Monday, 16 March 2015

Multi-Level Marketing (MLM) a sin or a service?

Multi-Level Marketing (MLM) is a SCAM!! This is what often we  hear from a layman. There will be always a "smart" person who cynically condemns a network marketing business. From their understanding the company earns by recruiting people into their business, so called exploitation of wealth from people below to people on top. But most of them who criticize have never done even a single networking business before or stopped it halfway without knowing the actual way of doing it. Some might have invested in a wrong company and claiming ALL direct selling companies are SCAM.

Dear skeptics, allow me to share a few facts about Network Marketing business to give more clarity rather than being dumb over utilitarianism.

1) MLM companies are not recruitment agencies. If you have seen a MLM business owner who keeps on recruiting every month then he is as dumb as a chicken. Because the direct commission from sponsoring a direct sales representative is just one-time payment. A real networker should emphasize on duplication rather than signing up his own direct representative. There should be proper delegation of knowledge and expertise of the product and marketing plan to different levels. Why? Because MLM is the most cost-efficient and fastest way to deliver products to the end-user. It doesn't require a lot of overhead costs to manage the product and it gives clearer explanation and details on NEW products in market.

2) MLM businesses are ONLY for those who wants to get benefited over endorsing or consigning a product to an end-user. If a person find the product or concept useful and would like to share it to his/her closed ones, the company pays for his endorsement. Let's take insurance as an example. Insurance is vital to civilians. But how many people realize and understand the importance of insurance. So an insurance agent is responsible to make his client understand the importance of insurance so that they'll take a policy in order to protect their loved ones. And what if the client feel that he should spread the importance of insurance to some of his friends and relatives. The client can be recruited as an agent and get benefited through commission and other benefits for endorsing insurance policy to the person he knows. Does the earlier insurance agent who recruited the client to become an agent get benefited whenever the latter sells a policy? Yes, he does. That does not sound like MLM to you people? It is generally accepted as legitimate  business. But if someone likes a product from a MLM company and intend to consign to people they know, the company pays them, known as SCAM? Please enlighten me over the logic.

3) Some may ask, "If the product is too GOOD and REVOLUTIONARY, why not just sell it in retail or market? it may eventually reach people if it is good right". There are 2 scenarios you guys must take note on this.

a) Let say you created a new COLA drink. It tastes better than the soft drink giants like PEPSI or COCA COLA. And you placed it in open market like supermarket. You really think you can compete with PEPSI and COCA COLA and supersede their market? Maybe yes, it is possible in 5 or 10 years but can your company sustain the loss for the first 5 years of your introductory period before it sees a solid profit? Or let's take Google Plus for instance. They came up with a social network with very profound features, yet they couldn't establish themselves. Why? Because FACEBOOK was too established and holding the market. This is the main reason why MLM or direct-selling is more effective when it comes to delivering products to the end-user in such cases. During introductory phase a business must be very cost-efficient and capture the market share as fast as possible to avoide getting left out. And MLM seems the most suitable modus operandi.

b) Most companies with Network Marketing plan has a good product and concept but lack of investors and fund for R&D. Which is why they don't seem to be that attractive compared to the existing similar product during their introductory phase due to lack of resources to develop their product. And it is not easy to get an investor for a business idea too. Through MLM plan, the company shares their revenue to those who invest so that they can get more partners and marketers among civilians and able to improve their product quality faster as well as provide income earning platform for all. This way, the product upgrade is faster than ever with less cost involved and become more developed good enough to compete with existing products. It is just another way of crowd-funding.

4) Some claim "MLM is a Pyramid scam scheme, where people on top gets all the benefits and people below gets nothing. It is an exploitation of down-line". Do you know that Network Marketing is the only model of business  where down-line can earn more than up-line. How? Network Marketing works in a way that both left and right side of the tree must be active in order to see passive income and higher income. So whoever has active left and right leg they will constantly earn no matter they are up-line or down-line. Which means if down-line has both sides of legs active and up-line don't, the down-line will earn more than the up-line. So this is purely on individual ownership, hard-work and talent on duplication. In fact the actual pyramid scheme is as below:

This is where down-lines will never earn more than up-line and the up-line enjoys all the great benefits squeezed from down-line's hard work.

While in Network Marketing the more hard work put, the more progressive the person become. And it is mutual that if you don't service your down-line you will never go far in MLM business. Daria M. Brezinski Ph.D, a practicing psychologist and former marketing director for a multi-level marketing magazine, echoes these sentiments.  “Many people don’t realize that multi-level marketing companies are successful because they help people satisfy a number of important human needs, including feeling significant, having connections, learning something new, and making a difference.  I have heard people in network marketing say again and again, ‘I’m doing this because I’m meeting amazing people … making so many connections … and I feel so good about myself.’”

In simple words, if you don't make your down-line earn you won't earn. So how could that be an exploitation of down-line? There is a mutual connection between both levels earning. While in employment, if you don't perform or demanding higher salary you can be replaced by someone more skillful with lower salary.

5) Some claim that Network will die off if someone don't duplicate in any of the lower level. Do you know that your tree is in your control? You can place anyone below anyone provided that they are in the same legs of yours. So whenever a partner in any level seem to be passive, an active partner can be placed below him to activate our network. So no issues there.

6) And the BEST one is market will be saturated and we will run out of people to continue the network. Seriously? People don't breed nowadays? Every 2 years, a group of teenagers are entering adult hood, don't tell me you running out of competent networkers throughout years. Then which means we should be facing shortage of workforce crisis in our country if that's your logic.

Of course there are scam companies cheating people's money in the name of MLM.

1) Please check BNM unauthorised business list at here.

2) Check how big is the capital and does it require continuous capital injection monthly or yearly. Some business will require you to invest a small capital and request to pay more periodically.

3) If they are physical product based, check if it requires you to buy and pile up their product monthly so that your bonus points gets don't get flushed. As a real direct seller we suppose to be selling the product to the end-user instead of buying for ourselves or piling up stocks at home. You might end up not selling it till it's expiry date and keep it as showcase at home.

4) Are there too many competitions for the product? If yes you will have hard time selling it to people.

5) Is it in line with current trend. This is mainly referring to technology based companies.

6) Attend all the products and marketing plan events, so that you can compare reliably.

7) If they are tempting with pictures of luxury cars and stack of money, please beware.

Dr. Brezinski’s point is well taken and easy to see practiced by popular network marketing companies.  Many MLM and NM companies tout a three-to-five year plan to attain freedom and wealth, yet many of the people running company meetings have been in the business for five or ten years and still haven’t left their full-time job or landed on easy street.  “As it turns out,” Dr. Brezinski notes, “when other human needs are being met, the members and consultants don’t focus solely on the financial aspects.”

So people lose patience and give up claiming that this business is a failure model for them. SUCCESS TAKES TIME people!!!

Lorene Hochstetler, from Ohio, recommends keeping your current job while slowly making the transition into MLM.  She’s been able to replace her full-time income but explains, “It didn’t happen overnight, and I still work every day.  I am very disciplined with my business and wake up every day knowing what I have to do in order to succeed at this.  You have to treat it like a business and be willing to follow advice from others who have made it.”

To put in the nutshell, MLM is all about servicing not scamming. It's about duplication not recruitment. Do your homework, involve in at least one MLM business in your life before judging it.
If you really want to build a passive income then start NOW!!

Facebook Comment


  1. Lots of Good information in your post, I favorited your blog post so I can visit again in the future, Thanks.
    multi level marketing

  2. Do you prefer Coca-Cola or Pepsi?
    PARTICIPATE IN THE POLL and you could get a prepaid VISA gift card!