MLM Is A Scam?

It's not just the online MLMs that push junk. I've had a couple of acquaintances get involved in offline MLMs that involved selling overpriced not-very-desirable products. They didn't have any marketing skills or money to invest in advertising, and didn't realize that that would be necessary to be successful. Once they had sold a few items to their friends and family (who mostly bought out of a sense of obligation), their business basically was over.

So for me, it's not that MLMs aren't using a legit business model. It's that MLMs are marketed an easy way for anyone to make money, and that's simply not true. Like any other business it requires marketing skills (either natural or learned) and an investment of time and money (for advertising etc)

Here's the problem.

Most of the so-called MLM's out there make you money via signups underneath you. The legal term is 'headhunting fee', and it's illegal as hell.

A legitimate MLM has no such feature. The only way to make money in a legitimate MLM is through retail sales to actual customers.

If the MLM you're looking at has a feature like 'quickstart bonus', or 'referral bonus' for signing people up, don't walk....****ing run like you're fleeing an avalanche.

The thing that I believe in any good and legitimate
MLM business is that in their offline trainings, I think
they do talk about MLM as their own legitimate
self-owned business.

But I think that it's mostly the uplines who are
teaching the old dinosaur ways of doing network
marketing and thus really pushing people away
instead of building a real business for themselves.

But if it comes to building their own MLM company,
I agree with you - there are far easier and less
stigma stained ways of doing it.

Asher

Agreed, systems DO work. It's just the people who
fail at making it work.

Thanks for sharing that.

Asher

The problem is the blatant scams that operate under the guise of being an MLM.

Weak, useless, or nearly nonexistent products, while the real money is made in recruitment, or in the case of one well known company, making more selling self improvement tapes and books then selling "soap"- or their other primary products.

Add in the fact that sales can be tough anyway, and many that cant hack it are quck to label MLM as a scam.

This is it in a nutshell.....


Over the years I have been involved in quite a few MLM companies.

You can so easily get drawn in to these companies, because it looks so simple - particularly in the hard times that lie ahead, there will be many people who will unfortunately 'get skinned'. They will lose their hard earned money, and waste an awful lot of time - much the same as buying the wrong stuff in the IM community

There are three key questions you need to ask when being recruited:

1: Ask your potential up-line: 'How much did you make last month then?'
(if they aren't making money how can they show you how to?)


2: Ask yourself: 'Who do I know that I could sell this to and feel good about it?'
(could you meet a customer in the street and not want to avoid them)


3: Ask Yourself: 'Under normal circumstances (not being involved in selling it) would I buy this product / service?'
(many products only exist because the distributors are the only consumers)


If you can honestly answer these questions to your complete satisfaction - then the ball is firmly in your court - I know what I do at the first mention of MLM - politely say 'no thanks - I'm really not interested'.

The only upside of going to an 'opportunity meeting' - is that there are lots of people there who want to make money - you may be able to build them a website, design business cards - whatever - but for the sake of your own sanity, financial standing and retaining your friends and family - do something else!

There are obviously people making money, living the lifestyle etc. - but many will be funded and backed by 'The Company' - I know - because many years ago I had a downline of about 3500 people - I never made any money as my expenses always outweighed my income, and a large number of my downline were 'placed' there by the company.

The only benefit of getting involved in MLM is that you will learn a bit about marketing and meet some really nice people - don't expect to be living off your income anytime soon...... in most cases you will think you're just starting to get somewhere and the company will 'go bust' - the bosses will move on - set up another MLM and suck in another bunch of newbies.

Focus on building your retail side, and the rest of it will come together soon enough.

Here's the thing though. The "rich guys" started their business just the same as everyone else. No one in their network. No profit. They had the same products, the same opportunity, the same compensation plan, the same 24 hours in a day as everyone else. Sure, they become successful and step into the mentoring spotlight. That is the natural progression of the business. I started with nothing, but now, through persistent action, I am doing lots of public speaking to different networks within Amway, and I'm mentoring lots of people.'

What is the variable then between those that succeed and those that don't? It is the individual person.

How many people "succeed" compared to those that don't succeed in IM? The numbers will probably be similar.

You've made a very good point.

It seems Affiliate Marketing could be considered MLM.

And I think Amway has the largest distribution of an Energy drink out there. Most people probably never even heard of it.

MLM and network marketing is a very powerful distribution model.


Sounds like the 'IM' niche to me..

There are many legit mlm companies out there, particularly in the health/wellness category. Some of these product are very high quality but over-priced in my opinion. Of course the prices have to be inflated in order to accomodate the commssions spread out over many levels.

The issue I have with the majority of mlms is how many of the 'heavy hitters' approach recruiting. They make it sound very easy and 'duplicatable', when in fact it is anything but that.

It seems like most big earners in mlm have one or more of the following attributes:

- A very charismatic, outgoing personality that could sell ice cubes to an eskimo.
- Savvy, well developed marketing methods that are not very duplicatable for the average soccer mom.
- Deep pockets to pay for heavy advertising

For example, I personally know a mlm heavy-hitter that has been a high 6 figure and 7 figure earner in several large mlms over the last 20 years. His marketing approach is VERY complex and is not at all well suited for the average person.

Just the cost of doing business, its a risk.

Oh boy!

What a whole lot of beating about the bush!

MLM as a business model works, and works well.

MLMers, as a general rule, don't work.

Because they don't work and, consequentially make no money, MLMers decide that MLM is a scam.

The internet is crowded with failures who failed in spite of sitting around in their underpants all day, clicking their mouse!

Nothing works if YOU don't - ergo, everything is a scam. This is the first rule of internet (ML) marketing.

Yep, if you do it the wrong way. It's the same
like doing any kind of business... do it wrongly,
you lose your friends.

Do it right, you'll make great friends and business
partners.

Asher

It is, if you are selling it as a get rich quick, or making claims that cannot be possibly attained by the average person.

The most honest way I have heard is to treat MLM somewhat like an affiliate product.

Except you ACTUALLY use the product, everyday or as a recurring customer yourself based mostly on the strength of the product ITSELF, like a review site or your daily experience and creative use of this product as it relates to PERSONAL USE ONLY.

The MLM part comes in like some recurring affiliate commission type accounts...they like and enjoy a particular product, say, a face cream, and buy it regularly, you get a regular commission off their purchase as long as they continue to purchase, you introduce some discount offer to an already establishe customer if they tell someone else, the new person signs up, under YOUR downline, and on it goes.

The Marketing/Income plan part of the company should be optional and really played down, its for those who really like the product and are simply wanting to share.

To market it as though anyone can make thousands and thousands a month is unrealistic.

The math don't add up because of the saturation point at the tail end, unless you get in 1st, at the very top.

I'm not saying it's impossible, but it is very disingenuous to as far as mlm, to tell and sell people that they can make retirement income , quit their job or claim that they can at least make "x" amount of dollars if only they do as the marketing plan dictates.

On average, it is unrealistic for the average, and maybe, the above average user because of the very real saturation...those "potential" numbers get smaller and less likely to achieve as time goes on....because theres a boat load at launch, then once it dies down and there are so many competing affilates and places to purchase, the numbers won't add up.

Numbers based on example, say, they say you should be able to get 2 or 3, and "IF" they continue to promote, downline of hundreds, and "IF" those hundreds continue to promote. goes into multi-thousands, and you are supposed to train and motivate ALL these people and they are all going to give it a "fair" effort of promotion and the drop out rate will not adversely effect every individual in that downline's potential of accruing/growing income stream....., VERY unrealistic.

The 13 th Warrior

Wow, the ignorance in these "mlm" threads is simply staggering. I'm not a big fan of the network marketing business model but to say all "mlms are scams" is simply inaccurate. Some of the biggest names in IM participate in network marketing and many of them do very successfully and have been for many years.

MLM is not a business, it can be a way of marketing as well as a compensation plan. I used to work for a company called American Express Financial Advisors that paid their sales force in a multi-level marketing type of compensation plan. In fact, there are plenty of large companies that pay on more than one level, they pay bonuses, overrides, just to name a few. I have many insurance and financial sales peers who get paid under a mlm structure and have been for decades. It's nothing new. Like any industry you're going to get bad apples.

Whether people call them MLM or Networkmarketing or Relationship marketing companies or opportunities, it's basically the same idea. Just like in the Internet marketing arena there are going to be good Network marketing companies as well as bad ones. Though I've been a ten year veteran of the network marketing industry I chose to get out of it because I could make a lot more in Internet Marketing because I could create my own products and have total control over the sales process and all my profit margins.

Like ANY business you want to start, you've got to do your research. Unfortunately, network marketing (or mlm as some people refer to it) has gotten a lot of bad PR and I have to say rightfully so. I remember an ex-ex-girlfriend of mine dragging me to a Quixtar presentation and I only went along to see what it was about because she was thinking of joining it.

The stuff I heard coming from the presenter blew my mind (in a bad way). When I began asking straight, common-sense questions about their business model the presenter kept saying "I'll answer your question later". When later came he said I should just give it a try. Then I told him that I was already in network marketing at the time and very successful at it and was just there to support my girlfriend. He was NOT happy that I was there.

It was like a cultish atmosphere. But despite my many bad experiences with network marketing it doesn't take away from my good ones. I learned a lot about business, I had excellent coaches and mentors who really gave a sh-t about my success and I took those skills over to other businesses. But let's face it, no matter what business you're talking about starting, not everyone is cut out for it. Not everyone is willing to put in the time and effort it takes to build ANY business.

So to answer the OP's question, is MLM a scam? It really depends on the company, it's mission statement, it's product or service line, and the leadership it has. I've run into plenty of scams, but I've also seen some pretty darn good ones.

RoD