Multi-Level Marketing: The Future or Folly?

By Nora Dunn on 28 January 2008 (Updated 7 October 2009) 38 comments
Photo: tanakawho

Multi Level Marketing (MLM). Also known as Network Marketing or Direct Marketing, and even commonly (incorrectly) referred to as Pyramid Schemes, this type of business entity either has enthusiastic fans or raging critics. Today I will attempt to define exactly what multi-level marketing is, debunk some common myths, and arm you with some warning signs of the "bad seeds" of the industry.

Fundamentally, MLM can be a viable form of doing business. Let's compare the MLM structure to that of a conventional business.

Conventional Business

Structure

A standard corporate business structure has a President or CEO at the top, who inevitably gets paid the most of anybody in the company, and who calls all the shots. Below the CEO you have VPs, Assistant VPs, departmental heads, and sub-departmental heads. Each of the key players has assistants and teams to help them do their jobs. And the further the employees are removed from the CEO in terms of responsibility or title, the less they are paid. At the bottom rungs are the many support staff, who are the "worker bees" of the organization, and are typically paid the least.

In fact, you could often draw up a corporate employment structure to look like a pyramid.

Marketing

For a conventional business to market their product, they have extensive sales and marketing departments and budgets. They advertise to their market using strategically placed ads on tv, in magazines and newspapers, billboards, movie theatres, and on it goes.

If they are lucky, their product will catch fire with the right market and word of mouth will do the rest of the work. But they still have to maintain a presence in the advertising world in order to keep new customers walking in the door.

And of course, the cost of all this (often expensive) advertising is ultimately passed on to the customer through the cost of the product.

Compensation

Most corporate employees have standard salaries, plus occasional profit-sharing incentives depending on the company.

The only employees with variable income might be the sales staff, who are actively pushing the company's products and who can receive commissions for sales they make. All of the salaries and commissions are of course factored into the cost of the product.

MLM

Structure

Although many MLMs have a corporate executive staff similar to the structure above, there is another structure entirely designed to market and distribute the products in lieu of advertising and sales departments.

A friend, colleague, or new acquaintance tells you about a business they are involved in that sells "ABC Widgets". They identify that they are a distributor of the product, and if you become interested, you yourself can become a retail customer or distributor. Being a distributor entitles you to become the CEO of your own distribution network. You can distribute to one person, three, or a million depending on your network and the effort you put into it. Your customers can in turn choose to be just regular retail customers, or if they like what they see, they too can become distributors just like you.

As CEO of your distribution network, your responsibilities are threefold:

  • sell the product
  • recruit new distributors
  • develop and assist your distribution organization

Marketing

Because the fundamentals of MLMs are based on word of mouth, there is rarely much if any advertising budget required. There is also no sales staff on the payroll, since the distributors are in effect the sales department.

Compensation

The distributor's compensation depends entirely on the organization they build. A legitimate MLM company will pay the distributor in three basic ways:

  • Commission on products you sell to your retail customers and buy yourself
  • Commission on products your distributor sells to their own customers
  • Commission on products they sell to their distributors, and so on down the line up to five to seven levels down from you. (Note, in order for a legitimate MLM to be financially viable, your compensation has to stop after a certain number of levels down from you).

And similar to conventional business structure and sales departments, bonuses can become payable to sales staff/distributors who meet and exceed certain benchmarks.

The compensation structure of MLMs gets more complicated with achievement levels, bonus structures, and sometimes pricing points (eg: retail and wholesale), all of which vary from company to company. Becoming familiar with the structure can be daunting, and the shrouds of confusion can cause many people to be sceptical.

WHY MLMs FUNDAMENTALLY WORK

Sales Pitch Bunker

These days we are bombarded with advertising for anything and everything. Everywhere we look, everything we read, even movies we watch and telephone calls we receive, are all sales pitches for one product or another service.

As a society we have effectively become desensitized to this barrage of sales pitches, and have retreated into our safe little bunkers against sales. We are sceptical about a new miracle formula or revolutionary this-that-or-the-other that we see on tv. And so we should be too.

But if a friend tells us to eat at this restaurant or see that movie, we'll probably take their advice and race out to see it. We assume they are telling us out of genuine interest, and since we are hearing it from a real live person and not a squawk box, we listen.

Some conventional companies have tuned into this, and have developed referral programs to provide consumers with incentive (in the form of rebates, discounts, or cash) to refer friends and family to their product or service. So although we still trust that our friends are telling us about the product out of genuine interest and because they are a happy customer themselves, they are also now being compensated for it.

MLMs are not fundamentally different from this. They tap into the power of direct marketing, word of mouth referrals, and people using their networks (hence the term "network marketing").

Cost-Effective Sales

Some critics of MLMs will suggest that the compensation structures of MLMs aren't viable for the business. How can an MLM afford to pay a commission to six or seven different people for one product sale?

Conventional businesses build the following (among other things) into the cost of products:

  • Sales department salaries and commissions
  • Advertising costs
  • Retail property overhead (this is huge)

MLMs don't have any of the above costs, and so can instead channel the same money towards their own distribution force commissions - hence the ability to pay higher commissions and to multiple people.

In fact, some business gurus would go so far as to say that the wave of the future is in MLM marketing structures. Properly structured, legal MLMs that is. With a history of illegal operations and shady companies in the industry though, it is hard to pick out the good ones from the bevy of schlock out there.

COMMON MLM MYTHS

MLMs are pyramid schemes

In fact, the conventional corporate business structure smacks more of a pyramid scheme than a legitimate MLM does. With the lone CEO at the top being paid the most and the "worker bees" at the bottom stuck on their ladder rung with no hope of exceeding the CEO's income or stature, you have a pyramid.

A true MLM distributor's income is entirely dependant on their efforts expended. You could be a distributor and sign me on to become a distributor myself. Shortly thereafter you may fall out of interest with the company or family obligations could get in the way of your business efforts. I on the other hand, might choose to go gangbusters with it. Although you are technically above me since you brought me on, I can exceed your income and stature within the company by building a stronger network of my own. You will of course be paid a percentage of what I make, but ultimately I will make more money than you for my efforts.

In fact, some MLMs will build in a protective measure against the "slackers" who recruit winning distributors since the slackers are probably not contributing to the success of their winning distributor's business. So the company will cap off the income the slacker can make, or sometimes cut them out of the loop entirely.

The difference between a pyramid scheme and an MLM is product. A legitimate MLM has a viable line of products to sell, with real and ongoing customers. A pyramid often won't have a real product, or one that is marketable. Or there may be a product, but it is a one-time purchase, is not marketable, or is unreasonably expensive.

MLMs are illegal

MLMs are in fact not illegal. Pyramid structures however, are illegal.

MLMs are Get Rich Quick Schemes

It is hard work, and a full-time job if you want to get rich. You are not only servicing your own customers, managing sales and inventory, but recruiting new distributors, and training and assisting your distribution network. You are effectively your own CEO, and unless you personally hire a support staff to help you (which many successful distributors will do), you are wearing many hats.

The people you see in MLMs who have made huge amounts of money and are "living the life" on beaches around the world have invested years of hard work to get where they are, and continue to work in order to reap the benefits.

MLMs aren't viable due to Market Saturation

True - if everybody in the market is a customer or distributor, then there's nobody left to recruit and the people who were the last to buy in are duped. But show me a company that has total market saturation. Even (non MLM) corporate juggernauts manage to keep their businesses viable by continuing to develop products, change lines, and reinvent themselves. A legitimate MLM should also be doing the same.

SIGNS YOU NEED TO RUN AWAY

It's a big bad world of shady or illegal companies out there, so if you are being recruited (even if it is a friend or family member - they may not understand what they're involved in), you should do some due diligence before jumping in with both feet.

You don't really know what the product or service is.

If you can't define exactly what the product or service is, and who the market is, then it is likely that most of the money is made through recruiting which makes it a pyramid scheme and henceforth illegal in many part of the world. Without something to sell, there really is no viable business.

You are promised amazing riches with little to no effort.

Nothing in life is free, so beware of such enticements. Even legitimate MLMs may talk about the lavish lifestyle it affords in their recruitment process, but after a little digging you should find that there will be work involved.

You receive commissions just for recruiting new members.

Watch out! No money should be made by either the company or distributors for signing up new members. Read below for more on this.

You have to pay a significant amount of money to just become a distributor or member.

The fee to become a distributor should only cover the company's administrative expenses in signing you up, the welcome kit, and any marketing materials or supplies you receive.

If you are forced to pay huge fees or buy massive product packages just to get involved or learn more about the company, take it as a warning sign.

Now, some legitimate companies have extensive product lines and encourage their distributors to buy bundle packages of these products themselves, but it shouldn't be mandatory. The best sales people and distributors will be enthusiastic users themselves, not users out of necessity.

They have no inventory buy-back policy.

If you are required to warehouse your own inventory, a legitimate company should be willing to buy back at least a substantial percentage of your inventory if you can't sell it or choose to get out of the business. Better yet - look for a company that doesn't require you to carry inventory at all by instead using direct sales.

FOOD FOR THOUGHT

What is drawing you to the MLM in question?

Are the products truly revolutionary? Or priced well? Or high quality enough to warrant buying them through this system? Or are you more enticed by promises of lavish lifestyles of rich and fame and working from your beach villa?

Take off the Rose-Coloured Glasses and See Through the Sales Pitches

If you are being actively recruited (even by a legitimate MLM), you will inevitably hear an argument like this:

"If you recruit six distributors, each of whom, in turn, recruit six others, and carry the process through nine steps, here is what your organization will look like":

LEVEL MEMBERS

1 6

2 36

3 216

4 1,296

5 7,776

6 46,656

7 279,936

8 1,679,616

9 10,077,696

This diagram above is absolutely true, and if it worked this way, you'd be a superstar. The reality though, is that your six new distributors will all be different people. Some will go gangbusters with the business and recruit more than six people, while others won't do a thing with it.

Another reality is that recruiting even six members can be difficult. With so many negative stigmas around MLMs and common myths and associations with pyramid schemes, anybody actively recruiting for an MLM has their work cut out for them. That is why so many MLMs have personal development seminars and regular pep talks - to keep the interest level high and skin thick.

It's a tough job to work in an MLM, but the rewards for those who choose the right company and apply the right skills and techniques with a huge dose of perseverance can be big.

The FTC has some great tips on evaluating an MLM opportunity here.


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Guest's picture
Sean

Awesome article...

I can't wait until my organization looks like the one above. MLM's really do work.

Do the research first.

Guest's picture
Guest

What the graph is saying is that you can never get to that point because there are not enough people on the earth. YOUR downline will never look like that.

Guest's picture
Guest

What the graph is saying is that you can never get to that point because there are not enough people on the earth. YOUR downline will never look like that.

Guest's picture
Guest

What the graph is saying is that you can never get to that point because there are not enough people on the earth. YOUR downline will never look like that.

Will Chen's picture

Great article Nora! This part is especially important:

"If you are forced to pay huge fees or buy massive product packages just to get involved or learn more about the company, take it as a warning sign."

Will Chen's picture

Great article Nora! This part is especially important:

"If you are forced to pay huge fees or buy massive product packages just to get involved or learn more about the company, take it as a warning sign."

Guest's picture
Guest

Run, don't walk from ALL MLM's.
999 out of 1000 participants drop out. You will be one of them.
Get a job at Dunkin' Donuts and make more money.

Guest's picture
ianmcn

It certainly is a myth that MLM's are get rich quick schemes, but unfortunately the majority of the people involved don't realise (or acknowledge) that, and so pitch it to their prospective network as exactly that.

What troubles me about MLM's is that quickly the focus is taken away from the product, and onto the potential earnings, therefore the product is often sub-standard, so people are sold it as a business opportunity not as a killer product. Your product should be good enough that people want it purely on its own merit.

Guest's picture
Sean

VERY true...

Click my name to see the top 10 lies of the home business industry.

Guest's picture
ianmcn

It certainly is a myth that MLM's are get rich quick schemes, but unfortunately the majority of the people involved don't realise (or acknowledge) that, and so pitch it to their prospective network as exactly that.

What troubles me about MLM's is that quickly the focus is taken away from the product, and onto the potential earnings, therefore the product is often sub-standard, so people are sold it as a business opportunity not as a killer product. Your product should be good enough that people want it purely on its own merit.

Mark P. Cussen's picture

I really enjoyed reading your post today! You are a great writer, and should have no problem finding other places to write for! About.com was looking for a financial writer recently; I don't know if they found anyone or not. My work has picked up considerably. It looks like we MIGHT be getting our oil and gas company funded at last (famous last words.) Hope things are going well for you and keep up the good work!

Mark P. Cussen, CFP, CMFC

Guest's picture
ScottMGS

I think my main reservations with MLM's is the tendency to commoditize or commercialize personal relationships. Giving someone a tip on a movie or a restaurant because I enjoyed it is one thing but to do so because I get paid to is, for me, completely different. I don't like it when people I know do it and I don't want to alienate my friends by doing it to them.

Guest's picture

I think MLM's are a good experience for any professional, regardless of whether or not you intend to make a career of it. MLM programs not only show you the power or referral business, but also teach you how to "pound the pavement" for business. Too many people, including salespeople, expect money to just walk in the door. If you build it, they will ignore you until they're ready.

Guest's picture
Ron

Folly. Plain and simple.
Been there. Done that. Got the T-Shirt.
After 4 years of doing every single thing I was supposed to do, going to every single meeting, buying every book, every tape, attending every seminar, taking notes, and performing exactly as I was supposed to, I lost thousands of dollars. I had hundreds of people in my downline. I had the little pins, the awards, the accolades . . . but no money. It was always at the next level.

I know too many people to count who fall victim for these scams. NO ONE ever makes more than a pittance from the product, but if you can convince a small group of people to BUY tickets to your seminar in Tampa, use YOUR hotel service, SELL them CD's & books at FULL retail, charge them to come to EVERY meeting, yeah you can make money, but not because you have a fantastic product or service. You make money because you convinced a bunch of suckers to follow you. What's the difference between MLM and the Branch Davidians? MLM's keep their people alive so they can leech off their bank accounts.

MLM tends to have a cult mentality. Avoid it at all costs.

Guest's picture

How true it is, the only people who make money in MLMs are the people who sell books CDs seminars etc. My mother in law has been involved in one and spends far than she makes on books and tapes etc. Her walls are lined with stuff she bought but never got around to giving away. Secondly it is almost impossible to recruit people. No one has the interest or the time.

What the real killer is her son in law who was the first person in still makes more money than her even thought he stopped doing the business years ago. He happened to be the second person in the region to sign on and managed to get enough people below him who still buy the vitamins.

I second the advice avoid MLMs at all cost.

Guest's picture
Connie

My husband and I have been in our first MLM business for the last 10 months and I am so excited to say, My husband and I are both retiring from our (six figure income) Full-Time JOBS September 2008. If this is a cult, it's the best cult I have ever seen. We have been blessed beyond!We have replaced both of our incomes with our Part-Time business.. There is a time where you must put down the books and actually go out and do the activity.. Once you do the activity, it's just a matter of time when the results will happen. Maybe you did not have a good product. I don't know why it did not work for you. However, the truth is, only 2% of Americans are wealthy, and only 3% are financially free! Wow, in the land of plenty this is pretty interesting to say the least!

Guest's picture
Lori

I agree with you Connie. Having a great product, great training and a CAN DO attitude is necessary for success in any business. My husband and I retired from our 6 figure jobs in 1 year exactly after starting our first MLM. We are financially free and are blessed to have come across an opportunity like this especially, in a declining economy. Too bad for the nay sayers, they will remain where they are in life always blaming others for their own lack of participation. Never knowing the good life!!

Lori

Maggie Wells's picture

I completely agree. My husband was into one for a few months and it definitely cost us more than we got back. And the products were horrible. I didn't feel comfortable about using them let alone trying to get friends and family to use them.

Guest's picture
Duff

MLM's don't sell products, they sell greed. They sell false promises to innocent people who unfortunately get taken in by the hype, since they don't know enough about business, markets, or powerful personal and group psychological techniques of manipulation.

You are not "CEO of your own distribution network"--you are a commission-based salesperson in an over-saturated market, relying on the liquidation of your social capital (i.e. pissing off your friends and family) to make any money at all...and 99.5% of people in MLM's lose money, as has been shown again and again in numerous studies.

Due to the structure of the organization, MLM's cannot even in theory be profitable. The only profit made is from turning what would be called "customers" into what is reframed as "distributors" and then taking the money from the 99.5% that lose money in the organization and giving it to the 0.5% at the top (the people who started the whole gig in the first place).

Legitimate businesses assign salespeople to large geographic territories because they recognize the reality of a limited market for their product. Often there are 1 or 2 salespeople for an area of 50,000 people or more! MLMs emphasize the "unlimited market potential"--which is of course, impossible--and then create a structure in which there may be 100's, if not 1000's of sales reps ("distributors") walking around in an area where there should be 1 or 2.

So in order to deal with the obvious market saturation, MLMs encourage their sales reps to sell to their friends and family--in other words, to liquidate their social capital to make a buck, to manipulate the people they love by bowling over their objections with misplaced enthusiasm (greed + brainwashing). And instead of just selling them the product, they sell them the greed--they try to turn them also into the borg, the converted, the sales rep in a crowded market. The whole structure demands that they sell others in this way, even though there is no market left for the product they are selling...except by creating a market by liquidating friendships and family relationships, and converting them to cash, creating customers by convincing them they can have something they can't, which inevitably leads to a crash of trust.

I've seen 4 or 5 MLMs come and go in Boulder, CO in the past 6 years alone. Nobody gets seriously financially hurt--at most each "distributor" loses only a couple hundred bucks a month, most only $50 or so. But the lost trust in our capitalist society, and the lost trust between friends and family is horrifying.

Please help root out this nasty cultural meme, this capitalist virus by getting some real education on MLMs and their destructive nature.

Here are some critical perspectives on MLM's:

http://www.vandruff.com/mlm.html
http://www.merchantsofdeception.com/
http://www.mlmsurvivor.com

Guest's picture
Ron

You might also try
http://www.falseprofits.com/

Nora Dunn's picture
Nora Dunn

Thank you all for your comments! I attempted to write the article as impartially as possible, and as forgivingly towards MLMs too. I do actually belive that if done right, if the product is right, etc etc - it fundmentally works.

I won't respond to everybody's comments and points, many of which are valid, and some which could be clarified. 

The point I would like to make is in regards Duff's comment on sales territories, and how the lack thereof in the MLM industry leads to market saturation. 

There are many conventional organizations that don't enforce territory requirements - for example in the financial planning industry. It is a career based on personal relationships as well as sales (similar to MLMs), and personal networks almost always go beyond sales territory borders. And because of this, it works. The success of the financial planner depends on their personal & professional network, sales skills, and professional skills. 

The same could be argued for an MLM distributor too.  

 

Thanks all, and keep the comments coming! I would love to hear from somebody who has had a good MLM experience.....is there anybody out there? (smiles) 

Guest's picture
Guest

Awesome Article!!

Guest's picture
Minimum Wage

This reminds me of an idea I've had for several years - without doing anything about it.

How about if someone with an extensive local social network worked out a deal with a supermarket to buy some outrageous amount of groceries at a discount.

People in the network would order through you, you'd make one trip (more perhaps if you don't have enough vehicle capacity), bag orders sepately ehren you get home (you'd need space at home), and then your friends would come over and pay for their stuff.

This would probably be more appropriate for, say, a church, but why not?

Guest's picture
mom of 4

I started working for a home party based company 3 years ago and have had a wonderful experience with this type of business. I don't think you specifically addressed home party companies, but I'm frequently asked if i'm involved in a pyramid scheme or mlm so i thought I'd add my 2 cents.
I currently manage a team of 80 women

I think this kind of business can work very well as an extra source of income If certain criteria are met, some of which you've already covered

1. Low start up cost. you can start with many companies for under $200, and you should be able to make back what you've invested within the first party or two.
2. Sponsoring manager should have a well designed, free new start training guide or program available to help you get started.I try to teach all my team members NOT to invest a lot of money on sample products or to go "upside down" in their business financially, but to buy product samples a little bit at a time as they see that their business is actually going to take off.
3. Look for a quality product from a company that allows customers to return items they don't care for for a cash refund within a reasonable amount of time after purchase.
4.Look for a company or product where you can actually bring home a reasonable paycheck after business expenses without recruiting anyone to join the business and sell with you.
5. No one should be getting paid just because they are the first one in. A good company will have increasing sales goals and requirements as reps move up into the different levels of management, and those who don't work to meet those goals should lose the opportunity to earn a paycheck from the teams they manage.

Most of the women on my sales team are not interested in making big bucks with this business. They do it to earn cash for a specific goal like paying off a credit card, or paying for something outside of the family budget, like their child's ice hockey or dance bills or that trip to disney that they've always wanted. Many of them state that their sales goal for the year is an extra 4 or 5 thousand dollars in income for their family, and they can easily do this with 3 or 4 parties a month a no recruits, assuming they keep their business expenses in check.

Another reason people decide to try this is because they like the product and are looking for something to do, and having their own small business becomes a hobby for them that they enjoy.

Home party businesses are not for everyone, You have to like working with people, like your product, be willing to provide good customer service, and have a thick enough skin to not take a potential customers "no" personally.
Honestly 1/3 of the people who start this type stop within 6 months, because it's either not a good fit, or they couldn't get it to go anywhere.
Many people work this only for a season in their life and are done once the specific goal or two are met

I left a well paying career in Health care to stay home with my kids. We made specific financial plans before they were born so that we could achieve this goal. After 6 years at home I was going out of my mind with boredom and wanted something to keep my mind occupied. I started looking for a very part time job for the mental stim and for some extra cash for "fun " money for my family. I started this business and it much to my surprise, I found that I really enjoyed it, was good at it and now 3 years later I'm able to work from home ( which is honestly not easy, but worth doing for me) and bring home a significant income for my family.

Hope this post isn't too rambling. Thanks for a fair look at MLMs

Kim

Guest's picture

I have participated in two MLMs and I dropped out after a couple years. But you know what, I am so glad that I did it.

The reason people fail in MLMs is because they don't treat it like a real small business like they should. They treat it like a hobby on the side. At least that is what I did. But the training that I got from it was amazing.

Keys to finding a good MLM is a product you can actually believe in that you won't mind trying to sell by itself. If the product is good enough people will want to get involved. Second is the training, if they have good training, then even if they have a mediocre product, it is worth the price of admission just to get the mindset and sales training.

Nora Dunn's picture
Nora Dunn

Thanks for your experiences mom of 4, and yes - although I didn't mention the home party business, it often falls into the MLM category. Many MLMs use home-parties as their main way of marketing (although not all home-party companies are MLMs).

And great points, Adam. People who don't treat it like a business will fail. In part I do blame the all-too-often sugar-coated sales pitches launched by MLM members who try to entice new recruits with promises of fame and riches instead of more realistically describing what's involved. But I guess if they were realistic about it less people would sign up! 

And yes - the product should sell itself, and you have to believe in it. That is a principal of sales at the most basic level - if you won't use it yourself, don't expect anybody else to listen to you.  

Guest's picture

Thanks, Nora, for sharing this information. You have hit the nail on the head about many points, including the importance of checking out an opportunity to make sure it's legitimate AND right for you. There are lots of great opportunities out there, but not every one is right for every person.

There are millions of people who have found success in direct sales, whether that means $200 a week or a full-time income. I find the most common reason people fail is when they had unrealistic expectations at the outset.

Anyone interested in checking out a direct selling company should visit the Direct Selling Association's Web site. There you can find a page that outlines things to look at when considering an opportunity as well as other important information about direct selling. The link is http://www.dsa.org/aboutselling/opportunity/.

Guest's picture
Karrie

I love the MLM I am apart of. Love the products, love the people I work with. That being said I don't think I'm going to quit my job due to the money I'll make in this business, but that's okay.

My mother is my upline, she has made more than broke even, the pastor's wife at churhc is her upline and she drives a company supplied luxury car. However, they both approach it like the small buisness that it is.

Me, I just like the products and I will talk up the products. If someone wants to sign up under me, that's great, if not, so be it.

The difference I see is that one has to join a company that has actual good products, actually like and use the products/ services yourself and then work it like the business that it is.

Guest's picture

I know MLMs from the computer programming side. From the political structure side. From the competitive executive side. I know the numbers and the typical levels of payout, and how the actuarial numbers decide things. I've helped build the back-end structure of one, worked on the bonus schedules and point systems, time structures, the upflow jumps, the left and right legs, the power leg, and have even interpreted all that back-end stuff into a written a comprehensive compensation plan for a group of over 10,000.

And I never once joined.

Run away, unless you want to start one with about three other rich folks who know a dozen other good folks who are hooked up with a few more winks and nods. And they'll want you think you are in their upper echelon, or that you can attain it, but the ones at the top bought their way there. But you have no idea how true that is. You want to believe. It's powerful stuff. And besides, you only get to see the math you understand.

If you're not in the first 12 levels, well, there's easily 80 more below you, even in the early stages. No distribution model in regular corporate America has that many levels of payout. And prices are determined by the average number of point-earners in the deepest legs. If a company did have that many levels, why, they'd have to charge prices for aloe juice like the MLM'ers have to pay. "But it's the best stuff there is!"

Yeah. Been in on that part, too. It's stuff made just like everything else. Quality is nothing, marketing is everything.

The average payout only flowed down a few levels, but prices were fixed on a worst-case scenario of about 12 payout levels.
Perception is everything.

It's not illegal. But I don't think it's smart. Unless, like most of these "jewels" do, you start another new company every 6 months to a year.

Guest's picture
Tim

I agree with some of the above posters that people in the MLM schemes often get a cult mentality and start objectifying friendships.

I had a friend several years ago get into Quixtar and though it did not ruin his marriage... I think... it hurt his career as an engineer. He had way too much focus on the MLM. I gave him my perspective, but he told me I was negative and would not listen to me on MLM. Guy eventually lost his engineering job and now does hourly sales job at a local retail... substantial cut in income. I have not asked him about his Quixtar business in recent years, but I still feel it was a large waste of time for him. I should mention he met his wife while trying to sell her "the plan"... yeah on a date! Crazy?!?!?!?!?

Guest's picture

a Good mentor with a good team,the 97@failure rate goes bye-bye... Mentoring for free has best information on network marketing..HAVE FUN KIDS buzz2u

Guest's picture

I was fortunate because when I started my first online business I had ZERO bad experiences to deter me or influence me from my success. I replaced my corporate annual income within 6 months.
It was 100% learning and implementing what I learned consistently, due diligence, following the experts to the T.
Be willing to learn and be coachable.

I highly recommend Jim Rohn, Dale Calvert and Earl Nightingale.

Jim's instructions included things like "Take a Walk today" - who would think that walking had anything to do with my marketing venture....ironically getting out the baby stroller and walking through our town gave me more prospects and helped me meet more people than I ever expected....but I never start out saying 'who can I prospect on my walk'...I just walked as instructed and after a few days, people would stop me and say I see you walking everyday - that started the conversation and eventually I had a network of associates...not over night but over time.

Dale taught me about creative ways to give and made my marketing experiences fun. I enjoyed the time I was working for myself and found Dale's Lead Generation suggestions very productive. I was fully committed to my success. 21 ways to Generate Leads in your own backyard. I own it. You can too at success.erichnwise.com

My favorite audio series is "Lead the Field" by Earl Nightingale - I listen to his work over and over and highly recommend everyone get a personal copy. I am eternally grateful to Bob Proctor for sending me a copy of "Lead the Field".

I've added more wonderful coaches over the years and I generously share "Think and Grow Rich" principles and "Law of Attraction" techniques with my downline.

Network Marketing is not for everyone - it works for me.
and as I look back, I'm very thankful I got oursourced, downsized
and my job went overseas. 'Yesterday' I was a technician, Today I am a President.

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You *must* have good stats on the back end. So many programs don't... I'm looking for something with a thorough stats package, because without it, you have no idea if what you're doing works.

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Lambert

Nice to read your article, I have been trying to get this kind of information. You have given a excellent information about Multi Level Marketing. Thanks for sharing your views.....

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Just A Dreamer

So - I guess based on ALL of the negative comments about MLM (not to say that all MLM opportunities are good - but not all are bad either), the best alternative is to just find a normal job like everyone else & fulfill someone else's dream (the CEO & share holders, investors, etc of the company you work for). And just exist, pay taxes & hope for a better future & your small slice of the pie........and pray that our Social Security & Medicare funds (that we all paid 100's of thousands of dollars into over our life) are still around when we retire. If not - we'll unless you invested wisely & didn't have any type of crisis that occurred in your life that depleted every bit of savings you had (like getting laid off due to down sizing or companies going out of business, loosing your home, family emergencies, you know stuff that never happens to real people) you should be just fine. Course you can just decide to take a completely different street....one in which those who believe in themselves & always stive to have a better life (for family & friends) will ALWAYS find a way to be successful. Whether it is managing a business of their own or thru some other means - including MLM if it happens to be a viable option. Great leaders & successful people live with their eyes open & learn to completely avoid the streets with pot holes.

A Believer

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Just A Dreamer

Almost forgot......what Connie & Lori said

Still a Believer

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Degilbo

Before any reader of your article decides to try their hand at MLM, they should visit http://www.merchantsofdeception.com/
Another wise step would be to Google search any MLM type company you are thinking of joining. It could save you hundreds of dollars.

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Nate

I agree with many on this post. There's a bit of truth in every opinion. It's important to understand that there are good sides to the industry, there are also bad sides, and even ugly sides. Such is the case with every industry though. In the end ... I believe if one really does their research and investigates entrepreneurship... they will find a gem of opportunity awaiting within this industry. It's legal, It's fair, of course it's not for the faint of heart..nor is it easy... very similar to any venture. It's up to the individual to make any venture they endeavor to succeed in to be successful.

Here's a terrific resource by a famous economist for individuals who are skeptical: http://www.paulzanepilzer.com/

I am believer!