Love them or hate them, people have very strong opinions about MLM’s or Multi-Level Marketing schemes.
They also go by various names including network marketing and relationship marketing. The basic idea is to market and sell products and services to other people directly by word of mouth and personal contact, and to recruit as many of them as possible into the organization.
There have been numerous lawsuits and extensive regulatory intervention against multiple MLM companies over many years due to their abuse of their members and violation of laws and regulations. Beyond that even, estimates are that 99% or more percentage-wise of the participants in an MLM make little to no money at all.
That’s not much of a business model.
Yet the main buzzwords used to attract and recruit new people are “Independence” and “Lifestyle” related. They sell you the dream of being an Independent Consultant and building your own business within the organization to a level of wealth that appeals to you. In other words, they are selling you the dream and a fantasy that for most will never happen.
Once inside, you will be fully indoctrinated into a cultlike (arguably actual cults in some cases!) operation that will continuously pressure you to buy more and more “products” yourself while pushing you to constantly recruit more and more people into the organization to build your own “team”. There may be pressure to attend training classes and events, buy marketing materials, sample kits and other things.
In reality, there are people making a fortune in MLM. The founders and the small group of people at the very top of the organization – the ones they hold out as shining examples of success for you to aspire to be just like them someday. For most people almost all of the time that will be damn near impossible – if not outright impossible altogether.
Never the less the shining examples are broadcast throughout the organization and everywhere else to further the illusion that you too can be wealthy, successful, independent and enjoy that lifestyle – just like them!
A Conversation Years Ago
Many years ago my wife and I were relatively close friends with another couple. They were involved with one of the more notorious (though not notorious at that time) MLM companies on the planet. Often they tried to convince us to join it too.
Their garage was filled with products. Light bulbs, that were practically magical and were supposed to last basically forever – and had the cost per bulb to prove it too as I recall. Then there was the dog food. It was such a good deal. It must have been an amazing deal in their eyes – since I do not remember them even having a dog at the time!
Yet they were SAVING all this money by getting all this stuff through their program.
After several conversations, they eventually and reluctantly admitted that they had “invested” thousands of dollars – and had made exactly ZERO dollars in profit. Not a single dollar.
I told them that when they could come back to me and tell me they were consistently making even a couple of hundred dollars per month – in profit – that was stable and growing on a monthly basis, then I would be happy to sit down and take a serious look at their “opportunity”. Until then I asked them not to mention it to me again. Although we remained friends and saw each other often for several more years until we moved out of the area and lost touch, they never mentioned the MLM again.
By the way – they were not the only people who tried to recruit us into the same company. My favorite tactic was the idiots who approached me in book stores and other public places with the “Hey don’t I know you..” BS routine.
Sadly such tactics do work on far too many people. I had several other friends who did fall victim to them and who over time lost hundreds of dollars and in some cases thousands – all in pursuit of a lie, a scam – that was just intended to do exactly what it did, to take as much money from them as possible without giving them any real value at all. Just the illusion of the possibility of success when the reality under that specific program was there was no legitimate chance in hell that they were ever going to see any success.
Origins of MLM
People argue about who, how and when MLM first began. What is known is that its earliest connotations possibly have been around since at least the early 1920s if not even prior to that.
It may have begun with a certain vitamin company according to many, and others think it was a perfume company – one that has evolved and changed over the years and is still in business this very day. We will be covering it later in another article.
In the beginning, it was much more straight forward and did not have the multiple levels and complex compensation “downline” schemes that exist today. The level was basically simple. You got paid for selling the company’s actual products directly and you got paid a commission based on people you personally recruited into the organization’s sales too.
In Theory, It Is a Great Business Model
To be able to talk to people one on one and in small groups, especially in this social media crazed world we are in, and sell products and services. It seems like a natural fit when you can do that and make money from marketing products and services, and earn more money by recruiting other people to do the same.
But that is where the wheels come off the rails with some of these MLM companies.
Instead of providing legitimate products and services as a core – and then recruiting people and providing training and motivation to help them be effective at marketing these products and services, as well as recruiting – the focus becomes solely on recruiting more and more people in for the sake of just recruiting more and more people in – only to build a pyramid.
Such organizations do not care about any actual products or services. They just care about bringing in more people who bring in more people who bring in more people…
If there are any products or services they are merely a thinly veiled attempt to fend off regulatory enforcement and lawsuits, and nothing more.
Ultimately, making money depends on bringing in more people to build more levels and that must continue on a never-ending basis – or the whole thing collapses in on itself.
How to Tell a Legitimate Money Making MLM Opportunity From a Scam
Ask yourself – what is the real PRODUCT being represented?
Find the answer. It will not always be easy to tell so you have to do some research on your own.
Here is the core difference between a legit MLM and a Scam MLM;
- Legit – The PRIMARY purpose of the company is to move PRODUCTS. Recruiting is to bolster and support that mission and reward performance through additional compensation toward that end.
- Scam – There is no legitimate product. If there is any product at all it is an attempt to avoid being shut down, sued or prosecuted for running an illegal pyramid scheme. The primary objective is RECRUITING MORE AND MORE PEOPLE into the scheme.
Legitimate companies will focus on selling their products and service to other people. The scam companies will focus on coercing YOU to BUY their products.
Visit the FTC site and read all about it. Do your own homework. You can do that HERE.
Final Thoughts and Opinion for Now
Of all the Income Production Opportunities available joining any kind of MLM probably is not going to be your best bet. I know that is contrary to their big claims, but it is what it is, and in my opinion, there are far better things to start with.
Keep in mind that all real opportunities will require both hard work and time to begin to see results. While there are things that can be done which can produce significant income faster than others such things require highly specialized knowledge or relatively large amounts of money – and usually both.
Don’t get me wrong either – I am a big fan of recruiting and of building teams.
When it is actually to do something that matters instead of just recruiting so you can recruit others who can recruit others – all for no other purpose than just getting people to join. I have recruited THOUSANDS of people into TRUCKING (and still am recruiting drivers and people who want to become drivers as well as those wanting to get started in Trucking Businesses) and many into Real Estate too. Real people who want to actually become drivers, business owners, agents, and investors.
Now I am learning all about AFFILIATE Marketing – and recruiting other people to do the same.
There are even a FEW – very few, MLM’s I know of that I consider to be viable opportunities and which I will review and may recommend at some point in the future – but what I won’t do is recommend pie in the sky BS programs, companies, schemes and scams that are good for nothing except ripping people off.
Check back here again in the future, and I will be adding additional information to this article. This is a big topic that so many people are interested in and there is a lot to cover, so I will be adding much more to this article over time.
I would also like to hear your thoughts and opinions!
What do you think of MLM’s?
Do you have any experience with specific MLM companies, good or bad?