Multi Level Marketing (MLM) Business Model

What is Multilevel Marketing or MLM? It is a strategy employed by some direct sales companies where they reward existing distributors to recruit new distributors. This recruitment process repeats itself over and over again.

It is a well known fact that MLM has a negative reputation because of the recruitment tactics that they employ. They are even compared to pyramid schemes where only the oldest members of the scheme gets the money coming in and the newest members have to recruit other members to recuperate their investment and possibly earn.

Is MLM legal? Many have been around for many years now like the MLM company I joined which is Amway. It is over 60 years old now and is worth billions. They have business permits so they can legally operate. There are also millions of MLM members globally although the failure rate for members is high.

My first experience with MLM is with a company called Amway through an old school acquaintance who out of the blue informed me that he wanted to a talk to me in person. He requested a meeting but declined to inform me specifically why. He got my contact details from a common acquaintance of ours which is how MLM sellers get new prospects which is by asking other acquaintances to refer prospects they knew.

I later learned that the strategy of MLMs is to sell to as many people as possible especially to people you have some sort of relation to no matter how remote it is. They also would not initially divulge their purpose of contacting you because most likely if the person knew the purpose of their visit they would decline meeting them.

When we did meet he appealed to my aspirations about someday being financially secure and free of the negative side of working a regular 9-5 job where one gets paid the same amount no matter how hard one works or no matter the time they spent working. This is another MLM strategy.

He then introduced me to the MLM business model which promises unlimited income and more and more personal free time as one becomes successful with it. My old school acquaintance was good at persuading me at least to give it a try. I was more interested with MLM than convinced that it would make me money.

I then bought a kit from Amway which comprises of the products I am to endorse to others as well as motivational audio media. The prices of these MLM products are way above other comparable products sold at conventional stores. This is already a big negative sales issue for me. No matter how good a product is most people buy products based on price.

I already know that the MLM products were a hard sell. The motivational audio media however were top notch. It talks about pursuing a dream no matter how hard it is. It talks about how to mentally prepare yourself for difficult tasks such as selling. They are one of the good things about MLM from Amway at least.

I also got to go to Amway MLM gatherings as well. The person who usually recruited you to MLM usually guided you at the initial stages and one thing they do is to accompany you to these gathering. MLMs use these gatherings to boost the morale of their members and to also persuade potential recruits to join them by showing them the “community” of MLM members.

The speakers try to boost your morale by telling inspirational stories and by showing members who have successful sales together with their sales income figures. I also attended the gatherings of other MLM companies and found that they have the same strategy. If you are lucky you get to even see celebrities who are also members of MLMs.

The MLM business is a numbers game. The products are hard to sell and most people are turned off by the aspirational, emotional and downright tacky tactics usually employed by MLM sellers to recruit people which contribute to the negative image of the industry.

The MLM business is similar to other sales business in that one needs to sell a product in order to earn. The distinct thing about MLM is its sales personnel network structure and income scheme. Selling is a stressful job with a high failure rate but can offer lucrative earnings. MLM is no different.

MLM boosts the morale of its sales people. Other sales businesses do the same thing too. MLM has a lot of decent and dodgy sellers. Other sales businesses also do. MLM also does online marketing and sales. Other sales businesses also do.

Conclusion

So MLM is just like any commission based sales job where if you do not sell you do not earn. The difference is you have to spend money to buy their product to become a seller. After this you may possibly earn money. This is not how a commission based sales job works.