I hate Multi-Level Marketing
You are visiting here because you have viewed the slick videotapes, attended the motivational pep-talks and heard the “investment of our life time”, “get in early now”, “someone did little work but make $3k a week”, “Best MLM Marketing Strategies That Work Even While Your Snoring”, “Mother, Let Me Tell You About a Fantastic Opportunity…” etc. For most people, thankfully, the MLM experience usually ends in very quick financial failure and is then sidelined.
Most people can identify pyramid scheme when there is no product involved, i.e. the type of “make money fast” internet chain letters. But when there is a product involved in the pyramid scheme, it is harder to identify and evaluate it. A higher percentage of participants in product related pyramid scheme lose money. They tend to endure longer (evolving into Ponzi schemes), causing greater aggregate losses. They are less easily understood due to complex compensation plans which obfuscate the fraud. Victims seldom complain, so law enforcement seldom gives them priority—unless oriented towards proactive enforcement.
Why victims of recruiting MLM’s seldom complain? Here are reasons:
1. The very people who are its victims are also out recruiting until they run out of money and drop out. But they seldom complain to authorities, believing “failure” to be their fault
2. They do not complain because of fearing consequences from or to their upline (which may be a close friend or relative).
3. They have been conditioned to blame themselves for failing to “work the system.”
4. Lack of enforcement leads to the belief: “They must be legal or they’d have been stopped by now.”
Recruiting MLM’s (PPS’s) are usually disguised as direct sales businesses – but have a higher loss rate than classic no-product pyramid schemes—even worse than roulette and other forms of gambling.
Are we recruiting “winners” to build a real business, or planning by design to profit off of “losers” who buy into our “confidence”? The only money to be made is not from the product or service but from the losses of people lower down in the organization. The unfortunate “distributor” at the bottom is the loser, and once this becomes apparent beyond all the slick videotapes and motivational pep-talks.
A typical MLM is designed as 96% people are stuck at the lowest distributor level and 80% of distributors make zero income. Who wouldn’t want to make income off their friends, family and clients while they sleep? The problem is that MLM is a scam that will run out of steam and implode when no new recruits pay the piper.
Can you make money in a multi-level organization? Absolutely! Which one is the best? It is the one that you manage to climb to the top of the pyramid! However the system is not set up for the majority to succeed. Because it is pyramid in nature, those at the top will generate the most money while depending on those at the bottom to foot the bill.
MLM depends on people using and manipulating their existing relationships in order to grow the pyramid. You always on the lookout for new suckers, er, recruits, to sign up under them.
you are going to sell products to your mother, father, brother, sister, aunt, uncle, nephew, niece, employer, employee, friend or aquaintance. The relationship that you have had can change dramatically as you seek to recruit them for the “life-changing programs”.
If you are young and naive, you may sign up as a distributor. As in many MLM schemes, you are encouraged to purchase product in order to reach a certain level, thereby entitling you to increased commissions. Yes, in the end, you will buy the product yourself
Ten things to identify the product based pyramid MLM scheme:
1. Someone you know well approached you and eager to explain how it works. You may or may not like the product, but they try to convince you that you need the product or the product is good for you.
2. Those have not done well in their business or profession and have little money saved up to invest
3. They have no previous experience owning or running a business. They have no previous experience in sales
4. They have little or no experience developing business relationships other than that of employer/employee/co-worker
5. They are not satisfied with their current level of income. They have unrealistic expectations of the amount of work involved compared to the revenue realized
6. Recruiting of participants is unlimited in an endless chain of empowered and motivated recruiters, recruiting recruiters. The image of long line of people signed after you did sound very appealing.
7. But you need to notice that the advancement in a hierarchy of multiple levels of “distributors” is achieved by recruitment, rather than by appointment.
8. Ongoing purchases by distributors are encouraged in order for them to be eligible for commissions and to advance in the business (“pay to play”)
9. The company pays commissions and/or bonuses to more than five levels of distributors.” (Participants are not really distributors, but buyers.)
10. For each sale, company payout for each upline participant equals or exceeds that for the person actually selling the product. This creates an inadequate incentive to sell products and an excessive incentive to recruit a huge downline.
Ten reasons the MLM fails:
1. The worse thing about these scams is victims don’t realize they were victims until the suspect or the company has disappeared from the scene without the slight warning. Sometimes, the scam is perfect enough that even the government fails to initially detect that there is something illegal into it such that the unscrupulous suspects get away fine with tons of robbed money in their pockets.
2. They get no support from their upline. Most MLM marketers concentrate on numbers. They want a huge downline as soon as possible. They do not give a helping hand to the ones they recruited unless the downline is purchasing the products. The chances for survival are very slim.
3. It is a pyramid scheme, not legal. MLMs grow by exploiting people’s relationships. If you are going to be in an MLM, you must accept that selling to your friends, neighbors and family is part of “building your business.” The MLM’s call this “networking.” But to those not “in” the MLM, it seems as if the friendship is being abuses or used merely a pretext for selling. There is no compromise here, try as you might.
4. Most people, no matter how greedy, would not foist con on their own mothers. Even if people don’t know the specifics of what is wrong with MLMs, intuition often warns us: “Don’t tamper with that relationship.”
5. An MLM marketer needs to be familiar with selling. Most people in this is not trained marketing professionals. This is probably the major reason most people do not make it in MLM marketing. Since most are not salespeople by nature, and it is characteristic that MLMs attract few people with any experience selling this particular product or service, they usually sell through pre-fab “parties” or home “demos.” Thus, sales pressure is exerted by situation, if at all.
6. They are not able to recruit quality people. This is what happens. The new person has just joined an exciting MLM program. He is taught by the manuals and in the meetings how he should share his product with his friends, neighbours and relatives.
7. He is not comfortable with this, and he will have many sleepless, tossing and turning nights. He just doesn’t want to impose on his friends! He would feel a lot more comfortable just presenting his opportunity to strangers. Are you comfortable to try to convince family and friends?
8. MLM marketing company must be promoted through expensive methods, this is not feasible.
9. Selling by mail using standard MLM techniques. Traditional way to marketing MLM is to spend all spare time to call around and travel around to get prospects. A lot of people already have a full time job, it is hard to find extra time to travel and make phone calls. This is why these MLM marketers cannot keep their program going.
10. Often a person will sign up in a MLM marketing program in a fit of excitement. After the dust clears, he comes down to earth and reality slowly sets in.
Ten things to watch:
1. Over-selling the opportunity
2. Inappropriately discussing business in social situations
3. Coming across as desperate
4. Over-focused on new recruits and neglecting existing customers as a result
5. Being either inaccurate or deceptive when talking about their business