MLM also goes by the name of pyramid selling, direct selling, referral selling and network marketing.
It's all about selling products and recruiting people. This form of business plan has been around since the 1920's in some instances. It is very popular because it is so easy to join.
How Does it Work?
You are usually recruited by someone you know who is in the business. With tall tale stories of how you can male a lot of money and complete trust in your father or friend you sign up. That is how I got started in my first company back in the 1980's. The price to enter 99% of these companies is cheap. This is what makes getting started with MLM so cheap.
If you want to make the big commissions with an MLM it's been my experience you usually have two choices. They are:
- buy a higher level of membership to boost your earning potential on new recruits. This is a strategy that is used to entice you into upgrading your level of membership. Your sponsor (usually a relative or friend) will reap and skim from you a part of that commission.
- you buy higher priced products contained in their stable. When you do you are allowed to sell them for higher premiums. In most of all the MLMs I've looked at, researched and been a part of. This is always the case. You are not allowed to promote and sell the product unless you yourself has bought it.
You are fed these pitches because your sponsor won't make any money if you didn't buy more stuff. When you recruit your own people into your own network then the same thing will happen to you.
How Do I Join a MLM?
In my own case I was recruited by a co-worker who later became my roommate. He was living in Texas at the time and unemployed, well he couldn't work because he didn't have a green card. He was married to a nurse who was doing a one year contact at a local hospital. He then heard about a new company selling water filters.
It's funny when I recall some of our earlier conversations when he lived in Texas, when I asked him "how's it going and what are you doing now"? He would say, "I'm selling water filters, you should look into it". I said, "ya maybe sounds cool". Good luck.
Well, the seed was planted in my head and then revived again when I found out my Dad was involved in the water filter selling business. Fast forward a year later when my friend moved up from Texas, we attended a seminar put on by the same water filter company and I signed up on the spot for a distributorship. It was too good to pass up, I always wanted to own my own business and now I did. I was going to make it big selling water filters, because hardly anybody else was doing this right?
Why Do So Many Fall For This Scheme?
I blame it on The Flintstones and The Honeymooners. Say what?
I can never forget watching these shows as a kid and reruns as a teenager, showing the way the two male characters tried to make extra money. Yes, I was influenced by what I saw on TV. These guys were always trying out some angle to try and make some extra cash without doing a lot of work.
It's just always been there, this desire to be our own boss and set our own rules. At least it always has for me and watching characters on TV trying to do it, made this little kid (at the time) want to search for it too.
We fall for it because we believe our friends and family. I thought my Dad and my roommate knew what the hell they were talking about and knew what they were doing. Boy, what a bad assumption to make.
The fact is they were just dizzy from all the sales pitches and fell for everything they were told hook line and sinker. I then turned around and fell for the same pitch from them.
This is why getting in is so bloody easy, you have been recruited by people you know and trust.
Selling vs Buying
It takes awhile but you soon realize, at least I did, that I was sold something by someone I knew. I didn't go out and buy something because I needed it. I purchased water filter products because they were sold to me by my sponsor. I didn't go out and purchase water filters because I woke up one day and thought, Hey, today is a great day, I need a water filter.
This is how MLM really works. Your sponsor has a house full of products, they could be from Melaleuca or wherever. They have been sold and they have bought so much just to earn higher commissions, they need to push it out the door to make they're money back.
I decided to upgrade my starter distributorship to make more money so I spent a further $5,000 on more products and the potential to earn higher commissions.
What I was shocked to find out was the products were coming from previos inventory that she had boughtto achieve a higher level when she came into the business. We bought from each other. I was then encouraged to try and sell her products for her to earn even more. Say what? You mean, I can't sell the water filters I bought?
She said, "well you can do that, but there is more money in selling the business than selling the products". Oh OK I whispered not knowing what the hell was going on.
I didn't know how much trouble she was having unloading her water filters until I got my inventory from her. She couldn't wait to recoup that cost for herself. Meanwhile back at the ranch, I still had $5,000 worth of water filters to sell. Even when I had one friend of a friend who wanted to join up, her water filters came from my sponsor and not from me. I was still stuck even when I had a prospect that was buying.
You see, she was using my people to enrich herself and dump inventory. This was never revealed until you're right in the middle of thinking your starting to get ahead with this business. I was promised to get fast tracked to the next level if I had another four people to sign up. I was devastated that I couldn't even sell my own water filters.
I decided right then and there that the only way to get some of my money back was to sell these water filters to any friend or family member I could. I needed to get my 5K back.
That is NOT what your coach or sponsor wants to hear. You SELL the business, who cares about the water filters. In the course of selling the business they dump their inventory on others.
It's a Pyramid and Always Will Be
If you are in on the ground floor then you will probably make some of the early money. What happens is, you are really late to the party and there are lots of people in ahead of you and climbed up the pyramid a lot further. You have no way of knowing where you are on that pyramid.
What also became more clear to me that, somewhere along the way people had to buy the product. Someone has to. You can't just sell a business idea for very long without selling inventory. This is the main reason you see so many launches of so called new products. The old name doesn't work anymore, the products don't sell and it dies a slow death. This is why you see so many survey, click for dollars and make money emailing all over the internet in one form or another.
Two Of the biggest programs out there are MOBE - My Online Business Education.
You can read my in-depth review of how MOBE works here.
The other major MLM out there is Empower Network.
You can read my in depth review of Empower Network here.
They have so many levels of membership and so many products, new recruits end up being mesmerized by it all and never, really fully understand what it is they are buying and who the company is. I didn't and was just blinded by all the sales pitches and confirmation from my Dad and friend. We all lost money because of our combined ignorance.
The MLM of Today
It just keeps evolving. If you are like me and have been searching for ways to make money from home just like Fred Flintstone, Barney Rubble, Ed Norton and Ralph Kramden tried to do back in the day. You know how hard it is to make a choice. What company do I want to get involved in? What do I really understand about this business? I just want to make some extra money to help out my family. How do I do that?
As they say, this is not your father's MLM. Today's MLM world is full of new digital companies using new words like viral, systemization, cashflow, social media and online ads. There are autoresponders, hosting companies, domains and niches for you to deal with and decide if you need one. It can be very overwhelming to make choices nowadays. This has been my problem when searching for work from home opportunities.
What I really find intriguing when I go out and search for an online business is just how many sites are out there pushing and promoting a particular company. These are totally biased reviews. Everything I'm trying to relate to you here, is based on my own research and experience.
The webinar has now replaced the old time MLM revival meet ups of the past. They are all so outrageous with claims of making a fortune in such a short amount of time. Video training has replaced physical contact with coaches or sponsors to show you the way. They only want to sell you more, that has not changed. The methods they use have been refined for the digital world that's all.
What I Hate about MLM
There is not really a whole lot I like about MLMs and their whole business model and structure. It is solely dependent on people at the bottom to keep people at the top in the money. When there is no more money coming in at the bottom it folds up like a cheap lawn chair. The main business is in recruiting new prospects.
Once those prospects pay their admission price, the job of the sponsor/coach is immediately to sell them an upgraded membership or higher priced products that they offer.
You are then pitched the higher commission structure which gets you to the top of the pyramid faster. Only they never call it a pyramid. That's what it is no matter what anybody says, congratulations you are part of a pyramid scheme.
You will never be left alone, instead you will be constantly badgered and harassed to buy more. Do you like to be sold something all the time? I know I don't and I would hate that to be my only source of income.
You of course then turn to your family and friends and try and sell them on the same business idea you just bought into. They will eventually hate you and turn their back on you, your sponsor/coach will then tell you it's OK they just don't understand what a great opportunity this is.
The other maddening thing about my MLM experiences and I don't care whether you are selling water filters, beauty products, plastic containers, jewelry or perfume. You are in it because you LOVE THE PRODUCT. Really? I have to buy a business that sells jewelry because I you love their jewelry. Yes, I love it so much I bought a membership to sell it.
This is also the only business model I know of, where you have to pay them to sell their products to receive a commission. Think of how ridiculous that sounds. They should be paying you a commission when you sell a product for them. It should be the other way around.
That's how Amazon the biggest retail giant in the land does it. That tells me something right there. Yes, Amazon with all their billions of dollars in annual sales still needs people to help them sell. They don't ask you to buy anything first. If you sell a book from their site and you are a member of their affiliate program you earn a commission. Anywhere from 4-8% every time. All you need is your own website and be approved by Amazon, which is very easy and simple once they see you have traffic coming to your website. You see, with MLM it's all back asswards. Also:
- too many upsells
- commission structure is sometimes very confusing
- One Time Offers or Bonuses offered up to entice you into earning more
- no help or support when you struggle
- you don't own a business you are part of an organization
What I Like about MLM
There is isn't a whole lot I like about it other than the life lessons it will teach you about being in business. There is no greater teacher to your business success than when you fail. Everyone who joins eventually quits in frustration or goes broke because the pestering never stops. I've seen far too many of my family and friends fail at this to know otherwise. It's always the ones who can least afford to lose, that end up losing the most.
It is cheap to get started and some of the training materials offered are good, depending on what scheme you end up joining. You will never ever convince me that MLMs are good so don't bother trying.
What Business Do You Want To Be In?
You really can start your own business online on your own if that's what you want. There are so many free tools on the internet to help you get started there is no need to pay some MLM thousands of dollars on something you have no control of and know nothing about.
Make Your Money With Affiliate Marketing
I like the affiliate marketing business model because of all the various choices I can make on my online business journey. If I want to sell jewelry, beauty products, plastic kitchenware or water filters, I have the flexibility to do that on my own website because I have control over it.
Whatever your interests are you can review products and services that you use and then earn a commission from any sales that come your way just from people reading that article on your website.
Because you own your own website and blog, it allows you to build an audience and stay involved with your site, this will result in more profit for you.
You never know, maybe if you become successful enough with your own site, the work will be too much and then you can outsource some of it.
I am not Superman, not even close and if I can start my own website and thriving business online then anybody can. You don't need any special technical skills or experience to get involved with affiliate marketing. You just need training, good training. The main site that I recommend for doing that is Wealthy Affiliate. It offers you the most comprehensive and updated training you will find on the internet. It is where I got started and still hang out today.
Have you ever been a member of any MLM scheme? I would love to hear about your experience or any experience you may have had with one. If you have any questions, comments or feedback for me just drop them in the box below. Thanks for stopping by and reading my post on MLMs.
Hi there, my name is Peter, it's so great to meet you. I started this website back in 2015 to help educate and inform people on the many ways to make money online. There are so many scams out there that need to be revealed. I also explore ways on how we can turn our time into dollars working from home.
I hope you find some of the tips and suggestions that I've experienced helpful on your own online journey.
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