Multilevel Marketing: Should You Invest Your Time and Effort in It?
Is it a way to make extra income, or a way to help someone else get rich?
You need to make extra money and maybe you’ve looked for a full-time job and have had no luck. Or, you’re just getting back into the job market and you don’t have the skills. Could it just be that you’re tired of being underpaid and bossed around, and you really want to be your own boss?
What can you do to get busy sooner than later?
There is always multilevel marketing (MLM). Maybe you’ve heard about it and maybe you even have some friends that are in multilevel marketing, selling some kind of products, and they’ve encouraged you to join them and make money from it.
What kind of products? All kinds.
Skin care products, vitamins, health drinks, house goods, jewelry, insurance. The list is endless. Avon, Amway, Mary Kay, Juice Plus and Herbalife are all good examples of well-known and quite legitimate network marketing companies.
But what have you heard about multilevel marketing? Some people call them great opportunities to be your own boss and make money; others call them “pyramid schemes” and would tell you to avoid them all costs.
Who should you believe?
Here’s a quick look at the workings of multilevel marketing, and the pros and cons (and the facts) about your chances at being an MLM success story.
Multilevel marketing defined.
Multilevel marketing isalso called direct sales (or direct selling), network marketing, and referral marketing. MLM is an established marketing strategy for the sale of products or services through individuals who form sales teams.
It’s called “multilevel marketing” because everyone who becomes an MLM sales associate works with their own “recruiter,” who is “one level up.” That “up line” group leader also works with someone above them…and so on up the ladder. It also works the same way going down.
If you think about, that same structure is similar to many large organization businesses. The new hire just starting out reports to one boss, who reports to this “direct report” and so on.
Here’s an example of how it works in network marketing to help explain it.
The levels in multilevel marketing.
Mike has a friend named Sally, who is part of an MLM organization. Sally shares with Mike (who works but wants to make extra money) information about her networking marketing business since the products are great (“they sell themselves!) and there’s a opportunity to make a lot of money.
Sally has been an associate with the organization for a few years. She was told about it (recruited) by a close friend of hers.
That’s a legitimate question. Sally tells Mike that he could make thousands of dollars every month in a few years. She says she’s heard that some people who joined just five years ago are making $50,000 each month!
Sally is not lying—there are indeed some people who make that much money, and they started with nothing.
Excited by the possibility of making money, and being on his own, Mike joins. In less than a week, based on Sally’s urging, he is contacting people he knows to tell them about an exciting opportunity.
Sound familiar? Probably. When a friend says they want to talk to you about an exciting opportunity, it’s because he or she has been coached by their up-line recruiter…who was encouraged by their up-line recruiter, and up the line.
A Sales Pitch.
Direct selling firms will use their best success stories to encourage prospective recruiters. Here is an actual example (edited slightly) from a well-known organization—the company’s and associate’s name have been changed:
Can I really make money selling your products?
YES! I will give you ONE example. Her name is Sally and she is known around here as “the best-known Ajax Representative in the universe.” Yes! Check out this graph she made about her team earnings with Ajax. Sally is a mentor, trainer, and wonderful Ajax lady! She EARNS on average $15,000 every two weeks! Here’s an interview you can watch (link) and she talks about her Ajax business and how LUCRATIVE it is! She’s so inspiring! Plus, with all the incentives and changes that Ajax has been making, you WILL make money! Additionally, you will earn BONUSES when you share with your friends how you’re making money!”
In fairness to most legitimate MLMs, they also tell prospective recruits that it takes time, dedication, and a successful attitude to make it all work. Also, most MLMs will provide all the support a representative needs, from marketing materials and free training, to encouragement and advice. In addition, they can’t guarantee an income because everyone has certain skill sets, various work ethics and how much time they can devote to growing their business.
The pros of multilevel marketing.
Here are the top four aspects of multilevel marketing that might appeal to you.
- Start fast with little cost. The startup costs could be low or reasonable. It’s usually not expensive at all to get started. It’s a lot less that trying to launch an independent business.
- It is a home-based business. You are your own boss and you set your own schedule and pace. If you’re tired of being bossed around, here is your chance to go out on your own.
- You will receive support and training. That’s because the organization truly wants you to be a success. That’s often the opposite of what you receive in the corporate environment.
- The potential is there! Yes, you could make the money the top reps make, as shown in the marketing materials. But there are a lot of obstacles to overcome.
In their marketing materials, network marketing companies appeal to the emotional side of us to strike a chord. They sell ‘hope’. They know that many people, maybe most of us, would like to be financially independent and have something we created mostly on our own with hard work.
But the truth is, far more people will never realize that dream than those few who do. Here are a few reasons for that.
The cons of multilevel marketing.
- Recruiting. You only make money if you recruit successfully, and if you recruit a successful team. That’s doable, but not as easy as it seems. Most new recruits fail to build their teams so they fail to earn any money, let alone thousands of dollars a week.
- Time commitment. As with any business, becoming a success story with an MLM will require dedication and hard work. That means it must become a daily focus and your primary goal. That’s hard to do if you’re trying to make it work “on the side.”
- Selling. If you’re not an effective sales person by nature and you don’t like trying to recruit others and become a product evangelist, you will not achieve sales nor earn income.
- It might not work for you. You could spend years at it and spend more on products and supplies than you ever made in earnings.
Proceed with enthusiasm, information and caution.
Don’t let your friends or family prevent you from getting involved with network marketing based on their bad experiences. The FTC watches and keeps an eye on the MLM industry.
As long as MLM companies follow the guidelines set by the FTC, they should be around for a long time, however, some companies who didn’t were shut down with thousands of reps losing their income literally overnight. It’s your responsibility to know the FTC guidelines and make sure your company is on the up and up.
Heed the advice of those who encourage you to know what you’re getting into. The fact is, very few make the big money that is dangled out there to lure recruits.
To help you stay informed, avoid scams and fraud, and keep you safer online and in real life, listen to the Easy Prey podcast.
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