To MLM or not to MLM? *ugh*

21 replies
Ok, so I am not necessarily a fan of network marketing, MLM or direct sales (or whatever it's current name is) but I also don't adamantly oppose it either. It's been years since I played in that sandbox.

One of my current projects is a small, early start-up I.M. related site that has built in referral rewards & affiliate commissions. Currently, I have it designed so that each member receives a percentage of sales for their referrals. Just a standard referral/affiliate program, right?

I've wondered about building out referral commissions out over additional levels. In other words: Direct referrals = 25%, their referrals = 25%, etc, etc...

Essentially, it would be like being an IM affiliate but instead of getting a 50% commission per sale, you'd earn 25% on your sales and then 25% on their sales and so on. Since my site is a membership community, commissions are permanent for the life of the members' - not cookie or session based.

I know it's an on-going debate here on WF about MLM/Networking and I certainly don't want to fuel the fire but Warrior feedback would be greatly appreciated! Thanks in advance.
#affiliate #mlm #network marketing #ugh
  • Profile picture of the author DJVan
    Certainly everyone acts in their own best interest. I have worked traditionally, and MLM. Certainly if I was involved and got a piece of the pie for my referrals, I would be likely to promote the program, if it was something I could get passionate about.

    I get passionate about good quality products or services, fairly priced, nd about making some money. My biggest hangup with many MLM's is they are just money schemes.
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  • Profile picture of the author Alexa Smith
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    Originally Posted by Brains Gone Wild View Post

    I am not necessarily a fan of network marketing, MLM or direct sales (or whatever it's current name is)
    Those are three different things.

    Some (though not many, as a proportion) direct marketing companies are also network marketing companies, and some (in fact most, but certainly not all) network marketing companies are also multi-level marketing companies.

    Originally Posted by Brains Gone Wild View Post

    I've wondered about building out referral commissions out over additional levels. In other words: Direct referrals = 25%, their referrals = 25%, etc, etc...
    There are countless arrangements like that in the IM world. It's not generally a big deal, and most people don't generally regard that as "typical MLM" at all. People normally call it something like an "override commission", or whatever.

    You need to be very careful indeed, if using PayPal to pay commissions, about their being completely clear and satisfied that whatever you're doing on that front is fully in accordance with their own terms of service. It may be, but they have quite some history of deciding "what's MLM" rather differently from how other people do. Better safe than sorry, where PayPal's concerned. Good luck!
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  • Profile picture of the author RogueOne
    I've wondered about building out referral commissions out over additional levels. In other words: Direct referrals = 25%, their referrals = 25%, etc, etc...
    Multi-tier affiliate programs are not MLM. There are no monthly fees. No "starter kits" to buy, etc. You are simply rewarding people for bringing in new affiliates.

    I'm a fan of multi-tier programs. I won't promote programs that solicit new affiliates without giving me credit for sending them to the site.
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  • Profile picture of the author Brains Gone Wild
    thanks

    I appreciate your objective feedback - MLM/network/direct sales or simply multi-tiered compensation schedules can be a hot topic here sometimes
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  • Profile picture of the author nicholasb
    I personally enjoy network marketing, it's a great industry. I've found it to be very similar to affiliate marketing, except the earning potential is much higher.
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  • Profile picture of the author SunilTanna
    Originally Posted by Brains Gone Wild View Post

    One of my current projects is a small, early start-up I.M. related site that has built in referral rewards & affiliate commissions. Currently, I have it designed so that each member receives a percentage of sales for their referrals. Just a standard referral/affiliate program, right?
    Are you charging people (or requiring people pay for something) to become an affiliate?

    If you are not charging people, great. I wouldn't stop thinking, but you are most likely okay.

    If you are charging people to be affiliates, then I'd suggest you get advice from a lawyer knowledgeable in the field, as there are lots of issues that may arise. Not only from being MLM, but also biz op laws, etc.

    If you are charging people to be affiliates, and then the affiliates earn commissions when they recruit other members... then I think you should have a serious rethink, and redesign your plan.
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    • Profile picture of the author Brains Gone Wild
      No, not charging to join the site or to be an affiliate - commission occurs only when a product sale is made. Thanks

      Originally Posted by SunilTanna View Post

      Are you charging people (or requiring people pay for something) to become an affiliate?

      If you are not charging people, great. I wouldn't stop thinking, but you are most likely okay.

      If you are charging people to be affiliates, then I'd suggest you get advice from a lawyer knowledgeable in the field, as there are lots of issues that may arise. Not only from being MLM, but also biz op laws, etc.

      If you are charging people to be affiliates, and then the affiliates earn commissions when they recruit other members... then I think you should have a serious rethink, and redesign your plan.
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  • Profile picture of the author mattjay
    People are really passionate about the topic on both sides. The fact of the matter is, some people do make money in MLM or direct sales. Some don't. I guess if it's something you can get riled up about, and make some progress over time, it can be very profitable. there's people all over the planet who have made money into the millions with these things. But it's not for everybody.

    EDIT just to be clear, I am not a member of any MLM or direct marketing company but I know some people who have been successful with it not an endorsement of any kind.
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  • Profile picture of the author Randall Magwood
    Nothing wrong with MLM/network marketing. I feel that my mom would be a good MLM seller the way that she calls all of her friends and family members whenever Barack Obama gets ready to speak. Dan Kennedy has a good book called "Prospecting Sucks" that helps MLMers to succeed. I think you should read it. You can get it on Amazon.
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  • Profile picture of the author Brains Gone Wild
    and this is why I love WF! Thanks for the help & feedback!
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  • Profile picture of the author Yadira Barbosa
    I try several MLM companies with good compensation plans and good products, but I HATE that you depend form other people efforts, and its really hard to find a people that really works.

    You must invest so much time trying to motivate and teaching people who will leave after a few months (or weeks) .

    I prefer to base my business in my own efforts and expertise.
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  • i think the main focus in mlm is that you believe in the product you are selling and use it yourself. my wife got involved not long ago with a anti-aging cream that is built around the mlm platform and the business is exploding after only being around for about a year now. the great thing is the product actually works and lives up to its claims. another great thing about the product is that everyone that uses it, loves it, which is a key element in building a long term mlm company that will be around for years to come.
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    • Profile picture of the author simplesite
      I see mlm more or less like dropshipping. You have to find the customers. The difference is in the off line formula you have to make an investment to buy the inventory. For the online you have to spend time building a site.

      Originally Posted by realaffiliatereviews View Post

      i think the main focus in mlm is that you believe in the product you are selling and use it yourself. my wife got involved not long ago with a anti-aging cream that is built around the mlm platform and the business is exploding after only being around for about a year now. the great thing is the product actually works and lives up to its claims. another great thing about the product is that everyone that uses it, loves it, which is a key element in building a long term mlm company that will be around for years to come.
      Can I ask what product your wife is selling?
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  • Profile picture of the author Robert02011
    I love mlm as long as you find a good system that`s honest
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  • Profile picture of the author Jeff Burritt
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    As mentioned earlier, I'm assuming there's no upfront kit/membership to buy. This is always a big favorite of MLM companies. Because they know the average person is not going to recruit anyone, they try to maximize the first and maybe only sale.

    Secondly, is there a forced continuity? Almost all MLMs require this. Many affiliate programs do not. MLMs only pay if you are both a buyer and a recruiter. Affiliate programs pay if you are a referrer of buyers. That's it.

    Thirdly, a newer adaption in the MLM world is the hybrid of profit-sharing based upon the size of your organization or number of referrals. Often called pools. If you use this feature it's going to look more MLM. But if you don't, or you just offer performance bonuses like many JV launch contests, then you're probably just affiliate.

    The more MLM-like your program is, the more customers and paypal are going to assume you're really just an MLM trying to disguise as an affiliate program.

    I think it's best to clearly define what your program is. And it sounds like you are just multi-tiered affiliate.
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    • Profile picture of the author Brains Gone Wild
      Thanks, Jeff. Yes, it seems my site falls under the 'multi-tiered' affiliate category. Thankfully because the entire site and system uses Paypal.

      Originally Posted by Jeff Burritt View Post

      As mentioned earlier, I'm assuming there's no upfront kit/membership to buy. This is always a big favorite of MLM companies. Because they know the average person is not going to recruit anyone, they try to maximize the first and maybe only sale.

      Secondly, is there a forced continuity? Almost all MLMs require this. Many affiliate programs do not. MLMs only pay if you are both a buyer and a recruiter. Affiliate programs pay if you are a referrer of buyers. That's it.

      Thirdly, a newer adaption in the MLM world is the hybrid of profit-sharing based upon the size of your organization or number of referrals. Often called pools. If you use this feature it's going to look more MLM. But if you don't, or you just offer performance bonuses like many JV launch contests, then you're probably just affiliate.

      The more MLM-like your program is, the more customers and paypal are going to assume you're really just an MLM trying to disguise as an affiliate program.

      I think it's best to clearly define what your program is. And it sounds like you are just multi-tiered affiliate.
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  • Profile picture of the author sportslocker
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  • Profile picture of the author mtihani
    In my opinion you could use SEO and IM for MLM. When I was a part of an MLM not too long ago, the most successful people used SEO to promote the MLM, so I don't feel like it's much different.
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  • In my humble opinion, unless you have a ton of time or are a traffic wizard, MLM is a waste of time. Not a good return on your time or money investment. I have made much more with the direct sales model. Much more income for the same amount of work. Money comes quicker also allowing you to scale your business.
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  • Profile picture of the author aizaku
    create your own product or at least become an affilate, why make MLM your go to plan?
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