One of the business models that receives a lot of ink here in the U.S. is the multi-level marketing structure (MLM). It seems that there are many proponents and just as many critics.
For some reason, people always seem to have an opinion about MLMs – and often those opinions are extreme … they’re the greatest wealth vehicle ever, or they are all a big scam! Surely reality lies somewhere in between.
MLM companies seem to be generally associated with health care, supplements, household type products, or wealth building … but really … the product could be anything.
Personally, I have always shunned the idea of joining an MLM … although I will admit that some adopters have done extremely well with this type of business.
Now let me be clear: I have never joined an MLM company and have never really wanted to be a part of one. So I have an “external” bias and a perspective that those in the business would probably call uninformed or naive. I certainly can’t speak from having an “insider” view or experience in the industry.
Just the same, I have never liked the business model and I will explain why. Here are my reasons for my negative view of most MLMs:
- I absolutely hate being pitched (attempted recruitment) by friends and family (even more so by strangers), especially those that won’t tell me in advance why they want 45 minutes or an hour of my time. As soon as I hear about how much money I can make with this opportunity, I tend to get suspicious!
- I sometimes listen just to get people “off my back” as they will keep pestering me for an audience even though I try to politely tell them that I’m not interested – such is especially the case with friends, neighbors, co-workers, etc.
- It seems that commissions in many MLM payout matrix structures are often geared to favor the owners and those who get in the down line at the beginning. They make money on the backs of all their recruited masses.
- In fact, “the product” often seems like almost an afterthought, something to keep the FTC, Uncle Sam’s IRS, or state industry regulators happy.
- It seems that most of the “earnings” in MLMs are coming from members recruiting others, not from selling the product or the service that the company claims is worth the price of admission alone.
- It seems many MLMs have two faces. There’s the public face that’s all about how great the company is, how much they care about the individual, how wonderful the products for sale really are, how much money one can earn without hard “selling”, how easy it is to build a huge downline, how they are there to help you every step of the way, etc …
- Then there’s the “inside” face, the stuff they don’t tell you, where reality rules and all is not so much peaches and cream. Hidden or escalating costs, poor or no training, surprises that weren’t covered during recruitment, and sometimes company legal or financial issues that stay hidden until they fester and ooze and the company folds leaving recruits with nothing. I totally admit this perception comes from family and friends whom I’ve talked to who had a bad experience – not from firsthand experience of my own – or from very successful MLM participants (surely there are some out there, but in all my years I have never known any).
If the MLM is, or appears to be successful, it seems that copycats come out of the woodwork further saturating the marketplace and making it even more difficult to interest prospects in the MLM and associated products.
It seems to me that when critics bash the MLM model, the only ones who stand up to support it are those already in the business – people who have a vested interest in painting the MLM picture as rosy as possible. On the reverse side, the greatest critics seem to be those who were recruited into the business and for whatever reason left (or were ditched) with a bad taste in their mouth.
Yes, I know that some or all of these same perceptions could describe the business model of some non- traditional MLM companies.
I’m not being critical of what you MLMers are doing and I hope you will offer your contradicting viewpoints, if you have them.
I’m just trying to shed some light on how I personally perceive the model as an outsider looking in. I hope all of you rise to the top in your pink Cadillacs … maybe those are not longer possible rewards … but …
Here’s the one thing, above all others, that convinces me I don’t want to go the MLM route: I have probably been approached maybe 50 times (I’m just guessing here) during my adult life about MLM “opportunities” and probably half of those times I was “recruited” by people I know fairly well, people that I have followed during their careers. Of those 25 times (about), I’ve endured through their initial “great income building opportunities” for the first meeting but I’ve never been convinced that the opportunity was how I wanted to spend my “free time” or my career (full time). I didn’t believe that I would “like” doing this business model.
And just as telling, but far more damaging for the MLM model, in my opinion, is the fact that not one of those people that pitched me was still in that same MLM business a year or so later … not one! Some of those folks jumped to other MLMs (which I understand happens quite often), some found employment in the traditional workforce, others were still seeking to find a way to make some money in a different industry.
I’m guessing my own experience is similar to that of other people. Why do so many people fail at MLM money making? I’m guessing the answer is basically the same as the answer to “why do so many people fail at online business?”
That is a discussion for another day.
To your online business success!