19 Jul 2023
Insights, Marketing
In today’s digital age, there’s no doubt that SaaS companies are recognising the significance of multi-level marketing (also known as ‘network marketing’). With the rapid growth of the internet and social media, the influence and potential reach of multi-level marketing have skyrocketed.
But let’s address the elephant in the room, shall we? Certain misconceptions around multi-level marketing have led to its association with pyramid schemes and general ‘scam culture’.
This is why we believe it’s time to separate fact from fiction and understand the true potential and challenges of multi-level marketing for SaaS companies.
First and foremost, let’s clarify a common misconception. Even though some multi-level marketing (MLM) companies have previously overstepped the mark in terms of legal compliance and ethics, in its current form, MLM is not a pyramid scheme.
In fact, pyramid schemes are now completely illegal in many countries, including the UK, the US, and various European countries.
So, if it’s not a pyramid scheme, what is MLM marketing?
Now needing to operate within a legal framework and legitimate business model, MLM is a marketing strategy where individuals become distributors for a company’s products or services and have the opportunity to earn commission from their own sales, as well as the sales made by a recruited network.
Because this recruited network follows a hierarchical structure, this is where the confusion between MLM models and illegal pyramid schemes stems from.
In an MLM business, your network of distributors has the opportunity to earn income based on their own input. Unlike direct sales, MLM distributors can also make money from recruiting others to work for the company, making MLM a popular choice with those seeking additional income streams or a ‘side hustle’.
While it may not be suitable for all products, multi-level marketing is capturing the attention of SaaS companies in the UK and beyond — both in terms of their own operations and as an external service provider.
Note: Some companies operating direct selling strategies may also be considered MLM companies, but as mentioned above, there is a distinction when it comes to network recruitment.
For SaaS companies, there’s no doubt that MLM opportunities exist. Particularly at a time when multi-level marketing companies (and direct sales companies!) are seeking increased innovation and agility, SaaS companies are perfectly positioned to leverage multi-level marketing as a concept.
For example, we see significant MLM opportunities for SaaS companies in the following areas:
As a SaaS company, you can leverage MLM as a new and powerful way to distribute your products. Integrating MLM into your marketing strategy allows you to tap into a vast network of distributors who can promote and sell your products, expanding your reach and driving sales growth.
With the right MLM strategy, SaaS companies can penetrate new markets and gain access to a much more diverse customer base — without a commitment to in-house hiring!
SaaS companies specialising in MLM software are playing a key role in reshaping the perception of network marketing. With innovative “all-in-one” solutions already integral to the success of many leading MLM companies, MLM companies are actively seeking out new SaaS providers to streamline complex processes even further.
A network marketing software suite should be able to automate tasks such as:
With many SaaS companies already offering tools that cover many of these areas, developing your offerings and marketing yourself as an MLM software specialist can be tempting. Just be sure to do your research and ensure you fully understand the intricacies of the MLM industry.
Tip: Due to the complex nature of MLM tools and direct sales portal software, SaaS providers offering these solutions should prioritise user-friendly interfaces and intuitive functionality.
MLM also offers a scalable business model for SaaS companies and businesses using MLM software. By enabling distributors to recruit and train their own ‘downline teams’ at their own pace, there’s no limit to how far MLM models can expand.
For your SaaS company, this can mean significant long-term opportunities — both in terms of personal growth and customer relationships.
Tip: For an MLM company, finding the right multi-level marketing solution can be a process within itself. This is why if you’re a SaaS company wanting to tap into the network marketing business, it’s vital to thoroughly research the needs and wants of your audience.
Even though multi-level marketing can hold several opportunities for SaaS providers, it also presents unique challenges that require careful consideration and strategic planning. SaaS companies venturing into MLM must address these challenges head-on to maximise their chances of success.
Just some MLM challenges for SaaS companies include:
Due to the misconceptions associated with MLM, SaaS companies engaged in this marketing approach (either personally or as an MLM software provider) may need help managing their reputation.
This is why transparency, education, and addressing concerns are so vital for maintaining credibility and trust with consumers.
For SaaS companies looking to build a strong network of distributors for their own products, time and resources must be invested into finding the right partners. The aim is to target individuals who align with your values, can effectively promote your products, and can serve as trusted brand representatives.
To help this process, we recommend providing comprehensive training, support, and incentives to attract and retain high-quality distributors.
MLM operations will need to comply with various legal and regulatory requirements. For both MLM companies and MLM software providers, this can mean a heavy investment of time and other valuable resources that other marketing strategies are less likely to drain.
To avoid compliance issues, we recommend seeking legal counsel and staying up-to-date with the evolving nature of MLM and data security to safeguard the interests of your company, product, and distributors.
As you explore the potential of multi-level marketing for your SaaS company, it’s crucial to evaluate the opportunities and challenges equally.
To do this, we suggest considering:
It’s also vital to approach MLM with a clear understanding of ethical and responsible practices. By making informed decisions, SaaS companies can successfully navigate multi-level marketing and drive growth without falling victim to the same fate as less cautious business owners.
When it comes to finding the right marketing strategies for your SaaS company, Rocket SaaS is the perfect partner to help you make the best decisions for you.
With our expertise and in-depth understanding of the SaaS industry, we provide tailored solutions that align with your business goals and target audience.
Our team of experienced marketing professionals will work closely with you to develop effective marketing strategies, leveraging the latest trends and applying expert techniques to drive growth and maximise ROI.
To find out more, book a FREE marketing strategy call to see what we can do for you
