multi level marketing business plan pdf

Network Marketing Business Plan Template

Written by Dave Lavinsky

Network Marketing Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their network marketing companies.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a network marketing business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Network Marketing Business Plan?

A business plan provides a snapshot of your network marketing business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Network Marketing Business

If you’re looking to start a network marketing business or grow your existing network marketing company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your network marketing business to improve your chances of success. Your network marketing business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Network Marketing Businesses

With regards to funding, the main sources of funding for a network marketing business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for network marketing companies.

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How to write a business plan for a network marketing business.

If you want to start a network marketing business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your network marketing business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of network marketing business you are running and the status. For example, are you a startup, do you have a network marketing business that you would like to grow, or are you creating a new multi-level marketing (MLM) business in another geographic region?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the network marketing industry.
• Discuss the type of network marketing business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of network marketing business you are operating.

For example, you might specialize in one of the following types of network marketing businesses:

• Services network marketing : this type of MLM, or multi-level marketing business, is focused on the sales of services. For example, services such as insurance policies, telephone or cable television services, or educational services are offered via direct-selling, independent contractor representatives within the MLM company.
• Product network marketing: The most popular format for MLM (multi-level marketing) companies is found in selling products. Sales of products such as jewelry, health and wellness items, weight loss products, and other popular consumer categories are profitable continuity items that can create a significant income for independent contractor representatives.
• Membership network marketing: An MLM, or multi-level marketing business, can also be successfully built around the sales of memberships, such as travel, timeshare ownerships, and certain sport or hobby clubs.

In addition to explaining the type of network marketing business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of independent representatives you’ve signed up under your MLM business, the number of products you or your downline representatives have sold, or the number of clients your MLM business has acquired.

Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the network marketing industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the network marketing industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your network marketing business plan:

• How big is the network marketing industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your network marketing business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your network marketing business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, families, students, schools, and hobby or travel organizations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of network marketing business you operate. Clearly, individuals would respond to different marketing promotions and products than schools, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other network marketing businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes retail stores, travel agencies, health supplement manufacturers, or hobby club members. You need to mention direct competition,  as well.

For each direct competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of MLM (multi-level marketing) business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide options for upselling your products?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a network marketing business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of network marketing company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will your MLM (multi-level marketing business) sell a product line of natural health and wellness supplements created for athletes, or will your MLM sell jewelry club memberships that auto-ship jewelry to customers once a month ?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your network marketing company. Document where your company is situated and mention how the site will impact your success. For example, is your network marketing business located in a standalone office, or is your MLM (multi-level marketing) business purely online? Discuss how your business structure might be ideal for your customers.

Promotions : The final part of your network marketing marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to friends and family; sign them up as independent representatives
• Distribute flyers
• Engage heavily in email marketing to friends, associates, and others
• Post daily and blog frequently across all social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your network marketing business, including answering calls, planning and providing products, services or memberships, tracking online orders and payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when your MLM, multi-level marketing company, expects to sign up your 10,000th independent contractor, or when you hope to reach $X in revenue. It could also be when you expect to expand your network marketing business into new product lines or service industries.

Management Team

To demonstrate your network marketing business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing network marketing businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a network marketing business or successfully sold into DTC (direct-to-consumer) categories.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you sign up 10 new independent representatives in your beauty category downline every day, and/or offer bundled travel rates for your MLM downline representatives as they sell travel club memberships? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your network marketing business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a network marketing business:

• Cost of equipment and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your MLM downline independent representatives and the percentages you collect from their earnings, or a list of your “gold star” independent representatives who make over 100K in yearly revenue.

Writing a business plan for your network marketing business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the network marketing industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful network marketing business.

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Network Marketing Business Plan

The ability to generate residual revenue is one of the key benefits of network marketing. As a result, even if you are not actively involved in the sales process, you can still receive commissions. Thus, are you thinking of starting your network marketing business, if yes, then you will need a plan.

Need help writing a business plan for your network marketing business? You’re at the right place. Our network marketing business plan template will help you get started.

Free Business Plan Template

Download our free network marketing business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How to Write a Network Marketing Business Plan?

Writing a network marketing business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

• Introduce your business: Start your executive summary by briefly introducing your business to your readers.
• This section may include the name of your network marketing business, its location when it was founded, etc.
• Market opportunity: Summarize your market research, including market size, growth potential, and marketing trends. Highlight the opportunities in the market and how your business will fit in to fill the gap.
• Product and services: Highlight the network marketing products and services you offer your customers. The USPs and differentiators you offer are always a plus.
• For instance, your products and services may include health & wellness products, home goods, travel & vacation services, financial services, etc.
• Marketing & sales strategies: Outline your sales and marketing strategies—what marketing platforms you use, how you plan on acquiring customers, etc.
• Financial highlights: Briefly summarize your financial projections for the initial years of business operations. Include any capital or investment requirements, associated startup costs, projected revenues, and profit forecasts.
• Call to action: Summarize your executive summary section with a clear CTA, for example, inviting angel investors to discuss the potential business investment.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

• Single tier networking
• Multi-level marketing
• Affiliate marketing
• Cooperative marketing
• Describe the legal structure of your network marketing company, whether it is a sole proprietorship, LLC, partnership, or others.
• Explain where your business is located and why you selected the place.
• Owners: List the names of your network marketing company’s founders or owners. Describe what shares they own and their responsibilities for efficiently managing the business.
• Mission statement: Summarize your business’ objective, core principles, and values in your mission statement. This statement needs to be memorable, clear, and brief.
• Business history: If you’re an established network marketing business, briefly describe your business history, like—when it was founded, how it evolved over time, etc.
• Additionally, If you have received any awards or recognition for excellent work, describe them.
• Future goal: It’s crucial to convey your aspirations and vision. Mention your short-term and long-term goals; they can be specific targets for revenue, market share, or expanding your services.

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

• Target market: Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.
• People who are interested in starting their own business and need one other income, then they might be your target market.
• Market size and growth potential: Describe your market size and growth potential and whether you will target a niche or a much broader market.
• Competitive analysis: Identify and analyze your direct and indirect competitors. Identify their strengths and weaknesses, and describe what differentiates your network marketing services from them. Point out how you have a competitive edge in the market.
• Market trends: Analyse emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.
• For instance, the need and demand for personalized services is increasing day by day so explain how will you keep up with the trends.
• Regulatory environment: List regulations and licensing requirements that may affect your network marketing company, such as pyramid scheme laws, consumer protection laws, income disclosure laws, tax laws, etc.

Here are a few tips for writing the market analysis section of your network marketing business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

• Health & wellness products
• Travel & vacation services
• Financial services, etc.
• Product development: Describe your strategies for continuing to develop and improve your products, taking into account market research, team member and customer input, and spending money on new technologies or production methods.

In short, this section of your MLM business plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

• Unique selling proposition (USP): Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.
• This could be anything from superior quality or performance to better pricing or packaging.
• Pricing strategy: Describe your pricing strategy—how you plan to price your products & services and stay competitive in the local market. You can mention any discounts you plan on offering to attract new customers.
• Marketing strategies: Discuss your marketing strategies to market your services. You may include some of these marketing strategies in your business plan—social media marketing, Google ads, brochures, email marketing, content marketing, and print marketing.
• Sales strategies: Outline the strategies you’ll implement to maximize your sales. Your sales strategies may include direct sales calls, partnering with other local businesses, offering referral programs, etc.
• Customer retention: Describe your customer retention strategies and how you plan to execute them. For instance, introducing loyalty programs, discounts on annual membership, personalized service, etc.

Overall, this section of your network marketing business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your network marketing business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

• Operational process: Outline the processes and procedures you will use to run your networking business. Include all of the activities such as taking calls, organising and delivering goods, services, or memberships, monitoring online orders and payments, etc.
• Training and support: Explain how you will train and support your staff, including the training materials, resources, and tools that will be provided to help them succeed.
• Manufacturing and production: If the business involves manufacturing or production of products, detail the manufacturing process, including the equipment and materials required, and the procedures that will be followed to ensure quality control.
• Supply chain management: Specify the supply chain management system that will be employed to guarantee that goods or services are accessible for distribution. Information about suppliers, inventory control, and order fulfillment procedures may be included.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your network marketing business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

• Founder/CEO: Mention the founders and CEO of your network marketing company, and describe their roles and responsibilities in successfully running the business.
• Key managers: Introduce your management and key members of your team, and explain their roles and responsibilities.
• It should include, key executives, senior management, and other communication or product managers including their education, professional background, and any relevant experience in the industry.
• Organizational structure: Explain the organizational structure of your management team. Include the reporting line and decision-making hierarchy.
• Compensation plan: Describe your compensation plan for the management and staff. Include their salaries, incentives, and other benefits.
• Advisors/consultants: Mentioning advisors or consultants in your business plans adds credibility to your business idea.
• So, if you have any advisors or consultants, include them with their names and brief information consisting of roles and years of experience.

This section should describe the key personnel for your network marketing business, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

• Profit & loss statement: Describe details such as projected revenue, operational costs, and service costs in your projected profit and loss statement. Make sure to include your business’s expected net profit or loss.
• Cash flow statement: The cash flow for the first few years of your operation should be estimated and described in this section. This may include billing invoices, payment receipts, loan payments, and any other cash flow statements.
• Balance sheet: Create a projected balance sheet documenting your network marketing business’s assets, liabilities, and equity.
• Break-even point: Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.
• This exercise will help you understand how much revenue you need to generate to sustain or be profitable.
• Financing needs: Calculate costs associated with starting a network marketing business, and estimate your financing needs and how much capital you need to raise to operate your business. Be specific about your short-term and long-term financing requirements, such as investment capital or loans.

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your network marketing business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This sample network marketing business plan will provide an idea for writing a successful network marketing plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our network marketing business plan pdf .

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Frequently Asked Questions

Why do you need a network marketing business plan.

A business plan is an essential tool for anyone looking to start or run a successful network marketing business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your network marketing company.

How to get funding for your network marketing business?

There are several ways to get funding for your network marketing business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

Small Business Administration (SBA) loan

Crowdfunding, angel investors.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your network marketing business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your network marketing business plan and outline your vision as you have in your mind.

What is the easiest way to write your network marketing business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any network marketing business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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A Guide To Multi-Level Marketing As A Business Model

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Multi-level Marketing (MLM) or Network Marketing is not new to many. You may be a member, or at least you know someone who is always trying to make you join an MLM company. Often the introduction you get is too enticing, with promises that sound too good to be true. You’ll either find yourself wanting to join in or wary of the entire idea.

What Is Multi-Level Marketing Business Model?

It’s a marketing strategy or model by companies focused on creating, building, and managing a sales force. The model encourages the existing independent distributors to recruit more distributors. It consists of two or more tiers, and a distributor earns an income from their sales and a percentage from the sales of those they have recruited as an incentive. MLM has been known to work, and these Top Network Marketing Companies are proof of that.

Common Terms Used In Multi-Level Marketing

Types of multi-level marketing business models.

There are three main types of MLM business models, and each follows a basic structure where participants fall in different levels and earning from their downline mostly up to two levels down.

Breakaway MLM Business Model

It’s possible to start as a salesperson and move up and earn more as you do. Once you are at a level where you qualify for a full bonus, you can break away to form your team. At this point, the only way to make money is by becoming a sales leader.

Uni-Level MLM Business Model

This business model has many of the participants working on the entry or first level, and the focus is mainly placed on this level. You can have as many people as you can on your first level to earn a commission from their sales. The model is somewhat similar to the breakaway model in that there’s no limit to your downline participants. However, you are limited to the level from which you can earn commission from.

Binary MLM Business Model

Using this model also has cap commissions to ensure that they don’t pay out more than they’ve earned.

Final Thoughts

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The Comprehensive Guide to Building a Successful MLM Company

Whether you’re starting a multi-level marketing (MLM) company from scratch or mapping out strategic growth plans for an already established MLM, there are seven essential focus areas that drive to be successful. From business plans and compensation structure through MLM software platforms and marketing strategies, here’s a comprehensive look at what you need to consider, prioritize, and accomplish along your road to success. 

How do you define MLM success?

Worldwide, MLM companies are a $180 billion industry, with nearly 120 million people working as independent sales representatives. Today’s MLMs sell a wide range of products and services, everything from cosmetics, home goods, and clothing through wellness products, financial services, and utilities. And while every MLM company is different, there are some common key performance indicators (KPIs) that will help you gauge if your company’s direct selling is successful. 

The first metric is related to the company’s structure and ensures that sales practices meet regulatory compliance requirements. In the U.S., FTC regulations require MLM companies to pay compensation to sales representatives based primarily on retail sales, not wholesale purchases or downline recruiting. MLMs that adopt a multi-level business structure but rely on sales to newly recruited representatives rather than retail sales to end customers are known as pyramid schemes and fail to meet FTC guidelines. 

The second KPI MLM companies share is, not surprisingly, a financial one related to revenues and profits. The basic revenue calculation – the sales price of a company’s product or service multiplied by the amount sold – combined with expense management will determine profit margins. Monitoring revenue totals, with expenses (including taxes) subtracted out, tells you the amount of profit that is hitting the company’s bottom line. 

Related:  Everything You Want to Know About MLMs and How They Make Money

People metrics are the third important success measure for MLM companies. MLMs succeed when their sales representatives succeed – and MLM organizations grow when they are able to expand their sales networks. As an industry, direct selling companies see high turnover rates among sales representatives.  Half of MLM representatives drop out within the first year. This makes rep recruiting and retention important KPIs when gauging success. In fact, when an MLM company can improve representative retention by just 10 percent, the company’s  revenue grows an estimated 49 percent  over ten years. 

With these MLM success metrics in mind, it’s time to dive into the seven essential focus areas for building a successful MLM company. 

1. Develop (or refine) your products or services.

For most MLM founders, the company starts with a passion for a product or service and a desire to share it with the world. But believing in a product isn’t enough. Invest time and resources to research and quantify the market opportunity whenever it’s time to develop a new product or service.

For MLM companies, determining the potential market opportunity for a new product or service is two-fold. The product must appeal to customers, and it must also be something that inspires representatives to advocate for and sell. Start by identifying products and services that can be differentiated from other similar offerings. Potential product differentiators can include quality, performance, design, or features. (Of course, being first to market with a unique product is a differentiator! But expect competition to follow and think about how your product offering will stand out for the long-term.)

Never assume that the product you love will automatically translate into market appeal. It’s important to research customer needs, interest levels, and willingness to purchase. This type of market research can be accomplished through a mix of formal research methods, such as surveys, focus groups, and product testing, and informal outreach like customer or sales representative interviews. Remember, you’re not only gauging interest levels, but you also need to determine how much your customers are willing to pay.

Typically, in order to cover the costs of marketing and the multi-level compensation plan model, an MLM should aim to offer products and services priced at a five times margin over the cost of goods. It’s critical to understand the value your potential target customers place on your product or solution and then to accurately estimate the number of potential customers. This is where you’ll want to dive deep into defining and understanding your target customer segments (see focus area 5 below). When you have an idea of how many potential customers there are, estimate the market penetration percentage you can realistically expect to achieve in years one, two, and three. Then, continue to assess the market opportunity as it evolves through changing buyer needs, market forces, competitor actions, and your own organization’s performance.

2. Make (or refresh) your business plan.

Most of the time, success doesn’t just happen. It results from careful strategic planning and execution. Successful MLM companies need to have a detailed three- to five-year business plan that is constantly referenced and updated. A good business plan serves as a roadmap whether you’re launching a new MLM business or growing an existing one. 

Your written business plan should outline your vision for the company’s future, its purpose, and goals. Then, it should lay out the objectives and actions you need to take to get there. An MLM business plan is a living document, always detailing a plan for at least the next three years and always evolving based on results and changing market conditions. 

Much like the steps outlined for product development, your business plan involves research and number-crunching to determine the resources you’ll need to achieve the sales and revenue goals you set. When creating or refreshing your company’s business plan, include target revenue, customer, and sales objectives for at least the next three years. These objectives should be challenging without being unrealistic. For example, you’ll need to know how many sales representatives you need to recruit – and how long it takes to onboard them – in order to achieve the sales objectives. Over time, as you have more results, you will be able to refine your projections and make them more precise. 

No matter what, sales forecasting is always a mix of art and science. Whenever you can, base your projections on past results and a data-based analysis of the future. Don’t stop at high-level totals. Break your sales objectives down by sales teams and representatives, factoring in levels of experience, local market conditions, and competitive forces. You should also incorporate insights about average transaction values for both new and repeat customers. By taking a detailed approach, you’ll be able to see where the team is outperforming or under-performing and help to take the guesswork out of making process, product, or pricing decisions down the road.

Related:  The Road to Better Sales Forecasting

As part of your business plan, always have a plan for rapid scaling in the case of higher than anticipated customer demand. You never want to miss an opportunity for exponential growth. Think through supplier, manufacturing, and logistical needs to determine what it would take to scale at 10, 100, or even 1,000 times the pace outlined in your initial plan. Knowing what you would need to do enables you to act decisively and quickly capitalize on opportunities – and provides peace of mind that you have a map to follow. 

3. Determine (or revisit) your compensation plan structure.

An MLM company’s compensation plan is a critical component in reaching both short- and long-term goals. While it’s not something you want to change frequently, it is important to monitor and manage the plan over time to ensure it continues to effectively deliver on its three primary purposes: to recognize, reward, and incent desired sales representative actions and behaviors. 

MLM compensation plans must balance the company’s pricing structure for its products and services along with the behaviors the company needs from its sales representatives. In fact, determining the right compensation plan to fit your company’s unique needs is one of the most important decisions MLM company leaders make. Effective compensation plans incentivize and reward the sales representatives your company will depend on to grow. But, if your compensation plan pays too little or is difficult to explain, it will have a direct impact on recruiting, retention, sales volume, and your overall bottom line. 

The compensation plan defines how your organization’s sales representatives will earn income through a combination of commissions on their direct sales, overrides on a percentage of their downline’s sales, or bonuses as they achieve levels and ranks. MLM compensation plans are based on the company’s multi-level structure, which is called the genealogy. As representatives join your company, they connect into the organization based on the representative who sponsored them. The new representative’s sponsoring rep is called an “upline” because the relationship appears above them in the organizational hierarchy. Then, as the new representative builds her business, she will also recruit representatives, creating a new “downline.” The inter-connected structure resembles a family’s genealogical record and provides the map for determining how and when representatives are eligible for compensation for particular sales based on where they sit within an upline or downline.

Related:  MLM Genealogy Trees – and How They Grow

Based on the underlying genealogy, the company’s compensation plan defines who will be compensated and how much they will earn. There are five basic types of MLM genealogy behind the majority of MLM compensation plans. The basic difference between these payout structures is how they define the number of representatives included in the genealogy’s “width” and “depth.”

• Binary:  A binary structure is focused on two downlines, which means the plan has a fixed width of two representatives, while its depth is unlimited. In other words, a representative enrolls two people, known as a two-leg downline. Each representative then enrolls two people, with the structure continuing in two-person tiers. The compensation is based on the sales volume generated in each of the legs, with representatives typically earning the majority of their compensation based on the lower-earning leg of their downline, which is called the “pay leg.” A binary structure is intended to encourage teamwork between the downline legs in order for representatives to optimize their earning opportunities.
• Matrix:  Matrix plans have fixed widths and fixed depths, which provide MLM companies with more control over compensation payout volumes. For example, if a company adopts a 3×9 matrix plan, each level is made up of three representatives, up to a maximum depth of nine levels. By limiting the number of people in a downline, matrix plans are designed to encourage representatives to strategize on the placement of the reps they sponsor as a way to maximize both payout amounts and downline growth.  The company determines the structure based on its strategic goals and the market opportunity for the products and services it sells. A matrix structure can be any width and depth, such as “4 x 7” or “3 x 9.” In a 3 x 9 matrix, the sponsoring representative’s first level – also known as their frontline – is three representatives wide. From there, each level below multiplies out in threes, up to a maximum depth of nine levels.
• Unilevel:  Unilevel structures are simple. The width is unlimited, meaning representatives can sponsor as many people as they want. When determining payouts, unilevel plans limit the downline’s depth. For example, a unilevel plan may pay a 5 percent commission per level to a depth of five levels. Unilevel compensation plans typically reward sales representatives based on how many levels they have beneath their frontline, with representatives achieving ranks within the organization based on recruiting and sales volume. As a result, unilevel structures are an appealing option for MLM companies with large numbers of part-time sales representatives.
• Stairstep breakaway:  Used by early MLM companies, breakaway plans enable representatives who achieve defined personal and group volumes to “break away” and start their own lines. Along with being more difficult to explain to new representatives, the breakaway structure can cause representatives to be primarily self-focused as they work toward the breakaway goal. After that, it may be hard for them to shift gears to focus on their downline’s success as the way to continue to achieve higher ranks and rewards within the organization.
• Hybrid:  Today, most MLM compensation plans take a hybrid approach, paying compensation based on both a placement genealogy and a sponsorship genealogy to better align with their strategies and growth goals. For example, a company may opt for a hybrid combination of binary and unilevel plans, with payouts for initial sales volumes based on a binary structure and payouts for ongoing sales volume based on a unilevel structure.

In addition to basic commission structures, MLM compensation plans also include additional earnings opportunities for bonuses and rank promotions. These types of programs provide MLM companies with additional options to incent and reward specific sales behaviors, such as recruiting representatives, selling certain products, or increasing retail sales. Ranks or bonuses can also be designed to reward representatives who actively support their downlines while remaining active in their own business. 

Of course, compliance is a critical consideration when building or refreshing MLM compensation plans. According to FTC regulations, MLM compensation must focus on retail sales to customers who are not part of the company’s genealogy structure. Both compensation and bonus plans must reward reps for retail sales, with bonuses and ranks designed to build a healthy retail customer base. Consulting with an attorney who specializes in the MLM industry is a best practice to ensure your company’s compensation plans don’t raise any regulatory red flags. An MLM attorney can also provide valuable guidance on product regulations, product label requirements, and international expansion. 

Related:  MLM Compensation: How to Build the Best Plan for Your Business

4. Choose (or evaluate) your MLM software. 

The next crucial area of focus is your company’s MLM software, which should function as the backbone of your technology platform. Not only does the right choice of software enable your company to grow and scale through vital business-building tools and capabilities for your sales team, but it also streamlines your back-office functions, increases the accuracy of commission and incentive payouts through automation, and helps you address compliance requirements. 

In other words, your MLM software impacts every part of your business – back-office, representative experience, and customer experience. Choosing – or evaluating your current software – is critical to ensure that field sales representatives have access to vital sales tools like replicated websites, e-commerce sales capabilities, live and social selling options, customer profile management, and a mobile app. Via a representative portal, your MLM software also streamlines business management for the sales team with online ordering, sales, customer and genealogy reports, and commission statements. 

For the corporate back office, focus on MLM software functionality that automates and integrates your business, including field and customer management, lead management, inventory management, shipping fulfillment, payment processing, and commission calculations and payouts. You’ll also want it to have robust reporting capabilities, so you’re able to easily access and analyze the data you need to make strategy decisions. 

Look for an MLM software provider that has extensive direct selling software expertise and industry experience. Your goal is to establish a partnership with an MLM software provider that meets your company’s current needs and is able to adapt and expand functionality as you need it. Regular software enhancements are a must to ensure you can keep up with market expectations and optimize what technology can do for your business. Choose an MLM software provider with a proven track record of innovation and a regular cadence for enhancements provided at no additional cost. 

Ongoing, accessible user support is another important consideration. The best MLM software providers will offer access to dedicated, live support specialists who understand the MLM industry and your company. Be wary of providers who offer an executive or sales rep as your support contact. That’s a red flag that often results in slow and incorrect responses. You and your team should be able to reach out to talk with dedicated support specialists whenever you need to, via phone or live online chat. 

Related:  What Type of MLM Software Support Should You Expect?

Like any major business investment, cost is always an important consideration. When it comes to determining what you should pay for MLM software, look for pricing that’s based on the features you need right now, with a significant amount of functionality that can be “turned on” down the road as your company needs it. This way, you’re not paying for capabilities you’re not using, but you can be confident that the provider will be able to deliver advanced features as your company grows.

Expect to pay money upfront. If an MLM software provider offers to “take a risk” and cover the upfront costs, you should think twice. They will likely need to make up the cost somewhere else, such as fewer upgrades, hidden extra costs, or reduced user support. For high-quality MLM software that fits your business, expect to pay between $20,000 and $35,000 in upfront costs.

You should also seek to pay flat rate hosting fees, without additional hosting fees per order or per sales representative. This type of fixed monthly hosting fee means you’re able to establish a budget without running into surprise software expenses. Flat-rate monthly hosting fees should usually fall in the $3,000 to $4,000 range – and include ongoing support, service, and regular upgrades. 

Related:  How to Find the Right MLM Software at the Right Price

5. Map out your marketing. 

Marketing is essential to MLM success – and it starts with a deep understanding of your target markets. With your business plan as a starting point, create detailed profiles of your ideal customers and representatives – the more details, the better. Tap into external research, like focus groups and rep and customer interviews, as well as data available through your MLM software platform. You’re looking to create profiles that include both demographic and psychographic attributes. 

• Demographics, such as age, gender, ethnicity, marital status, education levels, and income, define who your target audiences are.
• Psychographics, like attitudes, interests, values, hobbies, and spending habits, complement the demographics to help explain why your target becomes a customer or representative. 

With your target audiences in mind, define – or refine — your brand. A strong MLM brand can be an extremely valuable asset for your company, helping to propel awareness, sales, and customer loyalty while establishing credibility among potential sales representatives. 

An MLM brand is more than a logo. Think of your brand as your company’s personality as your target audiences perceive it. Every experience and interaction impact their perceptions and add – or detract – from your brand’s value. That means consistency in messaging, tone, and visuals is key. From in-person events and online interactions, through website, product, and service experiences, it all adds up. The cumulative impact of positive experiences will build increased recognition, purchase preferences, and long-term loyalty. When companies consistently present their brand, they  achieve 33 percent higher revenues , on average.

Related:  6 Essential Steps to Building a Strong MLM Brand

Today, web experience is one of the most important elements of an MLM company’s marketing and brand strategy. Your website is often the first experience that customers and sales representatives have with your brand. That makes the design, capabilities, and user experience essential focus areas.

Your MLM software will be at the center of your web strategy, enabling you to create and deliver online experiences that support your brand and are tailored for the audience. The first step is building or refreshing your corporate website, considering branding, look and feel, content, and functionality. Once you have your corporate site, your MLM software platform should make it easy to create replicated websites for each MLM sales representative. 

A replicated site is built around the brand guidelines you set but provides a unique URL and the flexibility for representatives to customize what’s featured on their site. This way, each representative is able to have their own personalized website to help them build their business, but it’s also connected to your back end MLM software capabilities like payment processing, shipping fulfillment, inventory management, and reporting. In addition, replicated websites ensure brand consistency by providing formatting, product descriptions, and images for the sales representatives to use. 

Pay special attention to the e-commerce capabilities available through your MLM software platform. Today,  70 percent of Americans  are shopping online, and they have high expectations. Make sure your MLM software is keeping you ahead of the curve with capabilities like shop-by-category functionality, personalized product recommendations, the ability to carry your branding through to the customer’s shopping cart, and the option to tag products to highlight best sellers, new items, discounts, and pre-orders as customers shop.

In addition, along with customer-facing replicated websites, your MLM software should also provide robust rep portal capabilities, including business-building tools for sales representatives. For example, through your representative portal, sales reps should be able to access customer profile data and genealogy views, manage their inventory, view commission statements, and run reports in real-time. 

6. Be strategic about recruiting.

The secret to MLM success isn’t just about selling your products and services. Recruiting and retaining successful MLM sales representatives is equally important. As you build and refresh your company’s strategies, recruiting and retention should be considerations in nearly every decision you make.

Your sales representatives and potential sales representatives are key customer segments. Do your homework to understand both the demographics and the psychographics – or what makes them tick – so you’re able to create a profile of the ideal representative for your company. Then, turn that knowledge into powerful recruiting and retention strategies. 

Build in tools and support to help representatives tell your organization’s story and articulate the opportunity of becoming a sales representative. For example, feature click-able access to the details about who you’re looking for, what the role is, and the potential for success on your corporate and replicated representative websites. Make it easy for interested customers to take action by enrolling online, including promoting the opportunity as people shop by offering promotional incentives when they enroll.

But don’t stop there. Take a strategic approach to your representative onboarding experience, which lays the groundwork for sales success. Research shows that organizations that deliver standardized onboarding programs achieve  62 percent greater productivity  and 50 percent higher retention rates. Integrated, ongoing training pays off, too. When companies offer comprehensive training, reps earn more, the company achieves higher profit margins, and retention rates increase. Seven in ten people who work for organizations that provide training to enhance sales and marketing skills say it influences their decision to stay. Notably, this number jumps to nine in ten for those in the Millennial generation.

7. Get growing. 

Growth is a focus of MLM companies, no matter how long they’ve been in business. In today’s fast-paced, quickly changing marketplace, companies have to be prepared to adapt and pivot in order to achieve growth goals. As a result, the ability to access and analyze data is imperative. Your MLM software should bring all of your data – customer, sales, representative, inventory, and more – together. Set up automated reports to keep your finger on the pulse of your business. 

At some point, you will likely want to evaluate opportunities to expand your business into international markets as a way to grow. On the surface, with the MLM sales model providing a cost-efficient way for introducing a company and its products into a new market, expanding internationally may seem like a no-brainer. However, each market is unique, and the cultural, language, and currency differences must be carefully assessed. You’ll also want to understand the different regulatory requirements and the available technology infrastructure. To help you evaluate international opportunities, tap into the expertise of your MLM software provider, and seek the advice of an experienced MLM attorney.

Related:  Should MLM Companies Do Business Internationally?

One of the most powerful growth strategies for any MLM is the ability to drive repeat purchases. The MLM sales model creates strong, personalized relationships between sales representatives and their community of customers. Make sure you’re making the most of these relationships by creating memorable customer experiences that strengthen loyalty. There’s a tangible benefit for your bottom line. Loyal customers are  five times more likely  to make repeat purchases and nine times more willing to try new products. And when you’re able to increase customer retention by just 5 percent, your company can expect to  boost revenues by 25 to 95 percent .  

The road to MLM success almost always comes with unexpected turns and obstacles. ByDesign can help you along your company’s journey. With 20 years of experience in the MLM industry and lessons learned while serving more than 1,000 clients over the years, our MLM software solutions can help you optimize your operations and focus on growth. Learn more at  ByDesign.com  or  contact us  to schedule a mlm software consultation today. 

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• Do You Have the Right MLM Software for Your Reps? A Technology Assessment Tool

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Home » Sample Business Plans » Wholesale & Retail

How to Write a MLM Business Plan [Sample Template]

Are you about starting a starting a network marketing business? If YES, here’s a complete sample network marketing business plan template & feasibility report you can use for FREE to raise money . Marketing is one of the best tools that can attract loads of people. This is one of the very reasons why network marketing agencies have come to be.

If you have a natural penchant for marketing and meeting people, you may want to consider starting a network marketing agency business. This is a great way to start a trade anytime and anyway.

A Sample Multi Level Marketing Business Plan Template

1. industry overview.

Network marketing business is generally referred to as a business opportunity that is very popular with people looking for part-time and perhaps flexible means of earning additional income. Some of the leading network marketing companies in the united states are Forever Living Products, Fuel Freedom International, Avon Products, Mary Kay Cosmetics and Tupperware et al.

Network marketing which can also be referred to as Multi-level Marketing (MLM) or Pyramid selling or affiliate marketing et al is a controversial marketing strategy in which the sales force is compensated not only for the sales they able to generate, but also for the sales of the other salespeople (down – line / team members) that they recruit.

In the United States of America and of course in most countries of the world, companies that leverage of network marketing approach for compensation have been a frequent subject of criticism and lawsuits.

Generally, criticism has been focused on their similarity to illegal pyramid schemes, price fixing of their products, high initial costs for registering (the amount needed to purchase marketing kit and first products), emphasis on their recruitment strategies and loads of other technique that seems not to be plain and easy.

Research carried out by The Direct Selling Association (DSA) of which network marketing us under, shows that in 1990, 25 percent of members used network marketing, growing to 77.3 percent in 1999. By 2009, 94.2 percent of The Direct Selling Association (DSA) members were using network marketing, accounting for 99.6 percent of sellers, and 97.1 percent of sales.

The research also shows that companies such as Avon, Electrolux, Tupperware, and Kirby all initially used single level marketing to sell their products and later introduced network marketing compensation plans. The Direct Selling Association (DSA) in the United States has approximately 200 registered members, while it is estimated there are approximately 1,000 firms using network marketing in the United States alone.

It is important to state that network marketing companies operate in all the 50 states in U.S. Over and above, network marketing has become one of the best options for stay at home mothers or anyone who intend making money without registering their own personal business or directly working for an organization.

So if you have the intention of starting your own network marketing company, then you should ensure that you select a product that is easily sellable and of course a good reward system for network marketers under your scheme. You should also ensure that you conduct a thorough feasibility studies and market survey before launching your network marketing company.

2. Executive Summary

Good Life® Network Marketing, Inc. is a U.S based and world class network marketing company. We have been able to secure a standard and well – positioned office facility in a central business district in Carson City – Nevada.

We are a network marketing company that is set to compete in the highly competitive network marketing industry not only in the United States market, but also in the global market because our clientele base will not be restricted to just individuals in the United States.

Good Life® Network Marketing, Inc. will manufacture and retail cosmetic products in the United States and in other parts of the world via network marketing. Our business goal is to become one of the leading network marketing companies in the United States of America with a robust network of individual clients scattered all around the United States and the world.

Our back office staff members are going to be selected from a pool of talented and highly creative experts in and around Carson City – Nevada and also from any part of the world as the business grows.

We will make sure that we take all the members of our workforce through the required trainings that will position them to meet the expectation of the company and to compete with leading network marketing companies in the United States and throughout the globe.

At Good Life® Network Marketing, Inc., our network marketers and client’s best interest will always come first, and everything we do will be guided by our values and professional ethics. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

We will cultivate a working environment that provides a human, sustainable approach to earning a living, and living in our world, for our partners, employees and for our clients. Good Life® Network Marketing, Inc. is founded by Rooney Wilberforce and his friend and business partner for many years Festus Holloway.

They both graduated from University of California – Beckley with BSc in Business Administration and Marketing respectively and they have a combine experience that revolves around market researching, sales, network marketing and advertising and business management et al.

3. Our Products and Services

Good Life® Network Marketing, Inc. was established with the aim of maximizing profits in the Network Marketing industry. We want to compete favorably with the leading network marketing companies in the United States of America and the world which is why we have but in place a competent team that will ensure that we meet and even surpass our network marketers and customers’ expectations.

We will work hard to ensure that Good Life® Network Marketing, Inc. do not just recruit network marketers and sell her products to clients in the United States of America, but also for clients in other parts of the world. Our products and services are listed below;

• Sell of cosmetic products via network marketing model (reward network marketers under our scheme)

4. Our Mission and Vision Statement

• Our vision is to establish a standard and world class network marketing company whose products and brand will not only be accepted in the United States of America, but also in other parts of the world.
• Our mission is to become amongst the top 20 network marketing companies in the world; a company that will be known for sincerity and one of the best reward system for network marketers.
• We want to build a network marketing company that can favorably compete with other leading brands in the network marketing agencies industry.

Our Business Structure

Good Life® Network Marketing, Inc., is a network marketing company that intend starting small in Carson City – Nevada, but hope to grow big in order to compete favorably with leading network marketing agencies in the industry both in the United States and on a global stage.

We are aware of the importance of building a solid business structure that can support the picture of the kind of world class business we want to own. This is why we are committed to only hire the best hands within our area of operations.

At Good Life® Network Marketing, Inc., we will ensure that we hire people that are qualified, hardworking, and creative, result driven, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders (the owners, workforce, network marketers and customers).

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more as agreed by the board of trustees of the company. In view of the above, we have decided to hire qualified and competent hands to occupy the following positions;

• Chief Executive Officer
• Creative Director

Network Marketing Specialist

Human Resources and Admin Manager

• Sales and Marketing Executive

Network Marketers / Freelance Marketers

• Client Service Executive / Call Center Agents

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
• Responsible for providing direction for the business
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization

Creative Director:

• Serves as project manager of the organization; works directly with the product manufacturing team and the network marketing team
• Responsible for designing concepts and winning business proposals for the organization
• Develops strategic plan by studying technological and financial opportunities; presenting assumptions; recommending objectives.
• Accomplishes subsidiary objectives by establishing plans, budgets, and results measurements; allocating resources; reviewing progress; making mid-course corrections.
• Coordinates efforts by establishing procurement, production, marketing, field, and technical services policies and practices; coordinating actions with corporate staff.
• Builds company image by collaborating with customers, government, community organizations, and employees; enforcing ethical business practices.
• Maintains quality service by establishing and enforcing organization standards.
• Maintains professional and technical knowledge by attending educational workshops; reviewing professional publications; establishing personal networks; benchmarking state-of-the-art practices; participating in professional societies.
• Makes certain that operations and marketing department perform efficiently, coordinate employee efforts, and facilitate communications between management and employees
• Part of the team responsible for training network marketers / freelance marketers
• Ensures that the organization work in line with international best practices.
• Responsible for handling core network marketing services such as reward system, monitoring team progress, expanding the scope of the network and penalizing erring members under our network.
• Serves as compliance and quality assurance manager for the organization
• Handle other related network marketing advisory and consulting services
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Designs job descriptions with KPI to drive performance management for clients
• Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carrying out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Updates job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.
• Oversees the smooth running of the daily back office activities.

Sales and Marketing Manager

• Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data generated by customer
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
• Writes winning proposal documents, negotiate fees and rates in line with organizations’ policy
• Responsible for handling business research, market surveys and feasibility studies for clients
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Develops, executes and evaluates new plans for expanding increase sales
• Creates new markets cum businesses for the organization
• Empower and motivates the sales team to meet and surpass agreed targets

Accountant / Cashier:

• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting for one or more properties.
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for Good Life® Network Marketing, Inc.
• Serves as internal auditor for Good Life® Network Marketing, Inc.
• Responsible for selling the company’s products (cosmetics products) via network marketing models and getting reward / commission
• Responsible for creating content / buzz words that will help attract more networks marketers
• Responsible for managing team members under his or her network
• Responsible for engaging internet users and people around his or her community to get help statistics and leads
• Liaising and working effectively With other our back office staff and network members to generate sales for the business

Client Service Executive

• Welcomes clients and potential clients by greeting them in person, online or on the telephone; answering or directing inquiries.
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the creative director in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients when they make enquiries.

6. SWOT Analysis

Good Life® Network Marketing, Inc. engaged the services of a core professional in the area of business consulting and structuring to assist our organization in building a well – structured network marketing business that can favorably compete in the highly competitive network marketing agencies industry in the United States and the world at large.

Part of what the team of business consultant did was to work with the management of our organization in conducting a SWOT analysis for Good Life® Network Marketing, Inc. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Good Life® Network Marketing, Inc.;

Our core strength lies in the power of our team; our workforce. We have a team of creative, result driven and highly proficient network marketing expert, a team with excellent qualifications and experience various niche areas in the network marketing agencies industry and other related industry.

Aside from the synergy that exist in our carefully selected back office staff members and network marketing experts, our products are easily marketable and our reward system is one of the easiest amongst network marketing companies and will be guided by best practices in the industry.

As a new network marketing company in Carson City – Nevada, it might take some time for our organization to break into the market and gain acceptance especially from top experienced network marketers in the already saturated and highly competitive network marketing industry; that is perhaps our major weakness. Another weakness is that we may not have the required cash to pump into promoting our business the way we would want to.

• Opportunities:

No doubt, the opportunities available in the network marketing industry is massive especially when you are ready to play by the books and also considering the number of individuals who would not only want to make use of our cosmetic products, but would also want to make money by selling the products as independent marketers, recruiting down – lines, building a robust network and earning good commission from doing same.

As a standard and world class network marketing company, we are ready to take advantage of any opportunity that is available in the industry.

Aside from unfavorable government policies, just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing / spending power.

Another threat that may likely confront us is the arrival of a network marketing company or even a company retailing same cosmetic products like us in same location where our target market exist and who may want to adopt same Business model like us.

7. MARKET ANALYSIS

• Market Trends

If you are conversant with network marketing business, you will agree that it is quite challenging for them to survive that tough and unfriendly terrain that they are expected to operate in. As a matter of fact, most people still see network marketing companies as fraudulent, with a very difficult reward system.

In view of that, most network marketing companies are trying as much as they can to make people believe that they are genuine and are out there not just to make profits, but also to help people – those under their network marketing scheme make additional income without becoming a full – time employee of the organization.

Another notable trend in the network marketing industry is that most network marketing companies go beyond just giving commissions to network markets under their company when they sell their products or recruit down – lines under their network, but also encourage them by rewarding them with mouthwatering gifts when they hit a milestone.

Such gifts go beyond electronics, and cars et al. Some of them win all expense paid trips to notable tourist destinations as a result of their work.

This is one of the reasons why no network marketing company survives without constantly throwing out promos that will encourage and motivate the team to continue to perform thereby creating a win – win situation for the company and of course for the network marketers.

8. Our Target Market

Before starting our network marketing company, we are certain that there are loads of people out there; employed and unemployed who would want to make money and get their life going or make addition income from a business that is flexible.

In view of that, we have created strategies that will enable us reach out to stay at home moms, unemployed, employed and student et al who would want to make cool cash from using our products, and also referring or selling our products.

We have conducted our market research and survey and we will ensure that we meet and surpass the expectations of our clients Below is a list of the people and organizations that we have specifically market our product and network marketing services to;

• Unemployed people
• Employed people
• Corporate executives
• Business men and Business women
• Entrepreneurs and Start – Ups

Our Competitive Advantage

Surviving as a network marketing company goes beyond having the right products, but also having a full grasp of the network marketing industry, playing by the books, and having a good and easy reward system that will encourage people to join your network with little or no stress

We are quite aware that to be highly competitive in the network marketing industry means that you are not only expected to be able to retail good and reliable products and excellent customer services, but you must be result driven and able to create a network marketing system that everyone out there would not only find it easier to understand, but would want to freely join and recommend people to join.

No one would want to continue to remain as member of your network marketing company if don’t always meet up with the target date of paying out commissions or earnings as the case may be.

Our competitive advantage lies in the power of our team; our workforce. We have a team of creative, result driven and highly proficient network marketing experts, a team with excellent qualifications and experience various niche areas in the network marketing industry and other related industry.

Lastly, all our employees (back office staff members) and network marketers will be well taken care of, and their welfare package will be among the best within our category (startups network marketing companies in the United States) in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and achieve all our business aims and objectives.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Good Life® Network Marketing, Inc. is established with the aim of maximizing profits in the network marketing industry and we are going to go all the way to ensure that we do all it takes to meet and surpass the expectations of all our network marketers that will enroll in our company.

Basically, Good Life® Network Marketing, Inc. will generate income by offering the following network marketing services and other related services;

10. Sales Forecast

One thing is certain, there would always be loads of people out there; employed and unemployed, students, business men and business women et al, who would want to make money and get their lives going or make addition income from a business that is as flexible as network marketing company.

We are well positioned to take on the available market in network marketing industry and we are quite optimistic that we will meet our set target of building a robust network marketers and generating enough income / profits from the first six month of operations and grow our network marketing company to favorably compete with the likes of Forever Living Products, Fuel Freedom International, Avon Products, Mary Kay Cosmetics and Tupperware et al.

We have been able to critically examine the network marketing space and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projection are based on information gathered on the field, our products (cosmetics products) and some assumptions that are peculiar to similar startups in Carson City – Nevada.

Below are the sales projection for Good Life® Network Marketing, Inc., it is based on the location of our business and of course the kind of products we want to retail and target market;

• First Fiscal Year-: $250,000
• Second Fiscal Year-: $700,000
• Third Fiscal Year-: $1.5 million

N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same products ( cosmetics products ) and network marketing model as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

We are mindful of the fact that there is stiffer competition in the network marketing industry; hence we have been able to hire some of the best marketing experts to handle our sales and marketing concerns.

Our sales and marketing team will be recruited based on their vast experience of the network marketing industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall business goal of Good Life® Network Marketing, Inc.

Our corporate goal is to grow Good Life® Network Marketing, Inc. to become one of the leading network marketing brands in the United States of America and the world at large which is why we have mapped out strategy that will help us take advantage of the available market and grow to become a major force to reckon with not only in the United States of America but also in other parts of the world.

Good Life® Network Marketing, Inc. is set to make use of the following marketing and sales strategies to attract network marketer

• Introduce our network marketing company by sending introductory letters alongside our brochure to individuals, unemployed, business men and business women, students, religious organizations and key stake holders.
• Advertise our business in relevant business magazines, newspapers, and other media platforms.
• List our business on yellow pages ads (local directories)
• Attend relevant international and local expos, seminars, and business fairs et al
• Create different packages for different category of clients in order to work with their budgets and still accommodate them in our network
• Leverage on the internet to promote our business
• Engage in direct marketing approach
• Encourage word of mouth marketing from loyal and satisfied network marketers

11. Publicity and Advertising Strategy

We have been able to work with our in house brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to become the number one choice for people who reside in the whole of the United States and beyond which is why we have made provisions for effective publicity and advertisement of our network marketing company.

Below are the platforms we intend to leverage on to promote and advertise Good Life® Network Marketing, Inc.;

• Place adverts on both print (newspapers and magazines) and electronic media platforms
• Sponsor relevant community based events / programs
• Leverage on the internet and social media platforms like; Instagram, Facebook , twitter, YouTube, Google + et al to promote our products and network marketing brand
• Install our Bill Boards on strategic locations all around Carson City – Nevada
• Engage in road show from time to time in targeted neighborhoods
• Distribute our fliers and handbills in target areas
• Contact households, schools and religious organizations by calling them up and informing them of Good Life® Network Marketing, Inc. and the products and services we offer
• List our network marketing company in local directories / yellow pages
• Advertise our network marketing company in our official website and employ strategies that will help us pull traffic to the site.
• Ensure that all our staff members and network marketers wear our branded shirts and all our vehicles are well branded with our company logo et al.

12. Our Pricing Strategy

At Good Life® Network Marketing, Inc. we will keep the prices of our products and starter packs / kits below the average market rate for all of our network marketers / customers by keeping our overhead low and by collecting payment in advance from network marketers who would sign into our network marketing scheme.

• Payment Options

At Good Life® Network Marketing, Inc., our payment policy will be all inclusive because we are quite aware that different people prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;

• Payment by via bank transfer
• Payment via online bank transfer
• Payment via check
• Payment via bank draft
• Payment via mobile money
• Payment with cash

In view of the above, we have chosen banking platforms that will help us achieve our plans with little or no itches. Our bank account numbers will be made available on our website and promotional materials to network marketers / clients who may want to deposit cash or make online transfer for the purchase of our starter pack / kit.

13. Startup Expenditure (Budget)

In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting a place, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be creative and productive.

This means that the start-up can either be low or high depending on your goals, vision and aspirations for your business. The materials and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked.

As for the detailed cost analysis for starting a network marketing company; it might differ in other countries due to the value of their money. However, this is what it would cost us to setup Good Life® Network Marketing, Inc. in the United of America;

• Business incorporating fees in the United States of America will cost – $750.
• The budget for Liability insurance, permits and license will cost – $3,500
• Acquiring an office space or warehouse that will accommodate the number of employees and our products (cosmetic products / starter pack) for at least 6 months (Re – Construction of the facility inclusive) will cost – $150,000.
• Equipping the office (computers, printers, projectors, markers, servers / internet facility, furniture, telephones, filing cabinets, and electronics) will cost – $30,000
• Amount required to purchase the needed software applications – $3,500
• Launching an official Website will cost – $500
• The cost for purchase of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) – $10,500
• Amount need to pay bills and staff members for at least 2 to 3 months – $70,000
• Additional Expenditure such as Business cards, Signage, Adverts and Promotions will cost – $5,000
• Miscellaneous – $5000

Going by the report from the market research and feasibility studies conducted, we will need about two hundred and fifty thousand ( 250,000 ) U.S. dollars to successfully set – up a medium scale but standard network marketing company in the United States of America.

Generating Funding / Startup Capital for Good Life® Network Marketing, Inc.

Good Life® Network Marketing, Inc. is a business that will be owned, financed and managed by Rooney Wilberforce and his friend and business partner for many years Festus Holloway. They are the sole financial of the business which is why they decided to restrict the sourcing of the start – up capital for the business to just three major sources.

These are the areas we intend generating our start – up capital;

• Generate part of the start – up capital from personal savings and sale of his stocks
• Generate part of the start – up capital from friends and other extended family members
• Generate a larger chunk of the startup capital from the bank (loan facility).

N.B: We have been able to generate about $100,000 (Personal savings $85,000 and soft loan from family members $15,000 ) and we are at the final stages of obtaining a loan facility of $150,000 from our bank. All the papers and document has been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.

One of our major goals of starting Good Life® Network Marketing, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning network marketers and potential marketers over is to our network marketing services is to ensure that we create a reward system that is easy and fair to all, and also to make our starter pack / kit highly affordable.

We will also ensure that at regular intervals we come up with mouthwatering promos that people who are not interested in network marketing will find it difficult to resist.

Good Life® Network Marketing, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare is well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List / Milestone

• Business Name Availability Check:>Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts various banks in the United States: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Securing a standard office facility and warehouse facility in a good location: Completed
• Application for business license and permit: Completed
• Purchase of All form of Insurance for the Business: Completed
• Conducting Feasibility Studies: Completed
• Generating part of the start – up capital from the founders: Completed
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress
• Design of Logo for the business: Completed
• Secure trademark for our products: In Progress
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the Needed furniture, office equipment, software applications, electronic appliances and facility facelift: In Progress
• Creating Official Website for the business: In Progress
• Creating Awareness for the business: In Progress
• Health and Safety and Fire Safety Arrangement: In Progress
• Establishing business relationship with vendors and key players in various industries: In Progress

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Business Guidance Concerning Multi-Level Marketing

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Multi-level marketing is a diverse industry, employing many different structures and methods of selling. Although there may be significant differences in how multi-level marketers sell their products or services, core consumer protection principles are applicable to every member of the industry. Commission staff offers this non-binding guidance to assist multi-level marketers in applying those core principles to their business practices. [1]

Multi-Level Marketing and Pyramid Schemes

Deceptive earnings and product claims, agent liability, other compliance topics, 1.what is multi-level marketing.

Generally, a multi-level marketer (MLM) distributes products or services through a network of participants. Typically, the company does not directly recruit new participants, but relies on its existing participants to recruit additional participants, who, in turn, also recruit new participants. This creates multiple levels of participants organized in “downlines.”

A participant’s “downline” is the network of their recruits, and recruits of those recruits, and so on. A participant’s “upline” is the person who recruited them, and the person who recruited their recruiter, and so on.

2. Under Section 5 of the FTC Act, what is an MLM with an unlawful compensation structure, which is sometimes called a “pyramid scheme”?

The most widely cited description of a pyramid scheme appears in the FTC’s  Koscot  decision, which observed that such enterprises are “characterized by the payment by participants of money to the company in return for which they receive (1) the right to sell a product and (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to the sale of the product to ultimate users.”  In re Koscot Interplanetary, Inc. , 86 F.T.C. 1106, 1181, 1975 WL 173318, *59 (1975).

The assessment of an MLM’s compensation structure is a fact-specific determination that the FTC makes after careful investigation. The FTC, in accordance with established case law, focuses on how the structure as a whole operates in practice, including such factors as:

• marketing representations (e.g., statements that focus on or encourage recruitment rather than retail sales, and information provided to participants in training or events regarding recommended practices or how to make money);
• participant experiences (e.g., testimony from participants and information indicative of participant success or failure in the company—including amounts they purchased, sold, and earned, as well as the amount of additional expenses they incurred);
• the compensation plan (e.g., whether the plan requires participants to recruit additional participants to gain access to more lucrative rewards); and
• the incentives that the compensation structure creates for participants (e.g., incentives to focus on recruiting rather than product sales to real customers who don’t also participate in the MLM network, also referred to as non-participant end users, or incentives to make large or regular purchases in order to maintain eligibility for rewards).

3. How might consumers be harmed by an MLM operating as an illegal pyramid scheme?

The structure of illegal pyramid schemes may differ, and they may harm consumers in different ways. For example, in Koscot , the Commission described two ways that an illegal pyramid scheme’s compensation structure could cause financial injury to consumers.

• First, the Commission observed that the right to earn lucrative recruitment rewards could overrun an MLM’s retailing opportunity by making recruitment an end unto itself, resulting in “insufficient sales for the insupportably large number of distributors whose recruitment the system encourages.” Koscot , 1975 WL 173318, at *59.
• Second, the Commission concluded that “recruitment with rewards unrelated to product sales” was “nothing more than an elaborate chain letter device,” worthy of “categorical condemnation” under Section 5 of the FTC Act for its “inevitably deceptive representation … that any individual can recoup his or her investment by means of inducing others to invest.” Id . at *59-60.

MLMs operating as pyramid schemes harm participants in a number of ways, including by causing significant financial losses. The FTC has observed in many instances, for example, that a substantial majority of pyramid scheme participants lose money and time because they can’t sell enough products or services or recruit enough new participants. Such financial losses are inevitable due to the structure of the pyramid scheme and are not caused by a lack of effort or skill among participants. Additionally, pyramid schemes are made up of participants who themselves have invested money into the scheme and who cannot recoup that money without recruiting new participants into their downline. As a result, pyramid scheme participants have a financial incentive to make whatever claims will attract new recruits, even if those claims mislead potential new participants. 

In addition, participants who successfully recruit their family or friends put their family or friends’ financial security at risk. The consequence of being involved in a pyramid scheme can be so severe that some participants experience harm to their health, lose their housing, become estranged from friends and family, or declare bankruptcy.

4. What evidence does the FTC look at to decide if an MLM is operating as an illegal pyramid scheme?

As noted above in the answer to Question 2, the FTC will conduct a fact-intensive analysis to determine if an MLM is operating as a pyramid scheme. While each investigation is different, the FTC will look at, among other things, the behavior the MLM is incentivizing in participants, what income expectations it creates through its marketing, and how its participants are trained and compensated. The FTC may also look at data to evaluate, among other factors: (1) why individuals sign up to become participants, (2) how participants can and, in reality, do make money under the MLM’s compensation plan, and (3) who buys the products or services and why. These are examples only.

5. I’ve heard that an MLM is not a pyramid scheme if it pays rewards primarily for retail sales to ultimate users. I’ve also heard that an MLM is not a pyramid scheme if a company’s rewards are paid from revenue that primarily comes from retail sales to ultimate users. Which of these is the right standard?

Neither is the correct legal standard. There is no percentage-based test to determine whether an MLM is a pyramid scheme. A far more comprehensive analysis is required.

Under federal law, in a pyramid scheme, participants pay “money to the company in return for which they receive (1) the right to sell a product and  (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to the sale of product to ultimate users.” Koscot , 1975 WL 173318, at *59.

Under this standard, whether an MLM is a pyramid scheme depends on what the MLM’s compensation plan incentivizes as well as the rights the compensation plan offers to participants. An MLM operates as a pyramid scheme where the “focus [is] in promoting the program rather than selling the products.” FTC v. BurnLounge , 753 F.3d 878, 883 (9th Cir. 2014); see also FTC v. Noland , No. CV-20-47-PHX-DWL, 2023 WL 3372517, at *42 (D. Ariz. May 11, 2023) (“Put another way, the second prong of Koscot  is satisfied when “participants purchase the right to earn profits by recruiting other participants, who themselves are interested in recruitment fees rather than the sale of products.”).

In this inquiry, “courts look beyond a company’s policies and procedures and examine how the company operates in practice.”  FTC v. Vemma Nutrition Co. , No. 15-cv-01578, 2015 WL 11118111, at *10 (D. Ariz. Sept. 18, 2015), citing BurnLounge , 753 F.3d at 883. For example, a court has found that an MLM was a pyramid scheme when its “focus was recruitment…. Recruiting was built into the compensation structure in that recruiting led to eligibility for cash rewards and more recruiting led to higher rewards.” BurnLounge , 753 F.3d at 884. Similarly, another court held that an MLM was a pyramid scheme because, among other things, it “drove [] sales by pushing recruitment, taking advantage of the momentum from recruitment to sell large up-front product packs, urging large monthly purchases to stay on the path to financial freedom, and encouraging one’s recruits to do the same (i.e., to ‘duplicate’).”  Noland , 2023 WL 3372517, at *43.

Courts will look at the structure of the organization, both on paper and in practice, to see whether recruitment, rather than selling products, is the focus of the business opportunity. See BurnLounge , 753 F.3d at 884-7. Under Koscot , rewards need not be completely unrelated to retail sales. Id . at 886; see also Koscot , 1975 WL 173318, at *59 (“Indeed, even where rewards are based upon sales to consumers, a scheme which represents to all comers that they can recoup their investments by virtue of the product sales of their recruits  must end up disappointing those at the bottom who can find no recruits capable of making retail sales.”) (emphasis in original). Also, while purchases by participants do not per se result in a pyramid scheme, “evidence that distributors purchase and consume product for the purpose of qualifying for recruitment incentives is evidence of a pyramid scheme.” Vemma , 2015 WL 11118111, at *3. Where recruiting is necessary to earn significant rewards and the system is set up to motivate participants to earn rewards, rewards are for recruiting. BurnLounge , 753 F.3d at 887 (collecting cases).

6. If an MLM sells real products or services, does that make its compensation structure lawful?  

No. An MLM can sell real, even high-quality, products or services and still be a pyramid scheme. Similarly, having some or even many product or service sales to retail customers does not necessarily mean an MLM is not a pyramid scheme.

Not having a real product or retail customers can accentuate the harm caused by a pyramid scheme, but an MLM can be a pyramid scheme and harm consumers even if it has real products or many actual retail customers.

7. If rewards in an MLM’s compensation plan are only triggered by the sale of products or services by a participant or their downline, does that mean the MLM is not a pyramid scheme?

No. There is no safe harbor under the FTC Act for such a compensation plan. “To determine whether an MLM business is a pyramid, a court must look at [both] how the MLM business operates in practice” and the incentives “built into the compensation structure.” BurnLounge , 753 F.3d at 884. An MLM can be a pyramid scheme even if it offers rewards based on retailing. See id . at 885 ( Koscot “does not require that the rewards be completely unrelated to the sale of products”). The relevant test under Koscot  is whether the compensation structure, as a whole, gives participants the right to rewards for activity that is unrelated to the sale of the product or service to ultimate users, even if rewards are paid out in connection with reported retail sales. See Koscot , 1975 WL 173318, at *59 (“Indeed, even where rewards are based upon sales to consumers, a scheme which represents indiscriminately to all comers that they can recoup their investments by virtue of the product sales of their recruits must end up disappointing those at the bottom who can find no recruits capable of making retail sales.”).

Under this standard, if a compensation plan requires a participant to recruit a certain number of participants or have multiple levels of recruits to be eligible for significant compensation, then, in practice, the plan likely will incentivize recruiting even if the plan also imposes a requirement that compensation can be awarded only when a participant or their downline makes a sale or purchase. Participants will be incentivized to focus on recruitment to build a large downline, with the hope that someone in their downline will sell or buy products.

In addition, many compensation plans reward participants for purchases made by participants in their downline. Products or services that are purchased and consumed by participants to satisfy their own genuine personal demand do not themselves indicate a problematic MLM compensation structure. However, the FTC’s law enforcement experience has shown that many participants make purchases — and recruit or pressure other participants to buy products or services — for reasons unrelated to their own actual demand or their customers’ genuine retail demand. Such reasons include to obtain rewards or a particular rank under an MLM’s compensation plan, to help their upline maintain eligibility for particular rewards or get new rewards, or due to pressure from their upline or the MLM.

For example, in its prior investigations, Commission staff has observed MLMs where upline participants were often paid rewards for product purchases made by downline participants without regard for whether the product involved was consumed, retailed profitably, retailed at a loss, given away, or discarded. Commission staff has seen MLMs that permit participants to meet mandatory targets to qualify for particular compensation via participant purchases alone. Additionally, Commission staff has seen MLM participants who are encouraged to purchase products in order to qualify for more compensation or help their upline qualify for particular compensation. Commission staff has even seen MLMs in which participants made purchases in the names of fake customers, purportedly to satisfy sales requirements, and MLMs that either encourage or turn a blind eye to such practices.

An MLM that operates in any of these ways may run afoul of Koscot , especially when the MLM also requires or incentivizes participants to make recurring product purchases—for example, by premising rank advancement or reward eligibility on such purchases. Note that such purchasing incentives still may exist even when the compensation structure permits rank advancement or reward eligibility through other means, such as retail sales.

8. How does the FTC treat purchases made by participants in determining if an MLM is operating as a pyramid scheme?

This issue, like all issues concerning the evaluation of an MLM’s compensation structure, is fact-specific. However, when evaluating whether an MLM’s payment of compensation for participant purchases is, under Koscot, a reward that is unrelated to the sale of the product to ultimate users, the FTC is likely to consider several factors, including:

• MLMs that require participants to meet monthly or quarterly purchase quotas to maintain their eligibility for a particular compensation rank or bonus and allow participant purchases to count toward meeting those quotas. In the Commission’s experience, these MLMs are likely incentivizing inventory loading. Other examples of this practice include training participants to meet their sales quotas by purchasing products themselves, regardless of personal demand. But even in the absence of such explicit instruction, the incentive to purchase products to meet the sales quota may exist. A participant having difficulty finding customers sufficient to meet their quota during a slow month has a strong incentive to buy products to meet their quota and stay eligible for particular kinds or amounts of compensation;
• MLMs that require or encourage potential recruits to sign up as retail or “preferred” customers for some period of time before becoming participants. Purchases made during that time may be incentivized by the compensation plan and may not be indicative of true retail demand;
• MLM compensation plans that encourage duplication, or recruiting one participant who is encouraged to make a large initial purchase, who then recruits another participant who is encouraged to make the same large initial purchase, and so on. In the Commission’s experience, at least some participants are told to make the large initial purchase to build their business or to qualify for certain types of compensation and are not motivated by true retail demand;
• Whether participants are ever encouraged by the company or other participants to purchase products for reasons other than true retail demand or to falsely attest that personal purchases represent sales to family members, friends, or other purported end users; and
• Whether particular purchases by participants were made for reasons other than to satisfy personal or retail demand.

The persuasiveness of this information in any particular case will depend on its reliability.

9. What types of evidence suggest participants are not buying product due to genuine personal or retail demand?

The FTC’s case against BurnLounge provides an example. BurnLounge argued that its participants bought product packages consisting of sales websites and music-related merchandise because they wanted to use the merchandise. However, when a court ordered BurnLounge to untie its product packages from the business opportunity, monthly sales of these packages plummeted by almost 98 percent. BurnLounge , 753 F.3d at 885. This demonstrated that most packages had been bought in pursuit of the opportunity to earn income rather than due to genuine personal demand. At most, such demand was responsible for only a small minority of package sales, and the court found BurnLounge used an unfair or deceptive compensation structure.

Similarly, in  AdvoCare , the Commission alleged that participants had to meet minimum purchase requirements each pay period to earn income, qualify for bonuses, and maintain their compensation level. Even in typically slower retail sales months, such as January — coming right after the holidays — the business still required participants to meet the same purchase thresholds each pay period or lose their compensation level and bonus eligibility. The FTC alleged that because of AdvoCare’s compensation plan its participants made purchases in furtherance of the business opportunity rather than to satisfy genuine personal or retail demand.

These are examples only. As noted above, the FTC will conduct a fact-intensive analysis to determine if an MLM is operating as a pyramid scheme.

10. What is “inventory loading”? Do MLM buyback provisions protect participants from losses due to inventory loading?

“Inventory loading” refers to product or service purchases made so that a participant in the MLM can qualify for compensation (including payments, rewards, promotions, and discounts), receive increased compensation, or otherwise advance in the marketing program, rather than to satisfy genuine personal or retail demand. For example, participants may buy product to meet certain “volume” thresholds or to satisfy requests from their uplines.

Participants may or may not understand at the time of purchase that their product or service purchases amount to inventory loading. They may be responding to various arguments MLMs and other participants use to motivate purchasing, such as: it’s not risky to purchase extra because the product is easy to sell, participants need to look like avid users of the product in order to be successful salespeople, and product purchases represent an investment that will lead to a future return. Whatever the argument, participants can find themselves with financial losses when forced or encouraged to buy product or services that they neither want for personal use nor can sell for profit.

“Buyback provisions,” which allow participants to return unsold product to the MLM for a refund, can benefit participants, but do not shield an unlawful pyramid scheme from law enforcement. As a general matter, money-back guarantees and refunds are not defenses for violations of the FTC Act. Specifically, a refund policy is not a defense for marketing an unlawful MLM compensation structure or for making deceptive income or lifestyle claims, as consumers may still be harmed even with a refund policy.

Even where a buyback provision is offered, policies surrounding its implementation may dissuade or prevent dissatisfied participants from seeking a refund. For example, participants may be unaware of their right to a refund; the refund process may be too complicated or difficult to navigate; upline recruiters may pressure recruits to not seek refunds because doing so may hurt the upline’s status or compensation; the refund policy may be limited based on factors such as age or condition of the product; or obtaining a refund may require quitting the opportunity entirely.

Also, if the conditions and incentives related to obtaining a refund under a buyback program are not apparent to participants (as FTC staff has seen in certain instances), the buyback provision may increase consumer harm. For example, consumers may be misled into believing that the buyback program makes the opportunity “risk-free” and purchase more products – increasing their overall losses.

In addition, buyback provisions do not protect against harm from various other — potentially quite substantial — business expenses, such as travel for conferences, tools or services, and training. They also do not compensate a participant for all the time spent pursuing the income opportunity.

11. Does the FTC Act require MLMs to retain sales receipts?

No, there is no such requirement. However, as discussed above, to comply with the FTC Act, an MLM’s compensation structure must pay compensation for sales to ultimate users, among other requirements. Thus, receipts documenting actual sales to real customers who don’t participate in the MLM network would provide relevant — but not dispositive — evidence concerning an MLM’s legality.

There is no single method for creating and retaining such documentation. Different MLMs use a variety of approaches to show that their product or service is sold to retail customers, including collecting retail sales receipts created by participants; having retail customers buy product directly from the company, rather than from a participant’s inventory; and having product users sign up with the company as customers who are not participating in the business opportunity.

The most credible documentation is obtained through direct methods and used to verify that retail sales are made to real customers. Documentation obtained through indirect methods—like participant attestations or checkboxes—is less likely to be persuasive, with unsupported assertions being even less persuasive.

12. My MLM has many retail customers who do not participate in the business opportunity, and the vast majority of revenue comes from those customers. Does that mean my MLM is not a pyramid scheme?

Having retail customers or even many retail customers is not a safe harbor. As noted above, the issue of whether an MLM operates as a pyramid scheme is fact-specific, and one key question is what an MLM compensation plan incentivizes. See Response to Question No. 5 for more details.

13. How should an MLM approach representations about income and earnings to current and prospective participants?

An MLM’s or its participant’s representations related to the business opportunity, including earnings claims, violate Section 5 of the FTC Act if they are material to consumers and false, misleading, or unsubstantiated. This is true wherever the representations are made, including on social media, in live presentations, in one-on-one conversations, or in any other medium.

Whether representations are deceptive is a fact-specific inquiry, but here are some guiding principles about earnings claims:

• Any earnings claim should reflect what the typical person to whom the representation is directed is likely to achieve in income, profit, or appreciation.
• For example, should expenses nullify income for many participants, a claim that participants are likely to earn any money would likely leave a net impression that is deceptive.
• An MLM or participant making claims about MLM income must have a reasonable basis for the claims disseminated to current or prospective participants about the business opportunity at the time it makes the claims. A “reasonable basis” means reliable, empirical evidence that supports the claim, not subjective beliefs or personal anecdotes. It is deceptive to make claims without appropriate supporting evidence.
• No aspect of an earnings claim should be misleading. For example, claims about making money while working only a limited number of hours are deceptive if they do not represent what participants generally experience in terms of money earned or time worked.
• A “results not typical,” “results are not guaranteed,” or similar disclosure is not enough.
• Moreover, to be clear and conspicuous, the disclosure must be prominent, worded in a way consumers understand, placed where consumers are likely to look, immediately next to the claim it disclaims, and not easily missed. These principles apply also to disclosures in all multimedia ads, including claims in video and audio ads.
• In addition, disclosures that include information inconsistent with or contradictory to what is otherwise said in an advertisement are not effective. Disclosures need to be both understandable and unambiguous to be effective.
• Disclosures that are an integral part of a claim or inseparable from it should not be communicated through a hyperlink or mouse-over. Many consumers may not click on hyperlinks or read information in mouse-overs or that is available after clicking a hyperlink. They might immediately close the mouse-over, move to the next page in pursuit of completing their intended tasks, or not associate information available in a hyperlink window with a claim or product they haven’t encountered yet. Instead, disclosures should be unavoidable. They should be placed immediately next to the claim and be sufficiently prominent so that the claim and the disclosure are read at the same time, without referring the consumer somewhere else to obtain this important information.
• Disclosures are not always effective in correcting a misleading message conveyed by advertising claims and are not a defense if the net impression is misleading.
• More information about these concepts is available in the FTC business guidance  .com Disclosures: How to Make Effective Disclosures in Digital Advertising and in the blog post  Full Disclosure .
• MLMs can be held liable when their participants, employees, and other agents violate the FTC Act. ( See Questions 27 and 28, below.) In addition, MLMs violate the FTC Act if they provide the means and instrumentalities for individuals or entities to make a false or unsubstantiated representation, such as by providing them with a false statement or information for use in their marketing.

14. What should an MLM do if it does not know how much its participants spend in expenses while pursuing the business opportunity?

MLMs should have access to reliable and substantiated information about expenses. But, if an MLM or MLM participant does not have access to data showing what participants typically spend pursuing the business opportunity (e.g., product or service purchases, website fees, party costs, and training or conference expenses), they should refrain from making any earnings claims.

15. How should MLMs or MLM participants approach lifestyle claims?

Some MLMs and MLM participants may present the MLM as a way for participants to get rich or lead a wealthy lifestyle. They may convey such representations through words or through images such as houses, automobiles, and luxury vacations. These are implied earnings claims, and such claims are deceptive if participants generally do not achieve such results.

An MLM or its participants may also claim that participants, while not necessarily becoming wealthy, can achieve career-level income, replace earnings from a job, pay off debt, or provide a means to supplement their income. They may represent through words or images that participants can, for example, earn thousands of dollars a month, quit their jobs, “fire their bosses,” or become stay-at-home parents. They also may suggest that the income from the MLM has funded, for example, paying for gas, grocery bills, or activities for their children. It is deceptive and unlawful to make such claims if participants generally do not achieve such results or if the MLM lacks objective data to know whether participants generally achieve these results.

16. Is it okay for an MLM to tell potential participants about how they could hypothetically earn money?

A hypothetical earnings scenario — such as, “if you recruit 30 people who each sell $1,000 of product each month, you will earn $1,500 a month” — may imply that the assumptions made (e.g., the number of people recruited, the amount sold by each recruit) are consistent with the actual experiences of typical participants. If the assumptions are not so because most participants do not achieve them, the earnings scenario likely would be false or misleading to consumers, violating the FTC Act.

17. I believe that participants in my MLM will make money if they work hard, and that the people who do not make money are not trying very hard. Will I violate the FTC Act if I say that?

MLMs and their participants must have a reasonable basis for earnings claims at the time the claims are made. Personal beliefs or anecdotal observations are not sufficient.

So, before making express or implied claims that people “working hard” or “trying hard” are likely to make a certain amount of money, that people working “part-time” will earn some money, but not as much, that people who don’t make money aren’t really “trying” to pursue the business opportunity, or other similar claims, answer some questions:

• What does “working hard” or “trying hard” mean? Have you explained up front to prospective participants what they need to do to “work hard” or “try hard” — do they need to work 30 hours a week, spend $2,000 a month, or recruit 4 people each month?
• Do you have a reasonable basis for your claim that unsuccessful participants are unsuccessful because they do not work or try as hard as those who are successful, or that working more hours generally leads to a higher level of income?
• Do you have evidence that shows that a typical participant who is “working hard,” or who works a certain number of hours, earns a certain amount of money?

If the answer to any of these questions is “I don’t know” or “no” or “I only have anecdotal evidence,” you probably do not have a reasonable basis or substantiation to make a claim that participants in your MLM who try hard make money, that MLM participants who lost money did not work hard enough, or similar claims.

18. Participants in my MLM want to tell potential recruits about the things they were able to buy after joining the MLM. Can they talk about their own personal experiences?

If participants generally do not achieve such results, these representations likely would be false or misleading to current or prospective participants.

The MLM and its participants must have a reasonable basis for any claims they make based on their personal experience, including lifestyle claims, before they make those claims. A “reasonable basis” means reliable, empirical evidence demonstrating that the typical person in the group they’re making the representation to is likely to realize — in income, profit, or appreciation — an amount equal to or greater than that conveyed by the earnings or lifestyle claim.

If the MLM or participant does not have a reasonable basis to know what the typical person in the group is likely to achieve in earnings, they should not make any earnings claims, including lifestyle claims. If the MLM or participant does have a reasonable basis to know what the typical person in the group is likely to achieve in earnings, then the MLM or participant has to consider if the earnings they want to promote are typical or atypical. If they are typical, the earnings claim is likely acceptable. If they are atypical, then discussion of those atypical earnings must be accompanied, at a minimum, by a clear, prominent, and unavoidable presentation of the typical participant’s revenue and expenses. The MLM or participant always must ensure the claim is not deceptive.

19.  I believe that participants in my MLM can earn “modest or supplemental income.” Am I allowed to say that?

What does “modest or supplemental income” mean? If you don't know the typical amount people actually make (after expenses), you should not make any earnings claim. Even if an MLM does know this figure, before making any claim of “modest or supplemental income,” it should establish what that phrase means to reasonable consumers. It must then look to whether the MLM has a reasonable basis to know that its participants generally earn at least this amount, after taking into account typical expenses. If not, it should not make such a claim.

20. What should MLMs and their participants consider before offering “free” cars, trips, or other incentives to recruits and participants?

Because people continually search for the best buy and usually view offers of “free” merchandise or services as special bargains, all such offers must be made with care. While any inquiry under the FTC Act is fact-specific, here are some general principles to keep in mind.

First, MLMs and their participants should not suggest that a trip or car will be offered for “free” if the person will have to pay for the item. The word “free” suggests that the person will pay nothing. Thus, it is reasonable for someone to view a “free vacation” offer as providing for free all material costs of the vacation (like airfare, hotel, and a rental car). If that is not true, the MLM and its participants should either refrain from using the word “free” or from misstating what is “free.” (For example, if only a free hotel room is being provided, the offer should specify that: “Free hotel room stay for X nights.”)

Second, MLMs and their participants should not make misleading statements about what is being given away. Take, for example, a “free car” promotion. A reasonable consumer likely would not believe getting a “free car” means: (1) they get only a limited or discrete “free” payment for a car lease; (2) the “free” payment will stop abruptly if the participant stops being eligible; or (3) the participant has to continue paying for the car lease after the “free” payment stops.

Finally, when MLMs or their participants advertise any “free” items, the advertisement should contain all the information about the offer that is likely to affect a consumer’s purchasing decision. In other words, it is not appropriate to tell potential participants that they can get a “free” car without also telling them — in a clear and conspicuous manner — what they need to do to be eligible to get that car. In addition, as discussed above in response to Question 13, it is not appropriate to communicate conditions on “free” offers in a hyperlink. Instead, the information should be placed immediately next to the claim, be written in a way that is understandable to an ordinary consumer, and be sufficiently prominent so that the claim and the disclosure are read at the same time, without referring the consumer somewhere else to get this important information. More information about these concepts is available in the FTC business guidance  .com Disclosures: How to Make Effective Disclosures in Digital Advertising and in the blog post  Full Disclosure .

21. Some MLMs have reportedly told participants not to mention that they are promoting an MLM or the name of the MLM. Is that legal?

MLMs and their participants should be candid and upfront with potential recruits about the type of opportunity being offered and the name of the company offering the opportunity. The Commission has said it is “manifestly unfair and deceptive to cause persons to invest time, energy and money and go through an appointment and interview before learning such basic and threshold information as the nature of the position being offered.” Encyclopaedia Britannica, Inc., et al. , 87 F.T.C. 421, 487-88, 531 (1976); see also FTC v. Think Achievement Corp. , 144 F. Supp. 2d 993, 1011-12 (N.D. Ind. 2000).

22. Are MLMs subject to the FTC’s Business Opportunity Rule?

Possibly – it depends on the opportunity that the MLM is offering. As stated in the Business Opportunity Rule’s Statement of Basis and Purpose, the Commission crafted the current Rule to avoid broadly sweeping in MLMs. It did so by tailoring the definition of business opportunity to exclude certain types of business assistance common to MLMs. 76 Fed. Reg. 76816, 76824 (Dec. 8, 2011). It is important to note, however, that MLMs are not exempt from the Rule if they otherwise fit the definition of a business opportunity. Id. at 76824 n.91. As with any other business entity, the determination whether an MLM is a business opportunity to which the Rule applies would be made on a case-by-case basis.

The Commission has issued an  Advance Notice of Proposed Rulemaking which, among other things, raises whether to consider regulating MLMs and other entities/businesses under a separate Earnings Claim Rule.

23. Does the FTC Act require MLMs to give an Income Disclosure Statement to potential participants?

If the MLM is a “Business Opportunity,” as that term is defined under the Business Opportunity Rule, 16 C.F.R. § 437.1, then it must comply with the requirements of that rule, including by giving prospective purchasers a Business Opportunity Disclosure Document. If an MLM subject to the Business Opportunity Rule or its participants make earnings claims to potential participants, then the MLM or its participants must give potential participants an earnings claim statement that contains the information required by Section 437.4(a) of the Business Opportunity Rule before signing up the participants.

If an MLM is not a “Business Opportunity,” it is not required to give any information about earnings to potential participants, but any earnings information it does give must be truthful, substantiated, and non-misleading.

If an MLM does not have evidence of the typical earnings of its participants (including any costs that its typical participants incur), it should refrain from making any earnings claims and ensure its participants do the same.

24. Some MLMs post Income Disclosure Statements on their websites. What should MLMs consider when drafting these Statements?

Like all earnings claims made by MLMs, an Income Disclosure Statement (IDS) should contain truthful, substantiated, and non-misleading information about the earnings participants can generally expect, considering both their income and typical expenses.

Most MLM participants earn little to no money, and, for any MLM for which that is true, the IDS should clearly and conspicuously reflect that.

It is misleading for an MLM to exclude from its IDS information about participants who lost money or earned no money, or who failed to qualify for bonuses or commissions. It also is misleading for an MLM to discuss only the earnings of “active” participants, while excluding participants who the MLM considers “inactive” because they didn’t get any compensation or qualify for a certain type of compensation during a particular time period. In the FTC’s enforcement experience, many MLM participants that MLMs might consider “inactive” try hard to succeed at the business, but fail to earn any money from the MLM or to qualify for certain types of compensation. Omitting the earnings and losses of such participants paints a misleading picture of what participants can generally expect to earn. Participants should not be omitted from earnings statistics unless the MLM has evidence that they have affirmatively opted out of the income-earning opportunity, not merely failed to qualify for it or not merely exercised any inventory buy-back program.

Other considerations to keep in mind when drafting an IDS include:

• The IDS should not misrepresent participant earnings, including by annualizing or projecting income that was not actually earned by a participant in the time period the IDS covers. For example, in its complaint in  AdvoCare, the FTC alleged that AdvoCare misrepresented participants’ “annual average income.” According to the complaint, when calculating a participant’s annual income, if a participant worked one year — 24 pay periods — but only earned one paycheck for $100, AdvoCare multiplied the single $100 check by 24 pay periods to calculate the participant’s “annual average income” as $2,400. The FTC alleged that AdvoCare’s IDS therefore was deceptive in its portrayal of participant income.
• The IDS should cover a reasonable and appropriate time period.
• The IDS should clearly and prominently explain what data is contained in the document. For example, MLMs should steer clear of using terms such as “income” and “earnings” to describe the IDS, if the document does not describe “net income” (or total income following payment of expenses), excludes certain types of income, or only summarizes prominently the earnings of a limited subgroup of participants.
• The IDS should not state that a percentage of participants earned $0 if those participants actually spent more pursuing the business opportunity than they received from the MLM in compensation (i.e., if any participants actually lost money, that should be reflected on an MLM’s IDS). 
• An IDS that highlights the earnings of the small percentage of MLM participants who make significant income is deceptive where many participants in a particular MLM make significantly less money, lose money, or make nothing.
• The IDS should not state or imply that working hard or working for a certain period of time will lead to someone earning a particular amount of income or achieving a particular rank, unless that result is in fact typical for everyone who works that amount or that period of time. For example, an MLM should not say or imply that it takes four years for someone to reach a particular rank, unless that result is typical for everyone who works four years.
• Finally, all material information in the IDS should be clear and conspicuous. Information should not be buried in legalese, small text, or long paragraphs. Additional considerations include: the prominence of the material information in the IDS, whether it is unavoidable, whether other parts of the IDS distract attention from the material information, whether the information is repeated at different places, whether the material information appears for a sufficient duration, and whether the language of the information is understandable to the intended audience.

25. Can the FTC seek civil penalties from MLMs that make deceptive earnings claims?

Under certain circumstances, yes. For example, the FTC has determined in litigated administrative decisions in which final cease and desist orders were issued that it is an unfair or deceptive practice to make deceptive representations concerning the profits or earnings that may be anticipated by a participant in a money-making opportunity. Under 15 U.S.C. § 45(m)(1)(B), engaging in this conduct could subject a company to civil penalties of more than $50,000 per violation. The amount is adjusted annually for inflation. (For more information, see the FTC’s  Notice of Penalty Offenses Concerning Money-Making Opportunities and the  Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials .)

Pursuant to the Business Opportunity Rule, 16 C.F.R. Part 437, the FTC may also seek civil penalties from MLMs that qualify as a business opportunity under the Rule for making deceptive earnings claims.

26. What should MLMs consider before making product claims, including claims that products can provide health benefits or help consumers lose weight?

Any claims MLMs or their participants make about their products must be truthful, not misleading, and substantiated at the time the claim was made. In addition, it is unlawful under the FTC Act, 15 U.S.C. § 41 et seq. , to make health claims for a product or service unless, at the time the claims are made, you possess competent and reliable scientific evidence substantiating the claims.

Under 15 U.S.C. § 45(m)(1)(B), making deceptive product claims could subject a company to civil penalties of more than $50,000 per violation. The amount is adjusted annually for inflation. (For more information, see the FTC’s  Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials and the FTC’s  Notice of Penalty Offenses Concerning Substantiation of Product Claims. )

Although the determination of whether representations are deceptive is a fact-specific inquiry, below are some guiding principles:

• Advertisers must make sure that whatever they say expressly in an ad is accurate. Often, however, an ad conveys other claims beyond those expressly stated. Under FTC law, an advertiser is equally responsible for the accuracy of claims implied by the ad. Advertisers’ implied and express claims must comply with the law.
• Advertisers must consider whether what they say or convey in an ad is accurate, considering the overall impression created by the text, images and graphics in the ad.
• An ad can also be deceptive because of what it fails to say. Advertisers must disclose information if it is material in light of representations made or suggested by the ad, or material considering how consumers would customarily use the product. For example, advertisers should disclose any significant limitations on an advertised health benefit.
• Similarly, advertising that makes either an express or implied safety representation should include information about any significant safety risks. Even absent affirmative safety representations, advertisers may need to inform consumers of significant safety concerns related to the customary use of a product. For example, take an energy drink that contains an ingredient that, when consumed daily over an extended period, can result in a significant increase in blood pressure. Even absent any representation about the product’s safety, the marketer should disclose this potentially serious risk. If an ad would be misleading without certain qualifying information, that information must be disclosed clearly and conspicuously so that it is actually noticed and understood by consumers. 
• To ensure that disclosures are effective, marketers should use clear, unambiguous language, avoid small type, place any qualifying information close to the claim being qualified, and avoid making statements or using elements that could undercut, distract from, or contradict the disclosure. More information about these concepts is available in the FTC business guidance  .com Disclosures: How to Make Effective Disclosures in Digital Advertising and in the blog post  Full Disclosure .
• In addition to conveying product claims clearly and accurately, advertisers must ensure there is adequate support for their claims. Under FTC law, before disseminating an ad, advertisers must have a reasonable basis for all express and implied product claims. What constitutes a reasonable basis depends on the net impression consumers take away from an ad, which in turn will depend on the specific language used, how the claims are presented in the context of the entire ad, and how consumers interpret any disclosures or qualifying statements.
• An endorsement, including a testimonial, must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer couldn’t legally make. Testimonials will generally be interpreted to represent results that are typical of what consumers can expect to achieve. If the results of an endorser are not typical, the ad must clearly and conspicuously convey what the expected results are, based on competent and reliable scientific evidence.
• MLMs can be held liable when their participants, employees, and other agents violate the FTC Act. ( See responses to Questions 27 and 28, below.) In addition, MLMs violate the FTC Act if they provide the means and instrumentalities for another to make a false or unsubstantiated representation, such as by providing another with a false statement or information for use in their marketing.

More guidance about product claims, including health and weight loss claims, is available on the FTC’s website:

• FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising
• Health Products Compliance Guidance  
• Advertising FAQs: A Guide for Small Businesses
• Gut Check: A Reference Guide for Media on Spotting False Weight Loss Claims
• Voluntary Guidelines for Providers of Weight Loss Products or Services

27. Are MLMs liable for earnings claims and product claims made by their participants?

Companies and individuals are liable for the FTC Act violations of their agents. See, e.g. , Goodman v. FTC , 244 F.2d 584, 592-593 (9th Cir. 1957);  FTC v. IAB Mktg. Assocs., LP , 746 F.3d 1228, 1233 (11th Cir. 2014);  FTC v. Medical Billers Network, Inc. , 543 F. Supp. 2d 283, 319-20 (S.D.N.Y. 2008); FTC v. Stefanchik , No. 04-cv-1852, 2007 WL 1058579, at *6 (W.D. Wash. Apr. 3, 2007); FTC v. Skybiz.com, Inc. , No. 01-cv-396, 2001 WL 1673645, at *9 (N.D. Okla. Aug. 31, 2001),  aff’d , 57 F. App’x 374 (10th Cir. 2003); FTC v. Five-Star Auto Club, Inc. , 97 F. Supp. 2d 502, 527 (S.D.N.Y. 2000). The liability exists even if the company has unsuccessfully attempted to prevent such misrepresentations, see Five-Star Auto , 97 F. Supp. 2d at 527, or if the agent made the deceptive claim in violation of direct instructions from the company, see FTC v. U.S. Oil and Gas Corp. , No. 83-cv-1702, 1987 U.S. Dist. LEXIS 16137, *48 (S.D. Fla. July 10, 1987).

Many MLMs choose to structure their business so that participants are the primary point of contact with the public, and those participants speak to the public with the actual or apparent authority of the MLM. As such, the MLM is responsible for ensuring that its participants do not make deceptive or unfair statements, including deceptive claims about what participants can earn or unsubstantiated claims regarding the characteristics of its products. This is true regardless of where the participant statements are made, including on social media and in small group recruiting meetings.

Additionally, an MLM may be liable for the deceptive earning claims of its participants if the MLM directly participates in the illegal practice or provides the means and instrumentalities for the deceptive claims.

28. What can an MLM do to avoid being held liable for the statements of its participants? Is it enough to engage in effective training, monitoring, and enforcement procedures?

MLM participants typically act as the agents of the MLM. As noted above, federal courts and the FTC have ruled that corporations are liable for the Section 5 Act violations of their agents. There is no safe harbor or exception to this principle under existing law.

MLMs should be proactive and ensure their agents do not violate the FTC Act. This may include: providing training to agents about what conduct violates the FTC Act; monitoring agents for law violations and then imposing meaningful discipline on agents who commit illegal acts; requiring agents to obtain approval before making income or product claims; requiring agents to provide the MLM with copies of all of their advertisements, including transcripts of private online chats or videoconferencing calls; and, requiring agents to give the MLM access to all social media platforms or groups where they discuss their business (for example, private social media groups).

Further, MLMs should ensure that such compliance measures are effective in practice. Caselaw holds that MLMs are liable for the conduct of their agents, so the onus is on the MLM to ensure that their participants comply with the law.

29. Does the FTC enforce laws or regulations other than the FTC Act that relate to MLMs?

The FTC enforces a variety of laws and regulations relating to advertising, marketing, sales, billing, privacy, data security, franchises, and business opportunities, among other topics. These apply or may apply to MLMs, depending on an individual MLM’s circumstances.

The FTC may seek monetary remedies from MLMs that engage in fraudulent and dishonest conduct and for any rule violation and relevant statutory violations that MLMs may engage in, such as Telemarketing Sales Rule, 16 C.F.R. part 310, the Restore Online Shoppers’ Confidence Act, 15 U.S.C. §§ 8401-8405, and the Consumer Review Fairness Act, 15 U.S.C. § 45b.

Helpful information for businesses interested in these topics is available at the  FTC’s Business Center .

30. Are orders obtained as a result of FTC enforcement actions binding on the multi-level marketing industry?

Orders obtained through settlements of FTC law enforcement actions are not binding on the entire multi-level marketing industry. Such orders, however, can be useful to MLMs that are not bound by them. Industry members may choose voluntarily to follow the provisions in these orders or to consider the provisions in developing their own practices and procedures. All industry members have an obligation to follow the law, and the provisions in FTC orders may provide guidance and insights to help them do so.

FTC administrative actions that are litigated may result in a final Commission decision and cease and desist order. If MLMs engage in activity that the Commission determined in a prior litigated administrative order to be an unfair or deceptive practice, the FTC can seek civil penalties from those MLMs in federal court. (See, for example, the FTC’s  Notice of Penalty Offenses Concerning Money-Making Opportunities and the  Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials . A list of Notices of Penalty Offenses issued by the FTC is available  HERE .)

31. How does the FTC consider compliance with industry self-regulatory standards in its assessments of MLMs?

Belonging to a self-regulatory organization does not shield MLMs engaged in unfair or deceptive practices from FTC law enforcement action. The FTC can and will bring law enforcement action against companies that follow, or claim to follow, self-regulatory guidelines, but nonetheless violate the FTC Act.

32. What should someone do if they believe an MLM’s claims or conduct may be unlawful?

Individuals or entities who have concerns about an MLM can file a report at  ReportFraud.ftc.gov .

33. Are the answers in this document legally binding?

No, this is an FTC staff business guidance document. It does not necessarily represent the views of the Commission or any Commissioner and is not intended to, and does not, create any rights or obligations with respect to the Commission, FTC staff, or the public.

[1]    This document aims to provide guidance to MLMs. It is not intended to provide guidance regarding chain referral schemes (sometimes called “chain letters”), Ponzi schemes, or other unlawful structures or pyramid schemes that may violate Section 5 of the FTC Act (among other laws), but do not give members the right to sell a product or service.

Multilevel Marketing (MLM)

A strategy that sells products and services through a non-salaried workforce in a pyramid-shaped commission system

What is Multilevel Marketing (MLM)?

Multilevel marketing (MLM) is a strategy that sells products and services through a non-salaried workforce in a pyramid-shaped commission system. The MLM strategy is also known as network marketing or referral marketing.

Companies that implement multilevel marketing encourage existing distributors to recruit new distributors, known as the “downline” of the existing distributors. Multilevel marketing is often confused with a pyramid scheme , but the latter is illegal.

• The multilevel marketing (MLM) strategy encourages existing distributors to recruit new distributors and has a pyramid-shaped commission system.
• Multilevel marketing distributors are independent and non-salaried. The distributors receive commissions on the sales made by themselves and their downline teams.
• Through multilevel marketing, companies can build up a large customer base with low sales costs.

How Multilevel Marketing Works

There are multiple layers of salesforce in multilevel marketing. The salesforce is known as distributors, who are independent non-salaried participants. There are two sources of income for a distributor. One is the commission of selling products to customers directly. The other one is through recruiting new distributors.

A distributor is not paid when a new (downline) participant is recruited. Yet, the sales from his downline distributors are also attributable to him. The distributor is compensated by a certain percentage of the sales from his downline team.

Many distributors with large-scale downline teams even do not sell products by themselves. They can receive sufficient commissions from their downline teams’ sales. The commission system effectively motivates existing distributors to build up or expand their downline teams. It allows the company to employ a bigger salesforce, and thus, access to a larger customer base.

Pros and Cons of Multilevel Marketing

The multilevel marketing strategy is beneficial to both the companies and the distributors. A company can gain access to a large customer base in a wide geographical range through multilevel marketing.

Since the distributors are independent, the company does not need to pay any fixed salaries , but only commissions when sales are made, which allows it to save sales expenses.

To distributors, multilevel marketing allows them to make extra income with sufficient flexibility. They can choose to work full-time or part-time to best adapt their schedules.

However, the distributors in the lower tiers may find themselves in a disadvantaged position. They usually work harder but make much lower incomes than the ones in the upper tiers, since the upper-tier distributors share the commission on their sales.

The high degree of flexibility and autonomy also comes with a drawback. Distributors only receive limited support from the company. The lack of sales training or support from expertise may make their sales efforts very inefficient.

Also, a multilevel marketing organization lacks control over its salesforce . It may experience damage to its reputation if some of its distributors are acting irresponsibly or not keeping trustworthy to customers.

Another concern of multilevel marketing is pyramid schemes. Pyramid schemes are fraudulent and can cause huge economic losses to participants.

Multilevel Marketing vs. Pyramid Scheme

A pyramid scheme looks very similar to multilevel marketing. It also expands the business by recruiting several layers of members, which form a pyramid system. However, pyramid schemes are illegal scams, while multilevel marketing is legitimate.

The major difference is that the primary goal of a multilevel marketing company is to sell actual products or services to its customers. Conversely, a pyramid scheme does not supply any real products or investments.

Participants are convinced that the company owns a valuable product or investment project. They only receive “promised payments” by recruiting downline participants. The more downline participants are recruited, the more people are dragged into the fraudulent activity.

Multilevel marketing distributors, especially the lower-tier ones, usually make small amounts of money. Participants deceived by a pyramid scheme typically lose all the money they invested in or paid as “membership fees.”

It is essential to identify whether the business model is legitimate multilevel marketing or the fraudulent pyramid scheme before joining. If a business places a greater focus on recruitment rather than sales of products, the business is very likely a pyramid scheme.

The Federal Trade Commission (FTC) is responsible for investigating MLM companies. In some cases, it is even difficult for the federal agency to determine whether the company is operating legally or not.

More Resources

CFI is the official provider of the Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

In order to help you become a world-class financial analyst and advance your career to your fullest potential, the additional resources below will be very helpful:

• 4 P’s of Marketing
• Affiliate Marketing
• Ponzi Scheme
• Top Accounting Scandals
• See all management & strategy resources
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Free Marketing Plan Templates, Examples, and a Comprehensive Guide

By Joe Weller | June 27, 2016 (updated April 17, 2023)

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In this article, you’ll find a complete, step-by-step guide to developing a marketing plan that will provide your organization with a strategic course of action.

Included on this page, you’ll find examples of a marketing plan, as well as pre-built marketing plan templates to suit your needs, including a Small Business Marketing Plan , Digital Marketing Plan , Strategic Marketing Plan , and more. Then, our experts show you  how to create a marketing plan and what to include.

Marketing Plan Template

Download Marketing Plan Template

Word |  PDF | Google Doc | Smartsheet

A marketing plan is a high-level document that guides your strategic initiatives and ensures your marketing goals are aligned with your overall business objectives. Use this pre-built marketing plan template to outline the purpose your business serves, as well as its strategic goals, target market, and standards of performance, to ensure you have a thorough and deliberate plan of action.

One-Page Marketing Plan Template

Download One-Page Marketing Plan Template

Excel | Word | PDF | Google Doc | Smartsheet

This customizable one-page marketing plan takes the comprehensiveness of a formal marketing plan and pares it down to the key elements for easy scannability. This template has space for a concise business summary, overall objectives, target market, marketing strategy, financial requirements, and more. It also contains an action plan to detail marketing activities, role assignments, deadlines, and costs.

Business Marketing Plan Template

Download Business Marketing Plan Template

Word | PDF | Smartsheet

This template takes all of the essential elements of a marketing plan and organizes them into sections, but you can also add and remove components of the plan according to your needs. Use this customizable template to write your executive summary, mission and vision statements, marketing strategy, core capabilities, main goals, budget, and more, with an appendix included to back up your research and findings.

Small Business Marketing Plan Template

Download Small Business Marketing Plan Template

A small business marketing plan can be simple or elaborate, depending on your needs and the nature of your organization. This marketing plan template is fully customizable, and will guide your small business in the identification and description of your project , the mission and vision of your company, the problem you are solving, short and long-term marketing goals, the 4Ps of your marketing mix, marketing channel strategy, and more.

Marketing Plan Template for Startup Business

Download Marketing Plan Template for Startups

Word | PDF  

This pre-built marketing plan template for startups provides the savvy entrepreneur with a strong foundation from which to build his or her marketing strategies. This template will help you develop clear short and long-term business goals, identify your target market, learn your buyer’s buying cycle, pinpoint your unique selling proposition (USP), track standards of performance and measurement methods, and more, so you can feel confident in a solid plan of action.

Digital Marketing Plan Template

Digital Digital Marketing Plan Template

Excel | Smartsheet

This digital marketing plan template includes sections for online advertising and analytics, content marketing and SEO strategy, social media , and tools for tracking metrics. The template is divided into months, so you can create a timeline for your digital marketing plan. Use this template to create a comprehensive plan of action for online marketing.

Real Estate Marketing Plan Template

Download Real Estate Marketing Plan Template

This pre-built real estate marketing plan template is customizable, and comes ready to outline your strategic and tactical goals, conduct a SWOT analysis (including a competitor SWOT analysis), identify your target client type (e.g. first-time buyer, home seller, renter, etc.), define your marketing channels, provide financial forecasts, and more. It also includes a built-in plan of action for you to plan activities, assign roles, and set projected dates.

Marketing Plan Template for Nonprofit

Download Nonprofit Marketing Plan Template

Word | PDF 

This marketing plan template is tailored to meet the unique requirements of a nonprofit business. Use this customizable template to detail the organization’s background, funding climate, a comparative analysis of competitors, profile of stakeholders, short and long-term marketing goals, positioning statement, financial requirements, and more.

Strategic Marketing Plan Template

‌Download Strategic Marketing Plan Template

Excel | Google Sheets

This free strategic marketing plan template includes sections for online marketing campaigns , media relations, trade shows and events, other branding efforts, and sales campaigns. The plan clearly identifies objectives, along with target market and total costs. Months of the year are broken down into weeks for easy planning. You can modify this template to include any elements that are vital to your marketing plan.

Sales & Marketing Plan Template

Download Sales & Marketing Plan Template

This sales and marketing plan template facilitates planning around sales goals and promotional activities. This is an annual marketing calendar template that shows all 12 months on one worksheet. There are sections for public relations, online content marketing, advertising, and research. Monthly sales goals are defined at the top of the template, and there is space at the bottom for metrics to evaluate marketing effectiveness.

Tactical Marketing Plan Template

Download Tactical Marketing Plan Template

Keep track of the tactics that need to be completed as you implement your marketing strategy. This tactical marketing plan lists each task, the person responsible for the action, expenses, dates, and status. Use this template to keep your plan on schedule and to assess progress.

Product Marketing Plan Template

Download Product Marketing Plan Template

Excel | PDF | Google Sheets

This pre-built product marketing plan template enables you to differentiate your product offering from the competitors by homing in on your unique selling proposition. This template has space to detail the company’s vision, conduct a competitive analysis, define the target market, and establish the market position to ensure your marketing goals stay aligned with the company’s objectives.

Service Marketing Plan Template

Download Service Marketing Plan Template

Use this customizable service marketing plan template to clearly define your goals and initiatives, analyze your competitors, and outline the characteristics and preferences of your target persona. With space to detail your company’s vision at the top of the template, you can ensure your marketing strategy and initiatives support the mission and values of your company.

What Is a Marketing Plan?

A marketing plan is a document that outlines your marketing strategy. It serves as a roadmap for how your organization aims to raise awareness about a product or service and how it plans to deliver that product or service to target customers. The fundamental purpose of a marketing plan is to align marketing goals with overall business objectives to aid marketing project managers in improving the success of your business or organization. 

What your marketing plan looks like will depend on the size and type of your business, but even small businesses and nonprofits can benefit from careful planning.

How to Write a Marketing Plan (and What’s Included)

In this section, you’ll find a comprehensive guide for creating a marketing plan, including an example of a marketing plan outline and links to pages containing free strategic marketing templates.

Pro tip: Save time by using one of the free marketing templates above as a start.

Step 1: Build Your Marketing Plan Outline

A marketing plan outline allows you to structure your plan in a way that makes sense with the product or service you are delivering, and can also serve as a table of contents for your finalized plan. Whether you are a business-to-consumer (B2C) or business-to-business (B2B) company, a small business, or a large enterprise, the details of your plan will vary based on the nature of your business and relative marketing position. 

Below, you’ll find an example of a basic marketing plan outline that you can modify to suit your organization’s needs:

Table of Contents

Executive Summary

Mission and Vision Statement

Situational Analysis

5C Analysis

SWOT Analysis

Porter’s Five Forces Analysis

Core Capabilities

Target Market

Audience Persona

Information Collection

Pain Points and Solutions

Marketing Strategy

Buyers’ Buying Cycle

Unique Selling Proposition

Marketing Channels

Standards of Performance and Measurement Methods

Performance Standards

Marketing Metrics

Measurement Methods

Financial Summary 

Financial Forecasts

Breakeven Analysis

Assumptions

Research Results

Product Specs and Images

Step 2: Write Your Mission and Vision Statement

A mission statement is a brief summary of your company’s main purpose, and how your company provides value to its customers. In other words, it should convey your company’s reason for existence, and serve as a point of reference for future planning initiatives. Get started on developing your mission statement by using a free mission statement worksheet .

A vision statement details the future aspirations of a company or entity, and should serve as a framework for short-term and long-term strategic planning. The purpose of a vision statement is to guide internal decision-making for future courses of action. Create a compelling vision statement by using a free vision statement worksheet .

Step 3: Perform a Situational Analysis

Your marketing strategy will not be as effective without a clear picture of the overall health of your business. Gaining deeper insight into your organization’s internal and external environment will allow you to develop a plan that capitalizes on opportunities and reduces risk, and enables you to position your business in the market in a way that sets you apart from competitors. 

Three methods you can use to analyze the elements that impact the health of your business are a SWOT analysis, Porter’s Five Forces Analysis, and 5C Analysis.

This method is one of the most commonly used tools for analyzing the internal strengths and weaknesses of a business, as well as the external opportunities and threats. When detailing the internal strengths and weaknesses of a business, keep in mind that these are the factors that your company has control over. By contrast, when defining external opportunities and threats, recognize that these are factors that impact your business from the outside, and that you cannot control. 

The main purpose of the of a SWOT analysis is to identify weaknesses that can be turned into strengths, and then to leverage strengths in order to take advantage of opportunities and mitigate threats in the market. Choose from a variety of free SWOT Analysis templates , including a SWOT Competitor Analysis template to see how you measure up to competitors.

Porter’s 5 Forces

This framework is used to evaluate your competitive landscape and to identify factors in your industry that may strengthen or weaken your position. The five forces include the following components:

• Industry Rivalry
• Threat of New Entrants
• Bargaining Power of Buyers
• Threat of Substitute Products
• Bargaining Power of Suppliers

Once you have assessed each of the five forces and rated them from low to high, you will be better equipped to pinpoint and enhance your organization’s competitive position within the industry.

This marketing framework is used to assess the five key drivers of marketing decisions for a business. The five Cs of the marketing mix include the following:

• Company: Identify the unique value proposition (UVP), or the sustainable competitive advantage that the focal business possesses. Some examples include economies of scale, cost leadership, and differentiation. This component of the assessment involves evaluating the products, services, culture, and brand perception of the business to determine if it’s in the best position to satisfy customer needs. 
• Customers: Having keen insight into who your customers are and what motivates them to purchase is essential before determining how you will meet their needs. Conduct research on who is buying your products, how customers interact with your business (including online), seasonal trends, and customer feedback to gain an understanding of the behaviors and preferences of your customer base.
• Competitors: Analyzing your competitors and learning about how they conduct business will enable you to strategize a plan that will beat them at their own game. Learn about your competitor’s strengths, weaknesses, and market position by researching what differentiates them, what kind of content they’re producing, and how their customers interact with and review them. 
• Collaborators: Leveraging relationships with people, partners, and distributors that support your daily business operations is key. Since you rely on these collaborators in order to get your product in front of customers, they can be highly beneficial for helping your business run more efficiently. Create a list of all the key players that your business works with — from investors and stakeholders to shippers and photographers — to create strong relations and uncover opportunities.
• Climate: Getting a sense of societal, legal, and industry trends that could affect your business will allow you to make decisions proactively. Get an idea of where the market is heading by keeping a watchful eye on social and economic trends that could impact the way customers are buying, or new technologies like social media  that could change the way businesses operate.  

Performing a situational analysis by utilizing these methods will allow you to critically analyze your organization and industry landscape, identify opportunities, establish goals, and create a plan of action to take steps toward achieving those goals.

Step 4: Pinpoint Your Organization’s Core Capabilities

Once you’ve conducted your situational analysis and have a clear understanding of the internal and external factors impacting your business, identify the core capabilities of your organization that you can capitalize on to gain a competitive foothold. 

One way to home in on your core competencies is to gather feedback from your team by asking the following questions:

• What are our greatest strengths as a company?
• What are our greatest strengths as a team?
• What makes our product offerings better than that of our competitors?
• What makes us the best in our industry?

Your core competencies should be a reflection of your mission and vision statement, and these statements should be modified as core competencies change.

Step 5: Define Your Goals

Are you trying to raise brand awareness? Meet a sales quota? Achieve growth within a specific timeframe? Whatever your primary business, financial, or marketing goals may be, you must ensure they are detailed and data-driven, and that you have the resources needed to achieve them. In other words, you need to establish S.M.A.R.T. goals , which are defined as the following:

• Specific: Clearly convey the main goals you are trying to accomplish.
• Measurable: Determine key metrics you will use to track progress.
• Achievable: Ensure you have the capabilities and resources needed to reach your goals.
• Relevant: Verify that the marketing goals support the overall mission and vision of the business.
• Time-Oriented: Set milestones and deadlines for goals to stay on track.

If you’re feeling uncertain about the main goals you are trying to achieve, here are some questions you can ask yourself to get started on developing them:

• How do we want potential customers to feel about our brand?
• What key elements of our product or service should potential customers know about?
• What will motivate potential customers to choose us over our competitors?
• How is our business positioned in the industry?
• What is our year-to-date (YTD) growth?
• How can we best align our marketing plan with our overall business objectives so they support each other?

Once you’ve answered the above questions, develop and track your S.M.A.R.T. goals by downloading a free goal planning and tracking template .

Step 6: Identify Your Target Market

Once you’ve identified your main goals, the next step is to identify target customers that your business will direct its marketing resources to in order to achieve those goals. Since it isn’t efficient or practical to target everyone, the idea is to focus in on customers that are more likely to choose you over competitors, and to stay loyal to your brand. Read below for tips to help you define your target market.

• Look at the customers you already have: Find out who is already buying your products, and look for mutual interests, preferences, and pain points among those buyers to build customer profiles. Dive in deeper on returning customers, and those that are bringing in the most business, so you can strategize ways to target more buyers with shared characteristics. Another effective way to gain insight into your customer base is to collect information from them by way of focus groups, surveys, research, or simply asking for feedback. Learn more about customer profiles, and use a free customer profile questionnaire template to get started.
• Look at the customers your competitors have: Learn about the customers your competitors are targeting, and figure out what motivates them to choose the competition’s products over yours. Use this information to find niche markets or opportunities your competitor may be missing out on.
• Examine your products and services: Take each product or service offering and list out the key benefits they provide, and then detail how each of those benefits solve a specific problem. Use that information to identify who is most likely to have the problem those benefits provide a solution for, and then create a list of those people.
• Create a target persona: Once you’ve identified the types of people who will most likely benefit from your product, you’ll need to home in on those that are also more likely to purchase it — and choose your brand over the competition. Figure out what the demographics of each buyer looks like (e.g. age, gender, occupation), as well as the characteristics of said buyer (e.g. personality, preferences, lifestyle). Then, identify how your target persona will find your product, what will motivate them to buy it, how they will use it, and how it fits in with his or her lifestyle. Learn more about target personas, and download a free persona worksheet template to get started.

Step 7: Develop Your Marketing Strategy

Once you’ve established who you are targeting, you need to create a plan for how you will reach them and ultimately convert them into a customer. Ask yourself how you will get in front of your target audience to bring awareness to your product, and how you will convince them to purchase from you. Read below for effective concepts you can use to develop your strategy.

Identify your buyer’s buying cycle. 

Now that you’ve pinpointed your target buyer, the next step is to develop a content strategy to encourage the buyer through each stage of the customer’s journey. Understanding how your customers make purchase decisions will allow you to align your content strategy accordingly. The stages of the customer’s buying cycle include the following:

• Awareness: Prospective buyers have a problem and begin searching for solutions. This is the stage where a business invests its resources to make potential customers aware of the products and services it offers.
• Consideration: Prospective buyers are considering the various solutions available to solve their problem, and need to be convinced that they need to make a purchase in order to solve it. This is the stage where a business conveys in great detail the benefits the customer will receive after using the product, and how it is better than what the competition is offering. 
• Intent: Prospective buyers are convinced that they need to make a purchase to solve their problem, and begin to compare alternatives. This is the stage where a business reassures the customer that the product offered makes the most sense out of all the alternatives from an emotional, financial, or lifestyle perspective. 
• Purchase: Prospective buyers have made their decision on which company they will purchase the product from. Even if the buyer chooses your product, the process does not end here. The goal of your business is to develop a relationship with the customer to increase brand loyalty, and to find upsell opportunities based on purchase history.
• Repurchase: Buyers need to renew a perishable product (e.g. a supply of contact lenses) or a product subscription. The goal of your business is to foster the relationship with the customer by offering incentives to repurchase and to increase brand evangelism. An effective way to use content to retain customers is through email marketing campaigns. Find email workflow tips, examples and free templates to get started on developing your strategy.

Before creating content for each stage of the buying cycle, you must first establish your content goals for each stage, strategies to implement to meet those objectives, and the key metrics to measure results. 

Develop your content strategy for each phase of the cycle and choose from a wide variety of free content marketing templates . 

Determine the 4Ps of your marketing mix.

In order to effectively guide potential customers through each phase of the buyer’s lifecycle, use your marketing project management skills to create a strategy to get your brand in front of them, and then motivate them to purchase your product. As you develop your strategy, refer to the following 4Ps of your marketing mix:

• Product: This refers to the tangible good (or intangible service) that you are offering as a solution to meet the needs of the customer. Emphasizing the UVP and differentiating your product in the market are the first steps to setting yourself apart and positioning your brand.
• Price: This refers to the price your customer is expected to pay for the product. Understanding the perceived value (e.g. high quality versus low quality) of your product in the eyes of the customer is imperative before you can effectively set a price. Researching the price competitors are offering for similar products or alternatives is a great place to start. 
• Promotion: This refers to the communication aspect of your marketing strategy. Getting the word out about your product is the best way to raise awareness about your brand, with methods including press releases, trade shows, event marketing, videos , and advertising.
• Place: This refers to the place where customers can purchase your product. Will you sell exclusively online? Will customers need to come to a physical location? The marketing channels you will use to get the product from producer to customer (e.g. direct selling, mail order, online) are a part of your distribution strategy.

According to Justin Mares and Gabriel Weinberg, authors of the book Traction: How Any Startup Can Achieve Explosive Customer Growth , some key marketing channels to use to raise awareness about your brand include the following:

• Relevant blogs
• Unconventional PR
• Paid Ads/Remarketing
• Offline Ads
• Content Marketing
• Email Marketing
• Trade Shows
• Speaking Engagements
• Marketing Events
• Community Events

Create your budget.

Setting a budget will give you parameters to work within as you are implementing your plan. It also enables you to prioritize your needs before your wants so you can dictate resources (e.g. talent acquired) toward high priority goals first. Here are some helpful tips you can use to create your marketing budget:

• Build your budget plan based on last year’s numbers, or build from scratch according to priority.
• Make a list of action items, and then come up with an estimated budget for each item based on marketing, distribution, and promotional expenses.
• Prioritize your needs before your wants. Whatever is leftover after your needs are fulfilled, funnel those funds toward your wants.
• Invest in areas with higher return on investment (ROI) (e.g., content marketing, email marketing) to increase your buying power. 

Find a wide range of free marketing budget templates to start planning your budget. 

Step 8: Create a Value-Complexity Matrix

Once you have established your marketing tactics and set out a budget to work within, you’ll need to prioritize your plan of attack by going after low hanging fruit. In other words, you need to act on the high value items that don’t require as much effort to complete, or the “easy wins.”

Take each initiative and assign it to a quadrant within the following matrix to determine if the time and resources needed to complete the initiative are worth the value it will return.

Step 9: Conduct Financial Projections

This segment of the plan shows the financial projections you have determined to be relevant to the project based on the research you have completed for your marketing plan. This component of the marketing plan is critical in order to gain buy-in from stakeholders and investors, and to guide your decisions throughout the duration of the project. 

Common financial data to add to your marketing plan include the following:

Forecasts (sales and expenses)

Break even analysis

Financial requirements

3 year financial projections

Income statement

Cash flow statement

Balance sheet

Find a free sales forecast template, financial projections template, and other templates to prepare your financial data by checking out this page with free startup plan, budget and cost templates . 

Step 10: Identify Standards of Performance and Results Tracking Methods

The primary purpose of setting performance standards is to communicate clear expectations and desired results for an organization’s marketing efforts. For example, a performance standard might be that the total budget for X will equal a specific percentage of the yearly promotional budget for the coming year. 

Before you can adequately measure the outcome of marketing initiatives, there are some steps you must take to lay the groundwork.  

• Determine your key performance indicators (KPIs): Define measurable marketing metrics and connect them to your established goals in order to track progress.
• Establish a baseline: Understand and document how your business is currently performing so you have something to compare future performance results to.
• Define your benchmarks: Acquire data about your competition and industry to develop standard measurements that indicate how you stack up against the competition.
• Decide which tools and platforms to implement: The results you analyze are only as good as the methods you use to track them. Find a  project management platform that provides real-time visibility into project status and performance so you have the ability to make timely, data-driven decisions. 

Once you’ve completed these steps, you can begin the process of tracking performance by doing the following:

• Establish guidelines on results tracking (e.g. what to track and how often), and determine who is responsible.
• Schedule meetings to evaluate results and determine where opportunities lie. Come to each meeting prepared by using a free meeting agenda template .
• Take inventory of your content and compile a list of the top performers. Compare the results of that content to your standards of performance to see if they align, and to identify what can be improved upon. In this article, you can choose from 60-plus content marketing templates , including a content inventory template, to help you plan and execute your content marketing strategy.
• When performance improves, identify what contributed to it and allocate resources accordingly.

Once you’ve identified the standards to use to measure the effectiveness of your marketing strategy, the next course of action is to implement your plan, measure performance, and adjust accordingly.  

Step 11: Write the Executive Summary

Although the executive summary is placed at the beginning of your marketing plan, it is the final step to be completed. This section summarizes all the key takeaways from each segment of the marketing plan, and should ultimately answer each of the following questions:

• What are the overall business objectives?
• How do your marketing goals align with the business objectives?
• Which products or services will you market?
• Who is your target audience?
• What resources will you leverage (e.g. partnerships) to get your products in front of prospects?
• What gives you a competitive advantage?
• What problems are you solving?
• What solutions are you providing?
• What are the short and long-term goals of the company?

Learn more about how to create an effective summary, and find free checklists and templates to support your efforts by visiting “ How to Write an Effective Executive Summary to Yield Results .”

It’s important to remember that a marketing plan is not static, but rather a living document that should be referenced regularly, and updated as changes occur within your business and the larger business climate. 

Marketing Plan Examples and Samples

In this section, you will find examples of marketing plans created by established companies, along with sample marketing plan, to help guide you in your efforts in creating your own plan.

Lush Marketing Plan (provided by Calameo)

This first example is a marketing plan that was created for a cosmetics company. You will note that design elements throughout this plan are consistent to the brand, and sections are broken up by catchy graphics and illustrations.

RE/MAX Marketing Plan (provided by Calameo)

This example is a marketing plan that was created for a real estate company. This plan emphasizes the benefits that a customer receives by using their services, and details the promotional strategy used to connect customers to their business.

Marketing Plan Sample (provided by Houghton Mifflin Company)

This sample shows a marketing plan for a hypothetical company. Although this plan does not display any design elements or graphs, it breaks the plan up into the key components of a basic marketing plan.

Benefits of a Strong Marketing Strategy and Marketing Plan

A strong marketing plan can serve as a roadmap for your organization, and taking the time to write a formal plan — rather than relying on esoteric goals or vague strategy — can heighten the success of your overall marketing efforts. A marketing plan can help you accomplish the following:

• Pinpoint high priority initiatives.
• Eliminate projects that don’t move you toward your goals.
• Identify the right metrics to track.
• Give your team direction and alignment.
• Set realistic and measurable objectives.
• Answer key questions about your business (and how this effort fits into high-level organizational goals).
• Identify your target audience/customers and define how to best reach them.
• Develop a structured approach to building products and services that satisfy customers’ needs.
• Retain your customers.
• Save time and money.

Ultimately, your marketing plan acts as a reference document that will hold you accountable and help you execute your marketing strategy.

Best Practices for Creating a Strategic Marketing Plan

You can elevate the utility of your marketing plan by taking extra time to add elements and perform in-depth analysis of your audience, brand, and budget. Below are some tactical and analytical tips that will help you get the most out of your marketing strategy planning:

• Create a dynamic marketing plan . With so much information to cover, your plan might end up being a long, text-heavy document. Include a table of contents so that your readers can easily navigate through the plan, use bullet points to break up walls of text, and include visual illustrations that draw the eye. Also consider creating a one-page version that captures the most important high-level information.
• Back up your plan with research. All of the information provided in your plan will be more credible if you can back it up with research and facts before you go to market . Attach an appendix for any supporting material, and provide graphics (tables, graphs, pictures, etc.) to substantiate your statements and analysis.
• Understand your audience . A successful marketing campaign hinges on being able to connect your message with your target market. Use Google Analytics or another engagement analysis platform to identify your audience and their behavior, and consider creating audience personas so that you know who you are producing content for. 
• Ensure your brand is strong and stands out . This concept is complex and requires continual attention and iteration. From a marketing perspective, you can begin building brand integrity by defining your unique selling proposition, optimizing and designing your website and all other distribution channels, and creating great content. Be sure to elicit feedback from other departments so that the marketing material is in line with organizational messaging and goals.
• Create realistic financial goals . Like all other business concerns, success relies on sound budgeting. Define your budget early on to set expectations around spending and to identify any potential financial gaps, and create some metrics and KPIs that are related to financial success. In addition, make sure you can realistically support any special offers, discounts, or rewards that you offer.

You can also tap into several accessory activities to strengthen your marketing planning. These include the following:

• Promotions strategies
• Online marketing strategy
• Joint ventures and partnerships
• Referral strategy
• Strategy for increasing transaction prices
• Retention strategy

Design Tips for a Marketing Plan

Presentation is key when it comes to showcasing your marketing plan to potential investors and stakeholders. Below are some basic best practices to keep the look of your plan interesting and streamlined:

• Keep design elements and formatting consistent throughout the design brief and plan.
• Incorporate icons, charts, and infographics to make the plan more visually compelling.
• Use borders and colors (ensure consistency with your branding style guidelines) to section out your marketing plan.
• Emphasize key stats and metrics to make it scannable.
• Create a visual of your target audience persona.
• Use design elements that reflect your high-level marketing goals.
• Use a template to incorporate your own unique touch and branding.

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MULTI-LEVEL MARKETING: AN INSIGHT INTO NETWORK MARKETING

Direct selling industry in India is one of the fastest growing non-store retail formats. Various store and non-store retail formats have evolved to cater to this growing market and direct selling is one such non-store retail format. The growing Indian market has attracted a large number of Indian and foreign direct selling companies. By 2014-15 direct selling business in India would reach a size of Rs 10,843 crore on back of increased consumer spending. Multi-level marketing (MLM) also known as pyramid selling, network marketing, and referral marketing is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other sales people that they recruit. This paper attempts to focus on key aspects of MLM and also what further researcher can add on to the existing literature.

Related Papers

yeasmin akter mukti

Multi-level marketing (MLM), also called pyramid selling, [1][2][3][4] network marketing, [3][5][6] and referral marketing, [7] is a controversial marketing strategy where an MLM company's revenue and profit is derived from a non-salaried workforce (called "salespeople", "distributors", "consultants", "promoters", "independent business owners", etc) selling the company's products/ services, while the earnings of this non-salaried workforce is derived from a pyramid-shaped commission system via two potential revenue streams which, although dictated according to each MLM company's specific "compensation plan", has two common features across all MLMs: firstly, from commissions on sales by participants directly to their own retail customers, and secondly, from commissions based on the sales by other distributors below them who they had recruited into the MLM (in the organizational hierarchy, known as their " down line " distributors). [8] MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing. Most importantly, however, they are incentivized to recruit others to join the company as fellow salespeople so that these can become their down line distributors [5][9][10] .

Shakhawat Hussain

Multi Level Marketing (MLM) is embracing more and more arenas today. Insurance business is just one among them. Selling Insurance policies, traditionally, is considered as a de-motivating and dragging job. Well, not until you discover the power of MLM to boost policy sales. With the competition heating up in the Insurance sector, companies are looking for innovative methods to spread the message and garner maximum business in shorter time. Many local MLM companies having quite large spread in the market are joining hands with leading insurance brands to promote their products along with an assortment of their own products. Insurance sector makes available long term debt for the economic development of the country. At the same time, the MLM route provides employment opportunities to lakhs of people and enhances their social status. The MLM members also get tremendous opportunity to develop themselves personally. This multiple role of MLM companies can be looked at as a social contribution and these companies or cooperatives are emerging as a development oriented social movement. This article studies the economic and social impact of MLM as a tool which can influence society through employment generation, mobilizing long term funds and improving quality of life of people. Statement of the problem Successful Personal selling based on referrals is the key to ensure regular expansion of customer base and building long term customer relations. A country like India offers immense potential to build well run marketing networks to promote consumer goods and appliances. Conventional marketing may become slow or stagnated over a period of time. Multi level marketing may be the turnaround tool in such situations. This paper presents a study on the proliferation of MLM in the Insurance Industry and analyzes the reasons for its apparent success so that further improvements and extension in to similar businesses can be considered. Methodology An in-depth study of the MLM concept is conducted using literature survey and interview with company personnel. Data on the business plan with respect to incentives or total earnings is analyzed in comparison with a traditional entrepreneurship business. Business model of a leading MLM company is analyzed as a Case study. Inferences are made on the unique features of the model and possibility of extending it to other industries.

NMSU Business Outlook

Michael R Hyman

International Journal for Research in Applied Science and Engineering Technology -IJRASET

Kamal Kant Vashisth

India is a major fulcrum for most of the direct selling companies in the world and is going to be one of the biggest markets in the world as population in one of the major factors in the growth of Industries. Without doubt, India has greatest potential for direct sales in the world. As Direct selling strategy is quite different from the business administration of general enterprises although it can save the company a lot of cost, in spite of being accompanied with uncertain risks. This study analyses the diverse motives of individuals choosing to become a distributor for the Network Marketing Company such as Amway, Vestige, FLP and Modicare etc. This paper aims to study the distributor attitude and perception towards Direct Marketing with reference to Amway, Vestige and FLP products in Himachal districts. This study also reveals the reasons for buying the products with the factor analysis. Snow ball sampling has been used for the study. The technique used for data collection is ques...

Hasif Hasbollah

Multi-level marketing (MLM) also known as network marketing is one of the strategy in marketing which motivates its participants to produce income not only from sales they generate but also the sales from other “Downline” participants that they recruited. Current practice of people involves in this marketing strategy is selling, supplying and distributing services or products through many levels of independent participants. Amway, Shaklee, Avon, Nu skin and Mary Kay are practicing the MLM business strategy to expand their business around the globe. In Malaysia, consumers have been exposed to all these types of products including local product brand such as D’Herbs, Dnars Skin Care, Beauty Umaira, etc. Lately, there are overwhelmed of health and beauty product in the market as people and consumer are very concerned about health and beauty. Since, many companies exist in the market as well as the product types, they need to compete among each other and take aggressive actions in order...

Journal of Business Ethics

Claudia Gross

Dr. Arti Chandani

International Journal of Economics and Business Research, 4, 5, 501-513.

T. Lakshmanasamy

A marketing channel is a network of many intermediaries. When it comes to India, they have a lot of mutual interactions compared to what is witnessed in other parts of the world. They are both organized and unorganized structures, but the most interesting feature is that they are largely self-organized. Looking at this from a Social Network Analysis perspective, there has to be some utility base for any link to be formed. In such networks, it is evident that the dealer or retailer expects to link with another for trade. Though profit is the basis, in reality, it is not only the gain but also various other factors that govern the link formation. An attempt is made in this paper to model the link formation based on factors like commercial, social, trust and information dissemination. An econometric model using the ordered logistic regression is used to estimate the link formation. The econometric results show that players have a strong loyalty towards links in terms of social, trust and information factors in the network.

Southern African Business Review

Albert Makore

Background: Remarkable successes have been registered throughout the world by individuals engaged in multi-level marketing (MLM), also called network marketing, which refers to individuals selling products to the public, often by word of mouth and direct sales. Purpose: The purpose of this study was to examine the determinants of MLM success strategies in the Zimbabwean economy and to identify factors that influence multi-level marketers in Zimbabwe. Methodology: A quantitative approach using a survey questionnaire was used to collect data which was then analysed using SPSS. A sample of 146 usable responses drawn from Harare and Masvingo was used in the study. Statistical techniques, which included exploratory factor analysis (EFA) and the correlation matrix, were carried out to deduce the strategies associated with achieving success as a distributor for a MML company. Findings: The study findings suggest that success in MLM is dependent primarily on the following factors: incentive...

Valentina Makni

Direct sales and network marketing in particular are a growing area in non-store retail trade to which until the present moment there has been paid little attention in Bulgarian economic science. That area forms a global industry, which in 2012 realized a turnover of 167 bln dollars, owing to 90 mln independent direct representatives all over the world. The present study aims at presenting an analysis and a global survey of the dynamics, structure and trends in its development during the past 1-2 decades. Taking into account the peculiarities of this area in the tertiary sector of the economy – the service sphere, the ambition of the author is to perform a comparison with the peculiarities of the world economy as a whole, which have emerged in the period under consideration, and on that basis to point out some conclusions on the prospects created by direct sales and mostly their main form of manifestation – network marketing.

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Multi-level marketing: A pyramid scheme by design

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