I’ve put off writing this for several reasons, first and foremost, I do not often engage myself on matters that do not have a direct relation with ministry, doctrine or church life.  I do however, have a passion and burden for people to succeed in all aspects of life, and especially those who make their living in the marketplace.  There is so much online concerning MLM’s (Multi-Level Marketing) most of which is slanted either in way of negativity due to bad experiences or in an effort to get you to join a specific one.  Let me preface this particular article with the disclosure that I am involved in one.  In fact, throughout my tenor in ministry I’ve been involved in most of them that have come and some that have gone.  The content of this article will be my dissertation in experience of both positive and negative.

Let’s address the first misconception of a MLM being a scam.  It’s often said that MLM’s are “Pyramid Schemes”.  According to the “Federal Trade Commission” the definition and operation of a “Pyramid Scheme” is this: Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company’s incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company’s distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.

So it is incumbent on the part of the recruit to do their due diligence in research as to whether or not a proposed opportunity is truly a MLM or a pyramid scheme.  There have been and will be those who disguise pyramid schemes as MLM’s, but not all MLM’s are pyramid schemes, some can be genuine business opportunities.  I admit that I’ve been suckered into some who were in fact pyramid schemes such as, Vemma Nutrition and Mona vie.  A MLM is often referred to as a “Multi-Level Marketing” company, but a true MLM is a “Multi-Level Model” of business.  This particular model is a legitimate business structure, if it is a true MLM.  There are many trusted companies that operate using this model of business.  One is Keller Williams real estate agency.  They have ingeniously adopted a multi-level model of operation by encouraging each agent to build under them a team of successful agents.  As these agents succeed so does their team leader.  Do not mistake me as saying that Keller Williams is a (Multi-Level Marketing) company, because they are not, but they have deployed a (Multi-Level Model) of business.

If you are considering a business opportunity with a MLM, please be educated on the compensation plan, and business model.  Be sure that your business model is not strictly dependent on your adding additional recruits, but there is adequate compensation or commission for the product or service you market.  If the business is heavily dependent on recruiting others into the business opportunity as your main means of success, then I would advise you to carefully reconsider your involvement with that company.

It is also extremely important that you research the current supply and demand of the product or service your company is offering.  I have been involved with and approached by many MLM’s that are health based.  I will agree that there are some who have great products, but that does not mean it is a great business opportunity.  The reason is the market is saturated with such products and services.  You often get into one of these opportunities thinking that you’ll be able to compete with the traditional market in quality and affordability when in reality you just cannot.  You need to be sure as well that the company is not relying on a single product to achieve success in the marketplace.  If a company is building itself on a single product or service it is only a matter of time before that company falls to the demands of competition.   I also advise that with health based MLM’s that you speak with people in the health profession whether it’s a MD (Medical Doctor) or someone who is well educated in the nutrition and natural supplementation field concerning the products the company is selling.  There are so many claims when it comes to health products of it being the best on the market and all natural when in reality it is not.  I’m not saying they aren’t good products, but they may not be everything you’ve been told they are.

Most MLM’s require a monthly membership fee.  Is this inappropriate business?  Not at all.  Monthly memberships for services or products sold or rendered is common place, and we do not think twice about it when it comes to the many other fees we pay a month.  Gyms, whole sale clubs, cable providers, Amazon, insurance, auto clubs, etc. all require monthly fees for products or services rendered.  It is common practice now that if you refer several people to the product or service and they purchase it you then get your monthly fee waived.  Again, this is a practice being deployed by many other well-known and established companies such as Dish Network, local gyms and other corporate run or local owned businesses.  This is a great incentive, and why not reward in some way those whether customers or business owners.  Now in saying this I would caution if the company only provides this incentive for adding additional reps or recruits.   If the company offers this to everyone whether customer or business rep in my opinion this demonstrates it as being a more legitimate business or company.

Now let’s discuss the fundamental premise of a MLM, which is the marketing aspect.  Another familiar term for a MLM is (Network Marketing).  Research has found that still the most successful form of marketing is “word of mouth”.  Think about how often we market for businesses by recommending their services or products to others based on our experience.  We do it with movies, books, restaurants, hotels, etc.  Now consider how often you get paid for referring someone to any of these services or products.  Some brick and mortar companies have wised up and now offer you a month free in membership if you do refer a new customer, but that maybe it.   What if you owned a part of a business that offered a product or service you firmly valued and gave you an opportunity to earn from not only the sales of its services, but also building a multi-level model or team of business minded individuals?  Again, this is common practice in the traditional marketplace, and we think nothing of it until we are approached with a MLM.  Let me just go on record as saying that MLM’s often get their poor reputation by those who are thirsty to make a quick buck with little to no work.  The only opportunity these individuals see is one of taking advantage of family and close friends in an attempt to make their wealth.  Be advised that a MLM is not a get rich quick opportunity, but a real business that requires you to work it like anything else.  This is why it is important that you go into it with the mindset of it being for the long-term, and you must know that the product or service the company provides is one you value as a customer before you do as a business owner.  Any product or service that requires you to over sale and under deliver is not a business you need to be a part of.  Nor do you need to take a good service or product and pressure someone to buy in.  The service mine provides is one that I would pay for whether or not I was in the business because I really value it in what it offers me.  With that said, if I come across someone who identifies themselves as wanting this kind of service then I will direct them to look at it.  After which I leave it to them to decide if it is something they find value in or not.

Is there opportunity to succeed in a MLM?  Absolutely!  But it requires you to value what your company offers more than the business opportunity, and then it requires you to work in building the business that you know own.  You have to be just as comfortable talking with others about the products or services your business offers as you are about the restaurant you ate at the night before or the book you read last month.  MLM’s are not for everyone.  The multi-level model of business is a strategy of building your business by helping others become successful in their business.  One could argue that this takes just as much work if not more than a nine to five job that simply pays you for your skill or service.  Most people are not driven enough to put in the effort required to make a business work.  This is why most people are content with the traditional work structure of a company or business that allows them to simply clock in and clock out.  And let me add that there is nothing wrong with that if that is all you desire to do.  But for someone who wants to grow something, and be given an opportunity to work something themselves that will earn dividends over time without the overwhelming overhead costs of a brick and mortar business then an MLM is worth considering.  I just encourage you to take the factors I’ve explained in this article into account as you proceed with your new business venture.

  1. Rik says:

    Thanks for writing this up. There is a stigma about the profession that has stemmed from people’s bad experiences from a small fraction of ‘pyramid scams’ or from people that had certain expectations that didn’t materialize into reality and blame the company and profession.
    Like anything, we can show the way, it’s up to the network marketer to do the work in a proven way. To be coachable and follow the system is way to have success. Rik @riklepine

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