That’s Multi Level Marketing.
Personally, I am not a fan of it, but I know many people who are. There are hundreds of stories online about people who either lose money by joining MLM companies, or who struggle to make an income of any kind of value. Equally, there are a select few people, with the right qualities, who persevere and go on to make vast fortunes from multi level marketing.
So, in order to keep a balance, I decided to take a closer look at MLMs –
Reasons to become involved in MLM
Do you remember a Letterman show that featured Donald Trump?
When asked how he would make another fortune if he lost everything, Trump replied that the first thing he would do would be to join a network marketing company, because he believes it is one of the easiest ways of making money.
Genuine multi level marketing companies always feature one or more products. When you join as a seller you may be required to pay a fee which then entitles you to sell on behalf of the company, earning a commission on every sale.
If you think about it, this could be considered a franchise opportunity, but with a mere fraction of the start-up costs.
There is also the opportunity to earn via referrals. Sign someone up and you can earn a percentage of their commissions too. In some MLMs you also get the opportunity to earn from their referrals as well.
Therefore, if you can sell the products as well as the thought of the opportunity to others then you can earn a considerable amount of money not only from your own personal selling efforts but from those of your downline too.
Whilst I don’t like multi level marketing, it is true that many such companies have been in business for a considerable amount of time. Would this be allowed by the likes of the Federal Trade Commission (FTC) if the organisations were in any way shady?
Reasons NOT to become involved in MLM
Some multi level marketing companies are an out and out fraud. In fact, they are not really mlm at all, they are pyramid schemes. In such instances, no-one really cares about any products, it’s all about earning through recruiting. Obviously, as the pyramid expands the opportunities for recruiting at lower levels diminish and so it is always true that those at the top prosper at the expense of those at the bottom.
In other cases, it is not so much the company, but it’s agents – some will push new recruits into buying inventory way in excess of what they currently need, just to secure their commission upon it.
In other MLMs, the structure is set up such that directors mentor new recruits, but some are too lazy to do so.
Why some people fail at MLM
Not all failure in multi level marketing can be attributed to the organisation. Sometimes those who join have to take some of the blame for not realising the following –
- MLM can lead to high income but some see it as a get rich quick scheme and don’t work at it
- Some people have no business sense
- MLM is about networking – if you don’t have people skills you are doomed to fail
- Some people fail and leave, not realising that our failures can lead to future successes
Hopefully this has been a quick and balanced view of multi level marketing. It certainly isn’t for me, but it is the route to riches for some people.
It would definitely be unfair to label all multi level marketing opportunities as scams – many are, some are not, and it would be fair to say that I make a point of looking out for the bad ones to write about more than the good ones.