Multi-Level Marketing (MLM) In Singapore: A Complete Guide

multi-level marketing in singapore guide

Want to see how far you can scale as a free-spirited entrepreneur? Then going for an independent multi-level marketing slot might just give you the experience you so deserve. Multi-level marketing, also known as direct sales is one of those proven opportunities that provide you with mentorship, training, marketing tools and sundry to get you started.

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Although MLM has been touted as the best start from home venture, success isn’t guaranteed. In fact, it’s not as easy as you might misconstrue it. If you want those revenue streams to hit your bank account like crazy, you’d better treat your MLM venture like the top notched business it is. Word of caution: just because the MLM opportunity comes with ready products and all the head start you need, it simply won’t operate itself.

But not to worry, other entrepreneurs have tried it, tested it and succeeded. You only need to brush up on your business etiquette and mind-set. That said, the MLM success stories out there should be your necessary steroids to get you going. Let’s see what the following MLM guide says about MLM, its successes, myths, and viability as a business model.

What is Multi-Level Marketing (MLM)?

Multi-Level Marketing-MLM or direct selling is a business model where a company builds a network of distributors or participants who sell the firms product or services. Once a distributor in MLM, you’re encouraged to recruit new distributors who will work under you.

The distributors who work under you are obligated to pay you a commission based on the product/services they sell. They, in turn, are encouraged to recruit their own distributors. The cycle mutates downwards creating levels that are referred to as multi-levels.

Multi-level marketing is not to be confused with pyramid schemes. 99% of the transactions involve the direct sales of products/services to consumers. These products are drawn mainly from the health, wellness, beauty and homecare domain.

Multi-Level marketing is an alluring opportunity for people who crave financial independence. You can quickly start your MLM business from the comfort of your home. This way, you become affiliated with an extensive network of distributors who earn a living from selling directly to customers.

Multi-Level Marketing Origins

Though it’s not profoundly documented, MLM has its roots in the US dating back to the 1930s-40s. The personal care and wellness industry was already gaining root. Companies were looking for ideal ways to get to potential consumers.

This is what birthed the idea of a vast network of distributors dealing directly with customers. Soon the networked concept became a coveted marking option. The multi-level marketing wave didn’t take long to encompass traditional businesses. In no time, MLM had spread to Europe, Canada and eventually Asia.

Characteristics of Multi-Level Marketing

Are there distinctive traits you like about the MLM business model? May be or not. Before you join the bandwagon, it’s prudent that you know how what characterises multi-level marketing as a whole. Here are some traits:

It’s Low Cost

Stop and think how demanding it can be to set up your coveted brick and mortar venture. The bureaucracy itself can be unnerving. What if you came across a business model that can get you earning without all these mind-boggling overheads. Yes, that’s what MLM is about. You don’t require a five-figure amount to open up shop.

Proven Systems

If you go for a conventional business model, you’re on your own when it comes to operational systems. Enter MLM, and everything is set. You only plug and play. But wait, you even have training and administration at your disposal; you only need some effort and discipline to start earning.

Flexibility

Does start-up failure bother you to the extent you’re not willing to try it? Then, multi-level marketing is that model that gives you freedom and flexibility. You can start it part-time as you push the usual 9-5 job. It presents you with a safety net during such a period. After you polish it up, you can quit your bosses’ job and make money comfortably.

Universal and Scalable

Want to experience the power of the web at play. Then, take the MLM plunge. Your local brick and mortar will take aeons to break into the global market. The internet, coupled with MLM best practices, can make your business an international phenomenon in a matter of hours.

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Remuneration Plans In Multi-Level Marketing

No two MLM companies are the same. That said, it’s important to mention that they abide by a conventional remuneration plan. This plan comes with two compensation options.

  1. The first option is money that you get paid directly by the MLM company after selling their products.
  2. The money you get paid as commission from the sales generated by the distributors that you’ve brought on board. This is what is called the downline distributorship.

Pyramid Schemes

One thing that continues to plague the MLM business model is that it’s usually misconstrued as a pyramid scheme. But what’s the truth in it? Pyramid schemes are indeed thinly veiled as MLM models. Pyramid selling involves taking money from people without offering a tangible product in return. That’s not quite the fact with MLM.

For years, individuals have sold products through direct human interaction. Pyramid schemes have only served to recruit people, but there’s no product; it’s just recruiting more people to generate purported wealth which makes pyramid schemes to stink from a mile off.

Difference between Pyramid Schemes and MLM

The significant difference between MLM models and pyramid schemes revolves around their legality. In fact, in some countries-Singapore included, running a pyramid scheme is illegal and punishable by law.

How to Confirm the Legitimacy of an MLM

The easiest way to discover whether an MLM is authentic is through due diligence check whether:

  • The company has been in the business long enough-5 years and up.
  • Do they have an excellent record for customer satisfaction?
  • Has the company generated plausible buzz around them and their products/services?
  • What do their blogs and websites say about them?
  • Has the MLM Company been involved in a lawsuit?

If they invite you for an opportunity meeting, do further diligence. Ask your recruiter/sponsor to specify their terms and conditions without skipping:

  • The compensation plan
  • Your starting expenses
  • Proof to support claims of the money you can make
  • Support for claims about how much money you can make
  • Contacts to a company rep and their references

Recognising Pyramid Schemes

Are you apprehensive that you might fall prey to a pyramid scheme? Not to worry, the good news is that there are discreet ways and means you can employ to keep off the scammers.

At the same time, pyramid schemes siphon money for sinister recruitment purposes while MLMs seek to promote and distribute real products.

For sure, a pyramid scheme will be fixated on recruiting more distributors than selling to end-users.  What if they’ve perfected the art of disguise? Well, here are tricks you can leverage.

  • Watch out for schemes that offer money simply because you’ve recruited people.
  • Avoid MLM scams that emphasise more on starter kits than selling actual products.
  • Keep off MLM models that charge hefty joining fees, non-refundable fees and those that force you to train.
  • Avoid any business model that’s too saturated with distributor/compensation levels.
  • Ensure that products have a real, competitive and reputable market value
  • Be wary of MLMs that recycle sales lead lists to other MLMs
  • Avoid MLMs that pressurise you to sign up on the spot-take time to think it through.
  • Avoid MLMs that entice you by flaunting imaginary wealth. Successful MLM distributors are intelligent and straightforward.
  • Eventually, if your gut feeling isn’t right about it, it probably is a scam.

How Does MLM Compare To Traditional Marketing?

  • Of course, the notable difference between MLM and traditional ventures is how products are distributed and sold.
  • Traditional ventures advertise their goods through media ads. Conversely, MLMs rely on aggressive distributors or agents to drive their products. Ideally, the MLM model is cost-effective and easier to manage. You only need to motivate your downline but don’t forget to help them find stable ground.

How Does a Typical MLM Work?

Typically, the Multilevel Marketing model works through recruitment. You’ll be asked to join the MLM company as a contractor or a distributor. A distributor who’s already working for the company will recruit, or you can join through an advertised forum.

After joining, you’ll sell products and make money directly from the sales. Also, you can recruit other distributors who’ll work under your wing. You’ll earn from part of the sales that these contractors generate.

If your recruits bring in more distributors, you’re entitled to a commission arising from the money they make. The distributor who recruits you is obligated to help you get started. In return, you’re obligated as well to coach the distributors you bring on board.

Types of MLM Compensation Plans

Uni-level Plans

Uni-level plans are simplistic. They’re based on the initial recruit tier. You can sign up as many recruits as you like. You’ll be compensated for every sale they make. However, there are limitations for depth. You can only earn up to a given tier. This plan is ideal for those who want to make quick money from home.

Binary Plans

Binary plans do not come with depth restriction. But they do have a width cap. This means you can only earn from two direct recruits the two are allowed to recruit two more. Your pay depends on the amount generated by the lower performing tier.

Forced Matrix Plans

This plan comes with a depth and width limit. A company calculates pay through a 4-by-5 matrix. It means that you can get paid for recruiting 4 people and you’ll earn up to 5 tiers.

Breakaway Plan

The breakaway plan allows a distributor to de-alienate him/herself from the upline. This is practical, especially if you’ve achieved a specific level of success. It equates to more pay since your recruiter is no longer entitled to a considerable chunk of your sales.

The State Of MLM in the Singapore Marketplace

In Singapore, there are stories about MLM, what it is and what it’s not. The term is intimately mentioned with pyramid schemes. There is a strong stance against disguised business activities that are associates with unstable financial structures and policies.

The truth is that there’s no confusion regarding the state of MLM in the Singapore economic space. There are no distinctions that separate MLM and pyramid scheme in Singapore.

Who Enforces MLM Laws in Singapore?

In Singapore, MLM activities are controlled by the Multi-level Marketing and Pyramid Selling (Prohibition) Act. The fact is that MLM schemes are illegal unless they’ve been censored by abiding by a set of regulation. Some of the MLM variables that qualify in this context include major franchises, insurance and direct selling companies.

Even so, direct selling companies are required to register and operate under a Code of Ethics and Conduct as directed by the Direct Selling Association of Singapore.

It’s this code that safeguards the interest and wellbeing of participants and consumers of these businesses. Additionally, the Consumers Association of Singapore is charged with creating awareness of the activities of multi-level marketers and associated activities.

Given that pyramid schemes are criminalised in Singapore, the reinforcing mandate lies with the commercial affairs department of the Singaporean police force. Overall the act is administered by the Ministry of Trade and Industry.

Is MLM Legal?

Yes, it’s not a secret that myths around the MLM model abound. For an MLM business to be legal, you need to check the following boxes:

  1. Presence of a proven product or service
  2. Income or commission earned from products or services
  3. The emphasis revolves on sales not recruitment exclusively

If the MLM takes the form of a program with no product and encourages payments based on the number of recruits, it could end up being a lousy scam. Remember, the term pyramid shouldn’t turn you off. Numerous organisations go for a similar structure with the CEO at the apex. That said, what vilifies the pyramid scheme is the lack of a valuable product and the focus on recruitment rather than sales.

Are There Penalties for Breaching the MLM Act?

In law, Singaporean citizens or persons in the country who take part in promoting MLM knowingly or unknowingly will have committed a criminal offence.

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Presently, getting convicted for MLM crimes may result in a fine of up to $SG200,000. Equally, it can result in a sentence not exceeding five years or both. In the light of tis, it requires citizens or anybody on Singaporean soil to do due diligence before partaking in any MLM/pyramid schemes.

Where to Report Illegal MLM or Pyramid Schemes?

Authorities encourage individuals to make reports of purported MLM scams or pyramid schemes to:

The CAD division

Telephone: 6325 0000

Report Online: CAD Website

In-Person reporting: 391 New Bridge Road, #06-701 Block D, Police Cantonment Complex, Singapore 088762

Why is Multi-Level Marketing So Popular?

Want to know how many factors contribute to the attractiveness of the multi-level marketing model? Simply, the reasons are a dime a dozen. If you take a guess, you’ll discover that MLM requires a smaller investment compared to the typical business. But the benefits don’t stop there.

Supplemental Income

The modern person yearns for a better quality of life. To make it a reality, people need to make supplemental income to live better. With an MLM business, it’s easy to make such. It doesn’t matter whether retirement is looking you in the eye.

Keeps you Engaged

Even with the need to generate income, you still need an activity that can keep you active. If you take on an MLM business head-on, not only do you have something to keep you busy but your stay at home days will be more exciting and fulfilling.

Well-adjusted Rewards

In the corporate world, the compensation structure is somewhat tilted to favour rank. Enter MLM, and your remuneration is equal to your efforts. You can make as much as your efforts and outreach allow you.

Modern Networking Opportunities

Globalisation and social networking have made the world smaller. You can leverage MLM to build global connections. Don’t forget, it’s a lot easier to run an MLM venture remotely.

Unparalleled Growth

A lot of light has been shed over the myths clouding MLMs. People have a new concept of what the multi-level marketing business is all about. Surprisingly, it’s become as popular as franchising. The growth potential of MLM isn’t easy to ignore.

Tips for Building A Multi-Level Marketing Campaign

In an MLM model, the bulk of the work is done by individuals. It’s all about presenting the brand to the target market. Every MLM presentation starts with a company intro and later product details.

Know Your Prospects

Drawing from that, MLM executives are obligated to create a mission, image and provide resources that facilitate such kind of communication. To ideally reach out to your audience, you’ll need to know what drives and motivates them.

Prioritise Data

Effective MLM doesn’t rely on trial and error methods. It relies and builds on data. If you’ve been gathering sales and prospect data at every presentation, it becomes easy to leverage the data to provide products with that matter. In fact, the company involved quickly deduces how to package such products, and they can tailor their messages to suit different target markets.

Establish and Keep Updating

An MLM brand is critical to the success of the MLM campaign. Marketers can identify products and assess the target audience whose needs are at stake. Additionally, marketers ascertain that the brand’s personality is aligned with the personality of the target consumer. The messaging needs to be adjusted to match the evolving needs of a customer.

Educate Your Agents

Brand reputation and quality indeed go hand in hand. If the product/service quality is pathetic, the marketing strategy won’t make up for such. Always ensure that your distributors are well-versed with the products such that they can demo it comfortably. Try and bring your brochure, catalogue or direct mail capacity to the show and see how well it works.

How to Build Great MLM Leads

You need great MLM leads that will stay with your venture in the long term. And no, those warm leads-friends and associates aren’t great leads. Your best leads are the ones you toil for. Here are some methods of generating leads.

Create a Website

Legit MLMs know the importance of technology. They’ll readily offer you a website or allow you to create your own. With a website, you’ll differentiate yourself from the rest, and the leads will find you easily.

Create an Email List

The leads affair is dynamic. First, you need to create a website for visibility purposes. Next, you need to ask them to sign up for your email list. Don’t spam with the emails but provide them with informative and useful product news, you’ll always be top of mind.

Create Content and Blog Posts

Do you know guest posting alone can multiply your visibility significantly? And you only need a bit of patience. Use blog posts to tell your story, and you can leverage backlinks to advertise your MLM venture further.

Don’t Ignore Social Media

Blatant posts asking people to sign up with your program will get you nowhere. But try creative social media calls and see the difference. Explainer videos and YouTube tutorials can do your efforts a lot of good.

Develop a Referral Program

People who get directed to your MLM program are easier to convert. That said, you’ll need to create a referral program such that those who root for you indirectly can suggest your program to others. A referral program should offer some form of reward for excellent results.

Tips for Succeeding in the MLM marketplace

Is there a cheat sheet that guarantees you MLM success? Maybe there’s one. To put doubts to rest, numerous tips will help you realise MLM success faster than the average MLM-er.

Understand MLM Realities

To succeed and stay safe from disguised MLMs and pyramid scams, you’ll need to learn as much as you can about the industry. Check whether you’re a good fit for your sponsor and vice versa.

Choose a Company with Captivating Products

Do you know that failing for an MLM company hype is what leads to business failure? Then I suggest you stay away from it. Instead, choose a company whose products excite you. In the process, don’t forget to check a company’s compensation plan and sign up if it’s favourable.

Be Sincere and Ethical

The truth is that some MLMs will ask agents to use deception to get recruits. Don’t be swayed to believe that legit MLMs do this. A reputable company wants you to play the honest agent in your prospecting. In fact, if you’re passionate about the product, it’s all you’ll need to succeed.

Go Easy on Friends and Family

Any MLM business isn’t and shouldn’t rely on close family or friends. If they don’t want to join your quest, you don’t have to push them.  Instead, focus on pushing your venture to the next level. Interested parties will follow you when they see your success.

Identify Your Target Market

At the same time, you’ll need to understand that identifying your target audience is the key to MLM efficiency and success. Once you do, through everything you have at them and wait for results.

Share Your Products and Plans Consistently

It’s not uncommon for MLM sponsors to have you recruiting aggressively. But you need to know that your income is dependent on the sales you and your downline make. If interested consumers keep seeing the products you’re promoting, it’s easy to convert them. Always get the word out about your products, you’ll have an easy time winning prospects in the long run.

Sponsor Instead of Recruiting

MLM-ers recruit and profit from the sales that their recruits make. Instead of seeing your recruits as exploits, turn it around and view it as a chance to help others get to the top. Be a leader and a trainer since it’s the only way you’ll prosper justifiably.

Learn How to Market

MLM-ers will indeed sell to anybody within 3 feet. Don’t follow that tenet. Go for marketing tactics that consider your target market, how you can promote it and the current needs. Incorporate essential resources like your website, social media or email outreach to boost product interest.

Be Different

There’s no way you’ll appeal to prospects if you’re selling a product they’ve come across over the years. But there’s a catch to it. If you dare to be different, you’ll find a way to stand out.

10 Examples of Multi-Level Marketing Do’s

  • Do Seek experts guidance
  • Do exploit MLM software
  • Do recruit passionate and interested people
  • Do know that your people are your wealth
  • Do tell them it’s empowering
  • Do delegate responsibility.
  • Do believe in the product and business model
  • Do substantial homework and groundwork
  • Do bolster your presence on social media.
  • Do work with a content management strategy.

Is MLM Right for You?

If you’ve decided to join the MLM movement, it’s wise to know that even some of the legit MLM endeavours may not suit your tastes and lifestyle. Before you plunge in, ask yourself the following:

Do I Want to Be a Salesperson?

Sounds like a pun but no it doesn’t. If you sign up, you automatically become a salesperson. You’ll need to know how to convince people to join, invest, buy or resell products /services. If you freak out at the idea of asking people to put their money in some products, then MLM might not be for you.

Do I Have a Robust Sales Plan?

Yes, you’ll have the warm customers around you but what if they’re no longer interested. Do you have a killer plan to find and retain a new stream of customers buying the product? If not, think again.

What are My Income Goals?

So you know how to dress for the job and impress prospects?  Aright, but do you have a persuasive secret that can keep your income constant? If not, you’ll need to evaluate your stand.

Can I Take the Money and Time Risk?

Typical businesses come with risks. MLM is no exception. Yes, the start-up cost is low but operational expenses can swell up in no time. You’ll need to be ready for costs of printing, website fees, party hosting and product expenses, among others. There are time risks too, and you need to be sure you can handle all that heat.

Are MLM Businesses Successful?

MLM businesses get a bad rap, but it’s not the verdict you should trust. Often, it’s thought that MLM ventures have a terrible failure rate. All businesses fail, and you know it. Secondly, its common sense to drop an investment you started with SG100 than one you pumped $SG10,000.

Additionally, many MLM-mers may sign into to cash on the fast buck, and they forget to assess MLM products and their love for them. This isn’t the fault of the MLM model per se. The cardinal rule is success or failure is as a result of the agent or distributor.

You don’t need to be reminded that you can succeed with MLM if you observe and play by the rules in the book. Some MLM ventures require modified strategies. However, you should keep the time tested business growth strategies. You cannot employ little known lead and market targeting tactics and expect to make money.

Top Factors When Choosing an MLM Company

That MLM Company you’ve been dying to sign up for their program may not be the lucrative deal you envisioned. To avoid making a mistake, you need to check out crucial aspects that tell you whether your dream MLM company is worth investing in. Always check:

Their Product or Services

An MLM company is only popular based on the appeal of its products and services. Always ensure that there is a unique selling proposition and product appeal.

Leadership Capacity

A reputable MLM firm will have strong leadership capabilities to create and sustain justifiable models or programs. They display industry prowess and a profound grasp of the MLM forte.

Financial History

The best MLM Company won’t have problems demonstrating how they’ve managed to be financially liquid over the years. The revenue stream is a product of competitive, legitimate, and long term marketing.

Compensation Plans

Other than being straightforward, an MLM firm should display alluring compensation plans that have motivated their uplines and downlines to keep the sales momentum high. The firm should show how recruits stand to gain devoid of pushy or manipulative tactics.

Availability of Training

An MLM company’s objective is to assist agents in selling in the right manner. As such, they shouldn’t have trouble explaining the scope of training they offer and the business plans they work with. Also, they should have online training offers and international training conferences.

 

 


FAQs

What are the characteristic of Multi-Level Marketing

– It’s Low Cost
– Proven Systems
– Flexibility
– Universal and Scalable

Author Bio

Tom Koh is widely recognised as a leading SEO consultant in Asia who has worked to transform the online visibility of the leading organisations such as SingTel, Capitaland, Maybank, P&G, WWF, etc. Recently he was instrumental in consulting for a New York-based US$30B fund in an US$4Bn acquisition. Tom is a Computational Science graduate of the National University of Singapore. In his free time he performs pro-bono community work and traveling.
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