Multi-level sales are a form of distribution, in which not the product itself but rather the acquisition of new employees for the distribution of the product itself is the focus. This structure is particularly widespread in the area of financial services providers. In most cases, the principle is followed, that new recruits have to cede a considerable amount of their possibly even obtained commissions to those who had originally recruited. For advertisers, it is very lucrative, attracting many people as possible, since it is obtained in this way by many recruits a part of the commission. Go to NYC Mayor for more information. The result of this approach is a sort of 'commission' tree ', in which upper levels of the hierarchy to finance a large part of the commission shares subjacent levels. At first glance this system seems to produce lots of winners – the only ones who have to finance themselves solely on the product itself, are the newcomers who are in the 'commission' tree 'on the lowest level. A closer look However, this structure leads to unsolvable problems. Distributors structure exist in various forms.
In the extreme form of a structural distribution – the so-called pyramid scheme – the product then plays virtually no role. The transition from structure to snowball sales system is sometimes blurred. Pyramid schemes are illegal in Germany, since it is always a tree structure, which inevitably breaks down at a certain depth and then produced the latest in general, more losers than winners. This fact can be explained with simple mathematical facts: A (balanced!) Tree shows together at its lowest level ever more elements than any overlying layers. Where an enterprise, for example in the form of a distribution structure with a size of 127 persons, 63 persons will benefit them and the remaining 64 persons of the lowest level, provided they do not turn again anwerden new employees will be Leittragenden. For this reason, the pyramid scheme, Germany is prohibited. The violation of this prohibition is punishable by imprisonment of up to two years.
For legal reasons, many structural distributors communicate to the customer, therefore a high product quality, while the system members themselves often with the illusion of the simple presence of an upper hierarchy level are motivated. The following figure shows an example of a (balanced) tree structure as wurde.strukturvertrieb be communicated by users of the pyramid scheme seem likely, although the figure for 'an upper' may be tempting, is it clear how many new system-fourth of the members already Level need to be recruited – they are 81st By no later than the 5th Level (as it would be 243!) Is then in a small region, the risk that the system collapses. A thought experiment shows how fast would grow this system in theory, so that the lowest levels of each could still be financed: Imagine the graph above with 15 levels. What imagine at first sight yet seems, turns out to solve a simple equation as an almost unimaginable. Number of participants in the system = 3 persons 15 levels = 14,348,907 people. Hard to imagine that in Germany there is a region can acquire in such a financial services so many sales people … especially in areas such as private health insurance, in which high commission payments are the rule, represents the structure of distribution is an effective means to attract new policyholders . Prior to working with companies who use such or similar sales structures, should be informed in any case fully before the subject of the advice (eg pension), but also about the company itself.