sessions and online meetings for both salespeople and customers.

With the growth of the company, with the increase of the sales network and the increasing number of customers, there is a need to improve the customer contact and sales process. It is also necessary to standardize and simplify the process of reporting results by salespeople or agents, and to facilitate the structure’s financial accounts. So the best solution will be to implement a CRM system in the company that also allows accounting for MLM structures.

CRM for a company using MLM sales model

CRM is an information system that allows you to manage customer relationships. It makes it easier for companies selling products or services to meet the company’s goals of satisfying customers and increasing profits. CRM users, i.e. the company’s employees (office staff or salespeople) maintain a history of customer contact in the system. This builds a base of all customers. Knowledge of customer preferences makes it possible to tailor further marketing and sales efforts to meet the needs of the target group of consumers the company wants to reach. The system also includes a database of salespeople and their sales networks, assigned cases and sales volumes. On this basis, the company can check the effects of the salesmen’s work and settle in the system their commission for the sales obtained.

SalesWizard – Online quoting CRM system

SalesWizard is not only a CRM system for increasing sales. It also supports methods of operation to more effectively manage customer relations and manage the entire company. It is tailored to a wide range of industries, including companies using a multi-level sales model, as it allows accounting for sales structures. Implementing SalesWizard is an entry into a higher level of technology that allows for a higher position in the market.

Advantages of implementing SalesWizard in the company:

  • Automating processes will save time that can be spent on effective action to increase sales.
  • Import direct requests from customers into the system from external marketing campaigns such as Google Ads or Facebook Ads.
  • Traders or Agents have the ability to add their customers to the system.
  • Ability to generate web or pdf offers to customers from the system.
  • Integration with the API allows contracts to be signed electronically.
  • Easier contact with customers with the ability to send text messages and emails from the system.
  • Ability to register MLM structures and account for them on a multi-level basis.
  • A complete database, available at any time, allowing analysis and easier decision-making going forward.

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