The MLM Deception
Multi Level Marketing (also known as Network Marketing), is a term used to categorize a business whereby an individual is associated with a parent company as an independent contractor.
Some may even refer to themselves as being "home-based business franchising" or "affiliate marketing" (Strictly speaking "affiliate marketing" is nowadays reserved for "web based affiliate marketing programs").
They are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the organization.
Some companies opt for a multi level marketing organization rather then selling direct to the public or through distribution to stores because it allows them to use the power of word of mouth by sales orientated people who are working on the basis of incentive.
What's The Scam?
It is important to note that not all MLM companies are scams. They may very well be reputable and have a sound business plan and an excellent compensation plan. Many people have been able to create a sustainable living from their mlm business. Others have become wealthy. Some have even become millionaires.
Yet others, the majority it would seem, have little or no success. Even when following the system.
The other factor, even in these companies of reputation, are the renegade factions or greedy individuals.
These are the people targeted in this lens. These are the people you need to look out for.
Survival of the Quickest
They may try the hard sell. They'll try and excite or even scare you. They'll tug at the emotional heart strings, appeal to your goodwill or make a convincing argument that you too will have financial freedom and live a life that many can only dream of.
It is important to remember that any decision you make should be done on your own time and on your own terms.
Don't sign up straight away. Think about what it is that you're getting into. Examine the pros and cons. And ask for as much information (free information, don't buy it) to help you come to that informed decision.
You don't have hours to make a decision. Even if it is a new start-up and those getting in early are already making huge cash rewards. A decision made in haste will cost you.
To avoid falling victim to either a shady company or an over-enthusiastic multi level marketer.
Find out how long the person who has joined the business has been in it for.
Have they already attained the riches that they are using as a carrot to get you to join?
If they are new recruits themselves there is a lot that they have to say that you should not believe. They themselves may have got caught up in the emotion (of making a lot of money) and are trying to quickly establish downlines or frontlines. they won't have all the answers that you need. they may also fear that if you go somewhere else that that other more experienced person may sponsor you (sign you up).
If indeed the first impressions of the business is to your liking and you want to research this opportunity to the best of your ability you will need to take charge of the situation. whether experienced, fresh recruit or someone in between ask for the information you need. Tell them that you will consider the proposal, but you need as much information as you can get. Is there an information night? A seminar? Can you speak to someone in their upline? Confirm to them that whatever happens if you do indeed sign up to the company you will have them as their sponsor, as they were the one that went out of their way to present this opportunity to you. but first you must get the information, process the information and then decide if it is the right opportunity for you.
Don't take any samples unless it is free.
If someone invoices you for a sample then return it, informing them that you were not informed that there would be a cost, that the impression you got was that it was free, and that you don't like a selling method that involves that kind of tactic
Is it the right thing for you?
Not everyone is a natural born salesperson. If you find it hard to sell, and many do, then you should think hard before signing up. Don't believe anyone who says that the 'product sells itself'. Because if they're trying really hard themselves to sell it to you then the product isn't really doing its job is it?
If you see a clear benefit in using the product but you don't want to sell the product, let them know. Don't fall for 'but if you're a distributor you get X% off!"
For the amount of time and effort and sales you'd have to make to gain that discount (even if it's automatic you'll still have to pay to join, possibly an annual fee, and other things that you won't discover until AFTER you join).
Do your homework. Do an exhaustive search for information about the company. Who founded it. Where. And when.
The age of the company is also important. As well as how many active affiliates it has. If the company is old it may have a disadvantage. Its exposure may have already reached saturation point.
If the company is new it of course won't have a track record. It's important then to verify who it is that is involved in the company. it may have investors. How much capital has been injected into the venture? What is customer service like? not just for the customers who use the product but for the people selling it. Because you too are a customer.
Do your homework
Find out what other businesses the person has been in who is trying to sign you up. They may be able to boast about big cheques, residual income, large network, blah blah blah, but if it's an experienced network marketer they may be able to get a jump onto new start-ups, and brought over their already established network and contacts with them. They may very well have a dozen, one hundred or more people already signed up under them in a very short time. Chances are it won't be nearly as easy for you.
If you're still deciding on the idea or have decided against it, don't give the person a list of your contacts. Whether it be family, friends or co-workers. Ask for their contact details and you will hand it out to others who express an interest.
If the person is going too quick, put the brakes on. Let them know early that you will be asking a lot of questions but only after you've got the right questions to ask.
If they continue to go too quick even after you've insisted that they slow down, show them the door. If they're like this with you now how will they be when you're signed up under them? Because the more people you sign up the higher they will get. They'll be riding you hard.
There may be different entry levels. a basic package might cost a few hundred. It'll get you started. But they'll sweeten the deal with extra incentives if you are willing to part with more money (possibly thousands). this may mean more of a discount. or more reward payments based on different forms of commission. which one is best for you? you won't know this until you weigh up the advantages of each. be sure to know the compensation plan inside out. because you need to know what it means for you. as well as people you may sign up under you. and don't trust word of mouth. something usually gets lost in the translation.
An Escape From the Rat Race?
One of the benefits, at least touted by MLMers, is that unlike a traditional business you can choose who you want to work with. That may not be entirely true. You may find people to be just as annoying or rude or stupid in these MLM companies as you would in a normal job. The added 'bonus' is that everyone is trying really hard to succeed and get ahead. So some people may put on airs and graces that they have accomplished something that they haven't.
While a lot of MLM's promote themselves as a quick and easy way to make money on the side the ones that are making the big bucks are those who dedicate their every waking moment to it. Sometimes it isn't until after that you get told that 'if you're serious about this business you need to invest time into it'.
They might have meetings once or twice a week. attendance is not compulsory (though I can't speak on the behalf of all MLM's, and if there are compulsory weekly meetings the organisation may feel like a quasi religious organisation).
While not compulsory you could still be expected to listen in on a weekly phone call, have your own weekly meetings which you invite people to come and check out (so you have to do a bit of legwork rounding up these people to get to that initial meeting) and then there could be a weekly business meeting.
If you have a life, whether it be a good job, a social life, and family life then something will have to give to fit in these extra-curricular activities. And don't forget, while not compulsory if you don't attend you're not really showing enthusiasm.
"Beyond the sheer hard work and talent required, the business model inherently consumes more areas of one's life and greater segments of time than most occupations." mlmwatch.org
Other Things To Look Out For
- Other shady practises may include the company profiting from selling instructional and motivational materials to its participants. This may be the companies biggest earner.
- Many pyramid schemes try to present themselves as legitimate MLM businesses.
- While it may be easier for a boss to sack someone of objectionable ethics or work practises it is a little harder to do so in an MLM.
- Some MLM's are solely about training. To teach you on how to teach others about what they're teaching you.
- Are you buying the product. Or are you buying into the company? If the product itself interests you let it be known. In fact the product should be the first thing you investigate before considering the opportunity of being a reseller.
- You have time to think things through. Don't let anyone tell you differently. If they say you only have days or even hours to sign up or else you'll miss your spot in the downline then think very hard about whether or not this is the person you want to spend time with in training as your mentor. Do you need that in your life? Someone who is going to dramatise everything that is directly going to benefit themselves?
Companies have devised various MLM compensation plans over the decades.
Until you know exactly how it works, don't sign up. And don't leave it to chance to find out after you've signed up.
Notice to all MLM recruiters
I'll make you a bet. Ask your recruiter to produce the tax returns of ten people showing a profit who are not at or near the top of their hierarchy (recruitment pyramid) of participants, and I will pay you $100. If you can't do it, you pay me $100. Fair enough?
Other websites and articles of interest
- Truth on MLM
- Pyramid Scheme Alert
- MLM Watch
- Four Lies about MLM
- Ten Big Lies of Multilevel Marketing
- Ripped Off By Herbalife
- Mannatech Sued for Fraud and Invasion of Privacy
- Becoming Wealthy With MLM: A Myth
- The Mirage of Multilevel Marketing
- Once Legitimate, Now a Scam
- Pyramid Scheme at Wikipedia
- Ponzi Scheme at Wikipedia
- Cockeyed presents: Pyramid Schemes
- What's Wrong With Multi-Level Marketing?
- The things they won't tell you about Omegatrend
- Agel Vs Pills
- Enlightening Hate Mail from MLM supporters
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