Hey there! We are quite accustomed to the concept of Multi-level marketing (MLM) and also aware of the major pitfalls the traditional MLM business holds. We will hold a deep discussion on the major issues associated with the traditional MLM business and how the smart contract MLM software can carry them away.
I can assure you that this narrative will define everything about the traditional and smart contract MLM business clearly. We shall get started!
Defining The Traditional MLM Business
First, you will have to get an understanding of the conventional MLM business model. For defining this business model, you can take the example of any business. Here it goes! A business recruits sales executives or simply distributors, who will then be made to take the responsibility of selling the company’s products or services.
The key is how they approach people and make them customers. The sales executives will receive commissions or incentives based on the number of customers they bring in. Or simply, this entire process can be termed as referring new customers. So, it is all about the existing employees directly getting involved in bringing customers. And that’s how the company’s user base gets expanded.
But there are multiple pitfalls in this traditional MLM business due to the intervention of human resources. Let us understand those pitfalls in the next section.
Drawbacks Of The Traditional MLM Business
- Improper distribution of commission fees or referral fees. In traditional businesses that are prone to severe politics, the upper-level employees may receive a high percentage of commission, and the ones at the bottom level may receive the least. This is what is termed a pyramid structure.
- Similar to private insurance companies, MLM-based businesses can face downwards, and one of them includes fraudulent activities.
- Another key problem in traditional businesses is the lack of transparency. The upper-level management will be the center of authority and may lack transparency in the case of business operations.
- Moreover, the conventional MLM business doesn’t guarantee a return on investment (ROI) and also long-term success.
Now, you have got to be familiar with the key pitfalls in the MLM businesses that operate in the traditional manner. We will jump into further sections to gain an understanding of the smart contract-based MLM business.
Smart Contract – An Outline
In a decentralized platform, there isn’t any administrative body that looks after the transactions or other in-platform happenings. Every transaction that gets executed on the DeFi platform is based on the instructions given in smart contracts. Yes, the smart contract plays a crucial role in transactions.
To define a smart contract in simple terms, then the word “virtual agreement” will be suitable. In technical terms, a smart contract is defined as a set of programs that include terms and conditions for the transactions.
Before we discussed the definition of an MLM business. And now, you will be aware of smart contracts. So, it is the perfect time to kick-off the smart contract MLM software development and the benefits that get trailed.
Smart Contract Integrated MLM Platform
To scoop out the loopholes in the conventional multi-level marketing message, the smart contract mechanism is integrated into the MLM platform.
Decentralized platforms that operate on any of the blockchain networks will employ smart contracts. Once the smart contract is programmed, it will be added to the blockchain network, which is immutable from then. The popular smart contract-based MLM platform are
- Ethereum smart contract-based MLM
- Tron smart contract-based MLM
Perks Of The Smart Contract-Based MLM Platform
Running an MLM business on a robust blockchain network comes with multiple benefits for users. Move on to absorb the perks of the smart contract MLM software.
Traditional MLM business is vulnerable to mischievous activities, which can be caused by the management body or the employees. Whereas in the smart contract platform, every action taking place on the platform is transparent, thereby ensuring trust among users.
- Simple and automatic
Not only is this smart contract-based MLM platform transparent, but also guarantees simplified processes. Again there is no need for the involvement of anyone to execute the transaction. The automated nature of the platform is all the more beneficial.
Tamper-proof, sturdy, robust, and so many other synonyms can be used to describe the stability of smart contracts. Any shred of change can be done to the smart contracts once it is being coded.
Hence, from providing 100% transparency to ensuring immutability, the smart contract is a perfect choice.
What Is The Functionality Of The MLM Software?
Since the concept is about coupling the multi-level marketing business with the smart contract, here is the functionality of the same.
In traditional MLM, the existing employees will refer customers, and for that, they gain rewards. It is the same here! Users who join this MLM platform will have to pay the joining fees in Ethereum tokens if the platform is based on the Ethereum blockchain. Generally, the sign-up fee is 0.03 ETH or 0.05 ETH. Similarly, new users who sign-up are bound to pay the same fees.
As always, the sign-up fees or entry fees of new users are rewarded to the current user who carried out the referral process.
An Effective Method For Building Smart Contract MLM Platform
The most effective way to build your smart contract MLM is to use the white-label solution. If you indulge in the scratch method of developing the MLM platform, the amount of time that has to be spent will be high.
But if you go with the white-label (ready-made platform solution) method of MLM platform development, you will save time and further make customizations on the ready-made platform itself.
Two Chief Features Of The MLM Software
- Crypto wallet
You can integrate crypto wallets like Metamask, Trustwallet, etc. into the MLM platform, thereby letting users transfer funds easily.
- Multi-lingual support
The need for multi-lingual support in your platform is essential. Hence, the multi-lingual feature is one of the notable features.
Hence, other than crucial attributes like transparency, traceability, P2P transfers, these two features are quite important for your platform.
Wrapping up, take this opportunity to develop your MLM software using the white-label solution and make the most out of your MLM business.