When I was growing up, I always had to sit around the house while my parents went on their Wednesday recruitment nights. I also remember on Thursday evenings I’d go sit in the van for hours while my parents went to their meetings and distributed supplies and what not.
I never thought about what it was they were doing. I just went along for the ride. I was young and didn’t care. I just wanted to listen to music and read comics in the car while waiting.
What is Multi-Level Marketing?
So what was it they were doing? They were involved in something that is in general called multi-level marketing, but more specifically the one they were doing was called Amway. But what are these programs and how do they work? I shall explain.
Multi-Level marketing (MLM) means just that. It means that there are levels, or tiers involved. There are levels of earnings, and there are levels of affiliates. So here is an example. Say I join an MLM company. I then go out and recruit members. (Now I’m about to start making up numbers, so don’t think they are accurate. They change with each program.)
Say for all of the sales I do, I get 50% of it. But for everyone I recruit one level below me, I get 10% of their sales. If they go out and recruit people, I get 5% of those people’s sales. Below that I get 2.5% of the third level’s sales. Say everyone does $1000 in sales one month of some software or jewelry or something.
For my own sales, I will keep $500 of it. For my tier 1, I will keep $100. For my tier 2, I will keep $50, and for my tier 3, I will keep $25. So total that month I will make $675. That is with myself and three people below me all in lowering levels. But what if I get 10 people in my tier 1, who all get 10 people below them, and then 10 more below them? Now we are talking about some serious cash.
Turned out my parents were raking in an extra $30,000 a year doing this. They were also busting their butts on it, but once it’s set up and rolling, it’s a pretty passive endeavor. The thing with MLM is that those who get in early make the most money, because most everyone has to sign up below someone else. So most of the earnings end up trickling uphill to the early adopters.
What a cool system. This is something you could do purely on the weekend and make some good extra money!