Multi Level Marketing

Multi Level Marketing (MLM) has been a quick way to get a company’s product or service into the market place. It seems these type of companies can spring up and grow rapidly. They can be over night successes or failures.

Multi Level Marketing according to Wikipedia “is a marketing strategy in which the sales force is compensated not only for the sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and the hierarchy of multiple levels of compensation.” Sometimes MLM has been called Network Marketing, Referral Marketing and sometimes Pyramid selling.

There is a fine line between multi level marking and pyramid selling. Pyramid selling is illegal because it is too easy to cheat the buyer. Pyramids are usually low cost investments where the buyers invest money where little or no product or service is rendered. They buyer invests a little money in hopes when others in their downline sign on they will get a piece of the action. Most of the time exaggerated earning claims are given. Chain letters, Ponzi schemes and other consumer fraud scams are prime examples of pyramid type selling. The crook, Bernie Madoff was involved in a high cost pyramid selling. Many fortunes have been lost in this type of pyramid selling.

MLM marketing has succeeded over the years for the most part because they usually sell a legitimate product or service. But there have been many lawsuits with these companies trying to defend themselves. MLM is not a fully regulated business model so there are many exaggerations being made with very little proof of income. Some people can do very well financially if they have the right personalities, work ethic and personal contacts. Usually these companies will point out a few very successful members but never tell you the negative side of the business.

Most of the time these MLM companies are honest and legitimate businesses with well known names, but they still have their own baggage they don't want to talk about. Usually it is a high failure rate or lawsuits from its members (they do not have to disclose). Well known names like Avon, Tupperware, Kirby, Nuskin, Amway and hundreds of others have used MLM to expand the sales of their product.

I have known some who have become millionaires in MLM and some who have made a good living for a number of years. Mostly I have known people (including myself) who have bought into a MLM business and have quit within a short time. Most people joining these businesses never make their investment back. Since it only cost them a few hundred to a few thousand dollars to join, they chalk it up to experience and move on.

As reported in Wikipedia, they quoted “The Times”, "The Government investigation claims to have revealed that just 10% of ____ (one of most popular MLM company) agents in Britain make any profit, with less than one in ten selling a single item of the group's products." According to Newsweek, in one very popular MLM companies own disclosure statement, “fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week.”

The USA today had several articles on MLM. Here is what they reported.
• While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400.
• In an October 15, 2010 article, it was stated that documents of a MLM called ___ reveal that 30 percent of its representatives make no money and that 54 percent of the remaining 70 percent only make $93 a month. The article also states ___ is under investigation by the Attorneys General of Texas, Kentucky, North Dakota, and North Carolina with Missouri, South Carolina, Illinois, and Florida following up complaints against the company.
• A February 10, 2011 article stated "It can be very difficult, if not impossible, for most individuals to make a lot of money through the direct sale of products to consumers. And big money is what recruiters often allude to in their pitches."
• "Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, the primary product is opportunity. The strongest, most powerful motivational force today is false hope."

If you go into and Multi Level Marketing, realize the deck is stacked against you. If you have many contacts outside of your family, friends and are willing to give them a sales pitch, if you are outgoing and have a gregarious personality and if you are willing to work long hours during the evenings, then you might be able to make some money in MLM. If you are planning on selling family and friends, it is the fastest way to alienate yourself from them.

If you do go into MLM, just don’t call me to join for I want to stay your friend.