Things can get kind of tricky when a network marketing company compensates it’s members/distributors on the foundation of recruiting other members rather than actually selling the company’s products or services.Mainly focusing on the compensation plan rather than the products themselves. A multi-level marketing system where most of the profits come from recruiting other members(downlines) may be considered an illegal pyramid scheme.
What is MLM ?
From my perspective MLM , Multilevel Marketing , is a type of Network Marketing company where the members are required to purchase a certain amount of product packages monthly in order to qualify for commissions that given month. I say qualify because the member is generally required to sign up 2 paid members under them to actually receive a actual commission for that month.The scheme being that each member signs up 2 paid members then those two sign up two paid members,and so on,creating a pyramid under the first member , hypothetically , that member being you. In many cases the first one or two commissions are passed up to your sponsor(the person you signed under) creating a incentive for them to help you recruit and the persons under you would do the same. It can become very confusing.
MLM companies can be a wolf in sheep’s clothing…
Many of owners/presidents of mlm businesses have very similar stories of “rags to riches” in a one year time frame. Almost as if they copied it from the same book. They try to connect with the prospective distributor thru tragic , emotional life experience. Being homeless ,”Living out of their van on the beach”. Fired from their job , divorced from their wife/husband and evicted from their apartment all in one day ! Many are just simple con artists. These are generally the type of companies that make it seem as if they have a whole arsenal of products , usually digital downloads of self help or business ebook products and a cheap blogging platform that they promise will bring the distributor from “rags to riches” over the next year for “only” $100 or more per month! Yippee… Good luck with that ! The truth is it works for some people especially if they are a incredible recruiter with no morals. A person that doesn’t mind selling worthless products that are covering up the fact that they are just promoting a cash exchanging program that is making the person at the top very rich. The people towards the bottom generally lose out , especially if they are not good at recruiting.
Basically these companies expect the distributor/consumer to purchase products that we know nothing except what they want us to know about their products. Plus they expect us to pay a very over inflated price for these products we know nothing about. Who wants to pay $60 for a bottle of Moringa juice or 1 ounce of miracle moisturizer for $80 ? Especially when we can buy a different brand with the same ingredients on Amazon for $16 ! It’s a fact , do the research. It will show that most mlm companies do not put the products first , they put the profits first. The company gets their 100% profit , always , and the distributor gets their 10%-40% commission depending on the compensation plan. And that’s only if they are qualified sales. That being said , with mlm companies there is seldom just a customer.Who in their right mind would pay nearly double the retail value of a product without trying to make some money back ?
Many of the product companies promoting and selling thru multi level marketing are health and wellness niche products. Superfruit juices , anti aging supplements , skincare products , energy drinks , fitness programs and even canned oxygen! These companies have become very popular and very common over the past decade or so. Some of these companies have actually stuck around , but many have gone by the wayside , closing down abruptly and leaving their distributors in the dust ! No explanation and no compensation . A chance one takes I suppose.
The companies that have survived may be do to a higher quality product , better organization , better pay plan or just simply better lawyers ! The lack of quality control in some of the failed and even existing companies astonishes me.
Smoke and mirrors…
It is common practice in mlm for companies to portray the headquarters as being in a big industrial park in the more subtropical areas of California , Arizona , Texas and Florida. Usually a large 10,000 to 30,000 sq. ft. building with a huge company logo photo shopped to the facade of the building.Then of course they feel the need to show you a video tour of their offices in these buildings , generally consisting of two or three rooms with floor to ceiling windows , some telemarketers and maybe a small mainframe computer room. But wait ! There were no windows on the outside of the building , how could there be windows on the inside? Hmmm. Smoke and mirrors…
Some of the more prominent dangers of mlm include the lack of transparency with many of the companies and their leaders
A example of a company not knowing it’s products…
I was a distributor for one company a few years back that is still in business. I am very picky about what I put on my skin and what I ingest supplement and food wise as well. The company claimed to have all natural products , no toxic chemicals , metals etc. Of course after reading the labels of many products , toothpaste , skin creams and such, I found titanium dioxide , sodium laurel sulfate , magnesium stearate. These ingredients are toxic if ingested for a short period of time.Toothpaste is something one uses two to three times a day. Anything that we put on our skin goes to our bloodstream.These ingredients do liver and kidney damage , never mind cancer causing abilities. Needless to say I contacted the owner/president of the company and was told that those ingredients were supposed to have been taken out of the new products and that the person who was responsible for the oversight would be suspended. What a joke !
Another company I was a member of was a energy supplement company ,s elling capsules of 30ct per bottle.Our “wholesale” price as a distributor was $$49 per bottle and retail was $59 per bottle. Hardly wholesale. To qualify for full commissions of 40% we had to buy $125 worth of product every month ! Anything under would qualify for only 20% commissions. That didn’t pan out very well. This company didn’t stay around very long either. It turns out that they were caught counterfeiting their own product and filling the capsules with plain old vitamin C !
Personally,I have lost trust in most MLM fueled product companies
It came to a point that I just didn’t understand why! Why would I want to buy and sell a product for 2 or 3 times the price of what I can buy a similar product on a online marketplace ? Most of the distributor sales pitches were just that! ” Buy a product that you already use every day,but make a full time income doing it! “. Well,at a $10 “profit”only after making a 6th sale for the month ,no one can make enough money to pay their electric bill ,never mind make a full time income ! That’s where the MLM comes in.The only way for members to make money on the products is by recruiting more distributors and hope that they spend at least $125 every month so I would receive my 40% commission and maybe even a one time startup bonus of $10 for each person that I signed up. Basically I needed to sign up 12 people that spent $49 a month in able to break even. Unfortunately most of the people I signed up did not spend $49 a month , never mind $125 and they seldom signed anyone under themselves unless I placed them there from my own efforts. So my down line basically stopped one person below me and straight across.
I learned my lessons…
- I will only follow a company that I believe in . Meaning I believe in their product, compensation , ethics and morals.
- I will only be involved with a company that offers a true commission compensation plan and does not require me to recruit others to make money
- A company that makes it possible for me to create multiple streams of income throughout their program platform
I have found that the best companies are ones that offer high value to their affiliate members at a affordable cost .Keeping in mind that it does cost money to run any business , including my own.
My Wealthy Affiliate review
Until then…Keep it real,
p.s: If you ever have any questions, comments or concerns , please leave a note down below. I don’t bite ! 🙂
p.p.s: You can chat with me at my WA profile page as well