Aren’t you sick of all the “make $5,000 a week working from home” messages you see all over the web? I am. I HATE multi-level marketing (MLM, aka “network marketing” and “pyramid marketing”) for a number of reasons, but there are a few good things about MLM programs if you know what to take and what to leave.
Why I HATE MLM
- Ineffective Business Model. If you are an MLM marketer and have a few people in your network who happen to have more people in their network, you’re probably the happiest person in the world. You get paid when your associates make sales without lifting a finger. For example, if A recruits B and B recruits C, when C sells a product for $20, his cost is $10 and then he keeps $5, gives B $3 and A $2. Here’s the problem: the consumer ended up paying a ridiculously high price so everybody could get their commissions. As a marketer, I’m always thinking about providing the consumer with the best possible deal, not charging them extra so I can pay the person who recruited me.
- Unethical Hiring. You always hear the stories of the people who make a fortune, but a huge majority of the people who get involved in MLM lose a lot of money or, at the very best, never make any. To be completely fair, I think that the people who never make it don’t have the skills to be a successful businessperson. So, it’s fair after all, right? No, I don’t think so. Here’s why: when you apply for a paying job, they make you jump through a lot of hoops to figure out if you’re the ideal candidate for the position. They’ll hire one; the best. That’s because the company will have to PAY this person. If they didn’t, they’d probably hire everyone. Then they can pay the best performers $1 for every $5 they make for the company, and the low performers won’t get a penny. It makes me angry that MLM companies don’t take any of the risk and they hire everyone who is willing to work (even if it’s obvious that they’re not qualified).
- Many of the Marketing Tactics They Use Are Annoying. Last year I was at a bar and this 50-year old man asked me if I exercised. I told him I play rugby. He then pulled a brochure from his pocket with some nutritional products. Annoying! I’m also sick of getting Facebook messages from people offering me “the exclusive opportunity to make $10,000 per month working from home”. No, thank you. I make way more and I don’t have to spam my friends to make money.
- Most MLM Companies Focus on Recruiting Members, Not Selling Products. Most MLM folks offer you a “business opportunity” and they barely talk about the product they sell. What’s a business opportunity anyway? Find out what you’re good at, what there’s demand for and sell that service. That’s a business opportunity and you don’t need an MLM company for that. Imaging getting to keep all the profits from the sales you make. Revolutionary! If you prefer to sell products instead of services, find out what’s the biggest pain in your industry and how that pain can be solved. Then either build the solution or have someone else build it for you or sell it to you at wholesale price. Market it the right way and there you have your own “business opportunity”!
Why I Love MLM
- Great Marketing and Sales Training. Some MLM companies can teach you a lot about sales and marketing for free. Go to their events, absorb as much information as you can and don’t let the motivational speeches affect you. Motivation comes from within. If you’re not motivated to build something meaningful, no amount of motivational training will change that.
- The Opportunity to Learn Business Skills at a Very Low Risk. When you start your own company, you usually risk a lot. With an MLM company you can do this part-time and you can start learning about finances, communication, writing and other necessary business skills.
- Peer Support. Starting a business can be a little lonely. And, you don’t want to get partners just so you have some company. Partners have to bring skills you don’t have to the table. But with MLM you will get some peer support that can make the whole journey a little easier.