This is something you hear me say over and over again on this blog. And while it is my opinion, I don’t really get into the fine details of why I believe this.
First off, are all multi-level marketing companies pyramid schemes?
I ask this because this is the most common rumor you hear. But the answer is no. Here is the difference between MLM programs and pyramid schemes.
There’s been some that I’ve found that are decent in meeting a certain legitimacy criteria, but even in the exceptional cases, I still believe the entire business model of MLM to be flawed. So in this post, I’d like to address why I believe this:
5 reasons I will never join an MLM:
1) To sell their products, you will likely to have to buy them first.
In fact, I have yet to review ANY MLM company, both online/offline that doesn’t require you to buy their products to them have the right to sell them to others.
There are certainly other sides to this argument such as being able to sell something honestly requires that you first try it. Right?
Not exactly. Sometimes you know exactly what a product has to offer without having to buy it,
I really feel like the incentive is leaning more towards making money and by requiring members of an MLM to purchase products before selling them, the company makes much more money as a result. But hey, that’s my opinion.
If you do other things such as affiliate marketing, in most cases, you will never be asked to buy a product in order to promote it. This creates more freedom for the sales person and doesn’t bind them to 1 particular product (since they’ll be invested into it).
2) The re-recruitment process:
Find me an MLM which doesn’t give you an incentive/compensation/reward to recruit others and I may become more accepting of this business. But that’s never going to happen because I doubt anyone would ever want to recruit others into an MLM without their being monetary interest.
And it’s really the whole recruitment process which I am not a fan of because it’s process is about as close to a pyramid scheme as there can be. And good luck selling this idea to others:
“If you can get X amount of people, you get paid X amount for each person. Then if they recruit X amount of people, you get an X amount for each recruit they get”.
I’m paraphrasing, but this is pretty much how a sales pitch from someone trying to recruit you into an MLM will work. And the biggest keyword there is “IF“.
Most people in my experience will not join a company/program based on this pitch. Hell, just the though of being sold something is a turn off from the start and it’s easy to spot when someone is trying to sell you something. That’s why it’s so hard to make money with MLM programs.
I can’t recall how many times I’ve been pitched how much money I can make, but all I really hear is what’s in it for the guy whose selling this idea to me. Now apply that same type of analogy to other people who go around handing out business cards, placing ads, calling people up and trying to do the same. How much of this work is ever going to lead to real sales!?
And how many of these sales reps go out and try to get their friends/families into this is beyond count. This just rubs me the wrong way…
What I’m basically trying to say is this:
Being successful at recruiting others requires some really good sales skills or having a lot of leads which usually comes about from being a good sales person to begin with. But:
A) You’re unlikely going to find a lot of people interested in this.
B) Even if you do find those few interested in joining, they’ll likely quit early on because they won’t be able to repeat the same process. Focusing time and energy on selling such an idea to others is not something everyone can devote time to, especially if they already have jobs, family and/or other events taking up a major portion of their lives.
Not to mention that with MLM programs, by recruiting, you’re basically building a chain (downline) with each person you recruit and then they have to keep the chain going. I honestly see this as a process of passing off the responsibility of earning money to the next guy.
Eventually this (in my opinion) cannot go on. Somewhere “down the line” (Pun intended), the people who are recruited will not be able to make money, will quit and this will directly affect their up lines, including you and like a house of cards, the whole business can come down quickly.
And the whole idea you’re sold that if you recruit an “X” amount of people which is usually 100s, 1,000s and make a ton of money is likely never going to happen. Yet from day 1, you are told that this is possible, probably from recruits who never have/never will do it themselves. From the most part, it’s just a dream for most…
But critics will say that recruitment is an option and you can always try to sell the actual product to people. Ok I’ll give you that, but:
3) Do you really believe in the product you’re selling?
When money is involved, you’d be surprised to know just what kinds of things people will endorse. It could be garbage or it could be the real deal. I believe as with recruiting, that you’re also bound to have similar/worse problems selling a product from an MLM because:
A) There’s already mainstream alternatives available that are likely cheaper and more popular so how exactly are you going to convince me or someone else to buy this instead of what’s more popular and people are used to?
B) If you’re going to buy products from an MLM program, you are likely going to be sold expensive package deals to keep you spending more. Good luck trying to convince someone to buy into this.
But when these sales tactics fail, you’re probably going to get a pitch from the sales person about how making money is also possible via recruiting others. Round and round we go.
Look I’m sure there’s plenty of great products available in MLM programs, but in truth when you have other alternatives that are more mainstream, likely cheaper and don’t bound you into buying them in the future, most people will lean towards this.
4) The idea that you’re building your own business.
Depending on how you look at the process of building a business, this may/may not be true. I believe that building a business, whether online/offline should be something you’re interested in doing, whether a passion/hobby or something you truly excel at and can share with the world.
Maybe this is idealism but in my “perfect world”, people should earn money doing what they love and not something they’ve convinced themselves is the real deal if you catch my drift. I know this almost never happens, but if you’re going to make a push towards reaching your dreams/goals, I believe you should be honest with yourself and do what you love.
5) Online MLM programs are probably even worse.
In recent years, there’s been a very large increase in new online MLM programs popping up and unlike the traditional options, they are being sold to you in ways that make you believe it’s the optimal solution:
- No need to buy overhead since everything is digital which saves you money.
- The process of signing up people is easier than with offline MLM programs because it’s all done online.
You can make more money without having to sell any tangible goods. In fact some online MLM programs such as Empower Network boast 100% commissions, yet this place is one of the biggest scams I have ever reviewed.
Technically all of this is true. But in reality, most of the online MLM programs I’ve reviewed are:
- Downright pyramid schemes.
- There is NO product, just training videos/tutorials on how to get others into it. They charge your $100’s and even $1,000’s for this information! That is a RIPOFF. And these are characteristics of a pyramid scheme.
- Horrible support (There are exceptions).
- More difficult to make money through online MLM since most potential sale’s reps don’t even know the first thing about selling online. Yes many MLM programs provide you with training on how to do this, but rarely in my experience does this kind of stuff work. The people who make the most in online MLM programs are those who have large numbers of leads who trust them OR those who get into the MLM earlier.
Long story short, when it comes to online MLM programs, there is no such thing as the best MLM program and most of them are pyramid schemes based on there being no product and whatever is being sold to you is vastly overpriced.
If you’re tired of MLM, see my #1 recommendation which is Wealthy Affiliate for building a truly successful business online.
My final thoughts:
Most people who get into MLM whether it be online/offline do so because they are sold a dream of making easy money. And in reality this kind of stuff doesn’t happen. The only ones who gets rich through this process is the MLM program itself.
If you’re going to succeed in creating a profitable business and you want my opinion, here it is: Stay away from MLM. Stick to building something that’s based on your personal interests/passions. I personally do online business and I find it very fulfilling and NO, it is not an MLM.
I know there’s going to be tons of people who agree/disagree with me on this so I’d like to hear your take!