Are MLM companies becoming more popular? Or is it just a function of the people I’m friends with on Facebook? It seems like everybody is getting in on it…
MLM = Multi-Level Marketing, also known as Network Marketing, or (not affectionately) as “pyramid schemes”.
MLM companies have sales forces that are compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. For example: I start selling MLM ‘Product X’ to my friends/family/co-workers and make 10% for each item I sell. Then one of my customers (a friend) wants to sell it as well, so he sells it to his friends/family/co-workers. He gets 10%, PLUS I get 10%. Then he recruits his buddy to sell it as well, and we all get 10%.
To make good money at MLM, you have to build up the layers of people selling the product beneath you, which is where the ‘pyramid’ metaphor comes in.
Avon and Mary Kay are probably the most famous MLM companies. Lately, these are the MLM companies I’ve personally been seeing more and more of: Advocare, Melaleuca, Juice Plus, and Young Living Essential Oils.
Companies like Rainbow Vacuums, Cutco, and Pampered Chef are also MLM companies but are setup a little differently.
If you look up information on MLM companies online, you will see a lot of “Company X SCAM” sites where they hate any and every MLM company. You will see other sites that rave about the company, along with pretty much every other Network Marketing company.
It’s tough to find a fair perspective.
I don’t have anything against Multi-Level Marketing. It is a legitimate business model. However, it is a business model that has some specific risks associated with it.
- First and foremost, MLM companies create financial implications in your family and friendships, providing possible ulterior motives in your personal relationships.
- Secondly, individuals selling MLM products can make unsupportable claims that the business could never make publicly without penalties and lawsuits.
- Thirdly, the commission structure can sometimes make the products way over-priced.
- Fourth, from a business perspective, MLM lacks the lotus of control that owning your own business provides because you are totally at the mercy of the parent company.
Kerry and I have had friendships affected by MLM; we’ve heard ridiculous health claims; we’ve seen average products with very high prices (not uncommon outside of MLM either); and we’ve attended MLM-hosted dinner parties where the entire focus was the “business opportunity” and barely cared to mention the product.
Now, that said, it doesn’t make every MLM company bad, or every product poor, or selling it to be a poor business decision.
Kerry and I have used, and continue to use, some MLM products where the price is reasonable and the product is better than what you can get at a store.
There are other MLM products that we won’t use because we don’t feel the product is superior to other alternatives, or isn’t worth the price, which is no different than any other purchasing decision.
If you are selling MLM products, that’s cool – good for you! Feel free to tell me why you enjoy the product and let me know you have some available if I’m interested in trying it (once, maybe twice). And we’re all good!
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