As of May, 2018 the third result, after typing the search word “mlm” into Google, is an article titled “Why Joining An MLM Will Ruin Your Life” by Eliza Romero from the website Plan A Magazine.
Can a Multi-Level Marketing Company ruin your life? Maybe, but let's explore the reasons Eliza thinks MLM can cause such devastation.
First, let’s be clear about what a MLM is. Multi-Level Marketing is a concept that, like an affiliate program, we can earn commissions through sales made. Furthermore, the multi-level part allows us to earn commissions from sales made by people that we sponsor into the business.
As an example, if you were a Manager in an auto sales dealership you may earn a commission from the sales made by the sales people under you and from any sales you make. In MLM terms, these sales people are on your first level or front line. Most MLMs go deeper than this, of course, but the concept is still the same.
Will this commission structure ruin your life? Probably not. So, let’s examine the article to see what Eliza suggests.
Her first reason is “MLMs are pyramid schemes, and are extremely predatory because the only way to make any money is to sign up more and more people under you which will just ruin your social relationships and make you a pariah where it matters most: your friends and family members.”
The term “pyramid schemes” is so often used in portraying MLMs in a negative light. What really is a pyramid scheme? According to the United States Federal Trade Commission a pyramid scheme is when “Your income is based mainly on the number of people you recruit, and the money those new recruits pay to join the company”.
Using our car dealership example, if each potential customer must pay the dealership a membership fee in order to buy a car, and that is how the sales manager earns his income, not through the profit from sales of cars, then it’s a pyramid scheme.
Most MLMs know this and make sure commissions paid are from sales of products and not from the fee you pay to join the opportunity. That’s why the government hasn't shut them down and they are still in business!
OK, now let’s look at the ruining of your social relationships with your friends and family.
Yes, your friends and family may feel uncomfortable or pressured when you ask them to attend a party or look at your opportunity. Unfortunately, obnoxious distributors have used tactics that are deplorable and have given MLM a bad reputation.
We must be mindful of this and do our best to change people’s perceptions.
Also, a secret…
We no longer need to approach friends and family if we don’t want to.
You see, there’s this thing called the internet.
People go to this site because they want to visit it. Whether it’s through a link or a search, they come here to learn about MLMs. No deception, badgering, nor discomfort.
As far as the party marketing strategy…
What’s so wrong with that. There’s usually socializing, educating, and refreshments. No high-pressure sales are necessary. Invitees either see the value of the products through the demonstrations or they don’t.
It’s important to be very hospitable and gracious. The truth is, most guests usually see something they like, and the products are very high quality, useful and long lasting. Are you still using that Tupperware you bought years ago?
The next point Eliza makes is “As with all MLMs, the real money to be made isn’t in selling their products but in recruiting more people to join your team”.
Come on Google, ranking this nonsense third?
Let’s make this simple…
No product sales, no commissions.
Lastly, she makes the argument “according to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission’s website, 99% of people who join multilevel-marketing companies lose money”.
You hear this kind of thing often.
So, on your last trip to the grocery or department store you lost money. Going to that movie was just like tossing ten bucks out the window (Unfortunately, sometimes it is).
A lot of people join Mary Kay just to get 50% off their products.
As long as we don’t do unwise things, like buy a bunch of inventory (which, because of online ordering, is so unnecessary), we have nothing to fear.
MLM gives us the power of leverage like no other sales model can. Having a huge sales force (downline) earning commissions for themselves and you is an incomparable opportunity that can be had for a fraction of the cost of starting a brick and mortar business or franchise.
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