Multi Level Marketing

Multi Level Marketing is something which you will often come across if you are working in online marketing.

But what is it?

There are many definitions of Multi Level Marketing available online. Many of them are geared towards the particular MLM which is looking for recruits and will make it appear to be all things to all men, as it were.

Here is a definition from Wikipedia:

“Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation.”

Sounds good so far doesn’t it?

You can see the full article on Wikipedia.

Can I earn an income from MLM?

MLMs ask their members ( called IBOs or Independent Business owners) to recruit other members, frequently their family and friends, who are in turn required to recruit other members.

Recruits are promised a whole new way of life with an income that will change their lives!

Thus I would recruit five people who  each recruit 5 people and so on. This all sounds deceptively easy!

In theory money is earned from the recruitment of other members, and also from sales of products. The products are purchased from the company wholesale by the person depicted by a blue dot in the diagram above. Blue dot then sells them to the people in his downline making a profit for himself. They then sell them to their downline and so it goes on.

These members supposedly go on to sell the products to customers, again adding to the price to make their own small profit, but the selling price is always fixed by the company.

In many MLMs the sale of products takes second place to the recruitment of members.

So can you earn a good income from MLMs?

In an article by Robert L Fitzpatrick, “The 10 Big Lies of Multi Level Marketing”, he states:

“For almost everyone who invests, MLM turns out to be a losing financial proposition. This is not an opinion, but a historical fact.”

He then goes on to say that with regard to one of the largest MLMs, Amway,”…. the average income of all Amway distributors is about $40 a month.”

Could you live on $40 a month?

You can see his full article here.

My personal experience with MLMs

I have been involved with MLM. I am an eternal optimist, and I wanted to believe all the hype I was told. In other words, I was gullible!

My introduction to the world of MLMs was to be invited to a social evening by a friend. I was not told  that there was any more point to it than that. I was confronted by a group of uncomfortable-looking people, none of who I had met before apart from the host, who I did not know very well.!

We were then introduced to the speaker who proceeded to inform us that we had been invited to hear about a great opportunity which we would be crazy not to join.

He told us that we would easily be able to make a great amount of money by introducing other people to this “great opportunity”. There were a few “products” dotted about the room, but very little emphasis was placed on the selling of these, it was all about finding people to join in.

One by one the “guests” made their excuses and left, and on this occasion so did I, saying that I would “think about it.” The host was not at all happy about this, and we were all given lots of “bumph” to take away and digest.

It was a very uncomfortable occasion.

I did subsequently join in a different MLM. It seemed a far better proposition than the previous one. At least the products seemed good, and they did prove to be so, although very much on the expensive side.

I did make a certain amount of money from it, but most of that was eaten up by the purchase of promoting literature and products, and by so-called educational CDs. In addition we were told that in order to succeed we must attend meetings once a month and weekend conferences four times a year.   The speakers there all emphasised the great life that the company enabled them to lead. Of course, they were at the top of the tree, earning the largest commissions!

All those meetings were quite expensive to attend. After a while it became clear to me that I was spending more on all those things than I was actually earning, and really not getting very far. Even the people at the top had to “qualify” every month to maintain their high commissions. I became disillusioned and I left.

My experience is not unique!

I have spoken with a good many people who have been in multi level marketing at one time, or are even still in it, and with very few exceptions their experiences have been remarkably similar to mine. We all agreed that it is the people who have been one the companies for the longest time who are making the greatest commissions, and they depend entirely on the “little” people to provide those commissions!

Is Multi Level Marketing ethical?

MLMs are legal in a number of countries, including most of the US and in the UK, but is it really ethical?

Can it really be ethical to virtually “dupe” prospects into joining the companies when they themselves know very well that very few of them will ever make a penny?

Can it be ethical to try to persuade someone to join when the only reason is that without more people joining there would be no more commissions?

If you have read this far, then I will leave you to make your own judgement.

Would I recommend MLMs?

If you are still wondering whether to join an MLM, then I suggest that you do as much research as you can on that company. That will not always be easy, as they are not at all willing to discuss probable earnings, only what they consider to be possible – a big difference.

If you would really like to create on online business with a really sound foundation, may I suggest that you look my post on the free training available with Wealthy Affiliate.

I am willing to grant that somewhere there may be an ethical MLM, but in my opinion the majority of MLMs are a BIG FAT

If you have any opinions or comments on this post, I should love to see them. Please post them in the comments box below, and I will reply to you as soon as I can. Thank you.