The Study On The Salary System Of Multi-level Direct Selling

Direct marketing refers to the distribution way in which direct marketing enterprisesrecruit direct marketers and let them sell products directly to terminal consumers out offixed places of business. According to the difference of salary system, direct marketingcan be divided into single-level direct marketing and multi-level direct marketing (MLM).In multi-level direct marketing, products are allowed to flow into several levels ofdistributors before they reach the hands of consumers.Domestic and international economic scholars did little research on the MLM salarysystem. This paper, combined with the theory of motivation and management, researchesthe rationality of the existence of MLM and its brief history around the world, explains thedifference between pyramid scheme and MLM, indicates the current situation of MLMsalary system, does in-depth research on MLM salary system using principal-agentmodel analysis tools, makes an empirical analysis combined with the current MLM salarysystem of those direct marketing enterprises in China who have received direct marketingbusiness licenses from the Ministry of Commerce. The study found that the contradictionof current MLM salary system itself leads to some deviation of its incentive effects, as theoriginal intention of direct marketing enterprises to set a high proportion of bonuses is tomotivate direct marketers to make great efforts to sell more products, but those rationalsellers focus more on the development of offline instead of selling products in thisexcitation, which reveals the reason why direct marketing enterprises encourage theirdirect marketers to help themselves to direct marketing products and at the same timeprescribes that direct marketers must consume a certain amount of products; the researchalso found that direct marketing industry is essentially a high-risk career for marketers,and came to some other conclusions such as team payment is necessary when settingMLM salary system. Finally, the author put forward improvement recommendations ofcurrent salary system in Chinese direct marketing enterprises: Devise salary systemsuitable for their own and propagandize it objectively and fairly, improve the design ofcurrent salary system, and salary system reform should keep up with the development of the internet direct marketing.