Ahh, good old MLM, aka Multilevel Marketing, Network Marketing, or Referral Marketing.
Investopedia defines MLM this way:
Multi-level marketing is a strategy that some direct sales companies use to encourage their existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales; the recruits are known as a distributor’s “downline.” All distributors also make money through direct sales of products to customers.
As a long time “dreamer”, I must admit this takes me back to the good old days of my youth. Like many people my age, my first encounter with MLM was through Amway. Back in those days, there was no internet, so MLM was conducted almost entirely through pitches to your warm market and prospecting when you were out and about in your everyday travels using the three foot rule.
I was way down the line in the organization of Amway legend BIll Britt and was recruited by my sister-in-law and her husband. The typical spiel was to tell people that if they put in 5-10 hours per week for three to five years, they could build a full-time residual income.
Teams would get together on Sunday nights to make prospecting calls(sorry Sunday Night Football fans). The goal was to see if people were interested in a business opportunity and getting them to commit to attending a presentation. We gave as few details as possible about the company and did our best to keep the calls as short as possible. As a pretty straight shooting guy, it honestly came off as a bit shady to me. Naturally, I didn’t succeed even though I rifled through a number of other MLMs after Amway. The dreamer in me couldn’t resist, but I simply wasn’t a good fit for the recruiting tactics in MLM, nor was I a very outgoing person.
Closing in on three decades later(good grief I’m old, lol) I wouldn’t classify myself as an MLM hater, but I am a major skeptic.
I’m not going to go into the myriad of flaws in the MLM business model or the false and deceptive claims that many MLM companies and their reps put out their. You can search those out easily enough. 🙂 I’ll simply sum up things with my bottom line view/opinion.
MLM is supposed to be an alternate method of product and service distribution to customers who have a legitimate interest in what your company offers. That’s the theory and the major foundation of the MLM business model.
The unfortunate reality of MLM that I’ve observed over nearly 30 years of seeing hundreds, if not thousands of people both offline and online joining MLMs is that it’s almost always more about the opportunity than the product.
Because it’s part of their dream of financial freedom, most people fool themselves into thinking the products are better than they are, which justifies the inflated prices of many MLM products. If this were the case, there would be a much higher customer retention rate for MLMs after distributors finally realize that they simply aren’t going to realize the dream income that they were sold on when they joined the opportunity.
For an MLM to be truly legitimate, their products and services should be able to stand on their own in the open market place without the income opportunity attached. However, this is very rarely the case. The average consumer simply doesn’t see the value in MLM products that are priced significantly higher than what can be found on store shelves. RIght or wrong, that’s the reality, even if your MLM product is actually better.
If you intend to pursue a career in MLM, make sure you sift through the hype and take a good hard look at what you will supposedly be selling. If you weren’t chasing dreams of financial freedom, would you actually buy it? There are supposed to be retail sales to customers not involved in the opportunity. If what you offer has no appeal, then what you are selling is a dream.
Be careful and good luck in your quest.