MLM companies

[tylerhutchinson]

I personally think MLM (multi level marketing) companies are scams and unethical in business. Most exploit people and survive purely based off people getting others to also join and then reward them. The majority of lower level people in MLM companies do not make any money. It is only the people in the highest levels that see money. I know a few people who are very wealthy off of them, but I know a lot more who have tried and failed, costing them hundreds or even thousands. Ant the thing that gets me the most is almost all of them say you cannot advertise! So even if you like the product and want to put it in a store or something you can't. Word of mouth only!

Does anyone else get approached by these people to join. I get literally at least 5 every day sent to my facebook, linkdin, or personal email. Most of them start with "I see your a successful business owner. Are you open to looking into new opportunities." Regardless of the company they always seem so pre-scripted.

Am I the only one that thinks so poorly of this business model? Has anyone had good or bad experiences with these? Do you ever endorse these companies normally? Someone told me when I first started building my first company a few years back to sign up for an MLM to get small income to fund your start up? I was tempted then until I realized my ROI on it and that most likely it will cost me more then what I will make.

[tylerhutchinson]

I do also want to add that I have consulted for a few people doing these companies to help expand. Some have unique allowances. But when having to help market them I was usually told "we aren't allowed to put ads online. We aren't allowed to use social media....." Off the top of my head I know of at least 10-20 companies that use this model. One of the latest ones that was brought to me was one Donald Trump endorses.

[Spider]

Multi-Level Marketing and Network Marketing is so highly regulated that the days of the MLM and NM scam are long past. And there are so many hoops to jump through to set up an MLM or NM company, just like a franchising company, the possibility of a scam getting through is extremely unlikely. Today, these are legitimate business models. There is nothing unethical about the concept.

[MostHeather]

It's all about who you partner with. If your partner/partners empower you to offer a strong product that's in demand, you could be their next success story. I like to think of it as being in the right place at the right time..

[billbenson]

Multi-Level Marketing and Network Marketing is so highly regulated that the days of the MLM and NM scam are long past. And there are so many hoops to jump through to set up an MLM or NM company, just like a franchising company, the possibility of a scam getting through is extremely unlikely. Today, these are legitimate business models. There is nothing unethical about the concept.

That being said, Spider, they frequently put a lot of obstacles in front of making money such as using online mechanisms for marketing them such as tyler said. One I know of sells .ws domains. The way its set up, they count on new subscribers falling out after a while and make their money selling email / phone lists that the people that dropped out generate to new members. I know someone who has been doing this for years now. She still pretty much makes McDonalds wages doing it if you really look at the time she's put in. I'm sure you could make money at it if you used web methods outside of the T's and C's. Not illegal or a pyramid, but not ethical IMO either.

The Amway companies are ethical from what I know and have good products, but I haven't really heard of people making a lot of money with them although I'm sure there are some. The people who just sell products can make some extra money selling the products. For example I know someone who works alone as a helper in a laundramat. She's dealing with people all day and sells Amway cosmetics from there. It makes her a few extra bucks for not much work, so at that level it's good for people like her.

[Spider]

You can say that for just about any industry, Bill. Take a look in your yellowpage directory and see how many plumbers there are, or a/c firms, or doctors and lawyers, for that matter. Ask yourself how much money is the bottom end auto-mechanic, painter, handiman, seamstress, or childcare person actually making? Even in supposed high-end professions, those on the bottom rung make a very meagre income. In any business, the people making good money are few compared to the many who just scrape by.

The whole economy is the same - to charge the MLM/NM industry as unethical because of this means you should charge the whole of the US economy with the same crime. Just like any industry, if you want to make it big in MLM/NM you can. Just like any other industry, most don't.

[billbenson]

Spider, I did say in my post IMO referring to the .ws MLM. WS domains are a garbage product and "I" had ethical problems with what they were doing. I gave the Amway example in pointing out that its not all are unethical in my opinion. I also did think if you went into the .ws mlm you could make some decent money if you were innovative. If you followed their guidelines you wouldn't make much though.

So no, I am not condemning the industry and didn't mean to imply that.

[Steve B]

Ah - I was wondering when the next MLM discussion would start. Thank goodness they are more regulated than before.

[Spider]

In the days of the settlers, roving quack doctors healed some and hurt others. The medical profession eventually came under government regulation and we have a far better system now. Certain business practices were rampant in the past - bribery, price-fixing, and other activities, illegal today, were once legal. Abuse of the public trust will eventually lead to government regulation - as indeed it should. Various practices common to early MLM companies hurt the public and were curtailed by government regulation.

Maybe, one day, the shenanigans of the banking industry will be outlawed. Trouble, at the present, is the banking regulations are made by bankers, and that is the fox guarding the hen-house. One day the banks will be properly regulated to the benefit of the general public.

[cbscreative]

Maybe, one day, the shenanigans of the banking industry will be outlawed. Trouble, at the present, is the banking regulations are made by bankers, and that is the fox guarding the hen-house. One day the banks will be properly regulated to the benefit of the general public.

Or, one could argue that our free market system should be able to do that. I bank with a credit union because I abhor the arrogance of banks. They treat their customers like they are doing them a favor letting them bank there. It floors me that people put up with it. What I'd like to see is more customers bailing on banks and not putting up with their crap. If they lose enough customers to organizations that aren't trying to rape and pillage their customers, that would work too. It's beyond me why people keep putting up with their crap when there are better alternatives.

That though is not really the topic here, except in principle. I've got to go right now, so I'll save further comment for later.

[Spider]

You're right - this is not for this thread. If you want to start another thread when you come back from wherever you are going, I'll kick the ball around with you for a while!

[cbscreative]

I just wish more people would do what I did and refuse to do business with arrogant banks. That would solve many problems automatically. Other than that, I've said all I need to say about banks.

As for MLM, we've had this discussion many times (something Steve B mentioned). It's a legit business model as I've stated when the subject has come up before. The problem is, many people who get involved know little to nothing about business and distort the whole purpose of the business model. IOW, they emphasize the opportunity above the product. They get the attitude that anyone who doesn't agree their business opportunity is the best, is an idiot/loser.

Even the best ones that have truly outstanding products fall victim to this flaw. Amway is the grand daddy of all MLM, and they have serious issues with this. The fact is, Amway has great products at a price that is below products of comparable quality. If they stayed true to the fact that you can join and just switch your buying habits, the program would work beautifully. Even if you join for no other reason than to buy the products, you could easily find yourself getting pressured to "build a business."

The greatest flaw IMO is the whole system relies on you finding people who are motivated enough to take full advantage of the opportunity. The problem with that is the people who have this kind of drive are usually already involved in something else. So you're left trying to motivate people who don't want it bad enough. Because of their lack of business experience, they expect it to be easier and give up far too early.

The very thing that makes these opportunities attractive, the low startup costs, are also their undoing. Because little is risked, giving up is easier. When someone shells out thousands, or tens to hundreds of thousands, their motivation to succeed is pretty high. The low startup costs invite a lot of "we'll try it and see how it works" people who aren't truly committed to making it work.

Because of how hard it really is to succeed at MLM, I'm convinced that the same effort put into almost any other venture is better invested. Yes, you'll need more money too, but the rewards are better and you don't have to tolerate winers whose stamina to tough it out won't make it past the first or second obstacle.

Bottom line, MLM itself is legit, solid, and ethical. But it's an extremely difficult way to build a business. The people who have made it should be seriously congratulated.

[Steve B]

Steve, you give a nice summary that is similar to my observations. I'll just ad that for whatever reason, these MLM's always seem to attact a certain type of individual that makes me want to run away when they start telling me about their new "opportunity". Amway may have some great products at great prices, but I'll never use one because that means that I'll actually have to talk to an Amway salesperson.

[Spider]

It is true that the network marketing industry does a poor job of training its recruits, but what industry trains its recruits, anyway? If you want to be a Realtor, for example, the real estate industry won't train you. They will test you for a license but you have to find your own educational resources. Other people identify this as a business opportunity and create private real estate schools, to teach you how to pass the test. This structure is common in most industries but not the network marketing industry.

So, I don't think it is "a certain type of individual" that is being attracted, just an uneducated one. (Uneducated in business, that is.) I would have thought by now either (A) the industry leaders would have created a better training system, with a private label qualification and testing procedure, or (B) the government, by way of industry regulation, would have established a training and licensing system that would help reduce unemployment.

[cbscreative]

Amway may have some great products at great prices, but I'll never use one because that means that I'll actually have to talk to an Amway salesperson.

First of all, thank you for the compliment. Second, I know a great alternative. Melaleuca (http://www.melaleuca.com) has products as good or better than Amway and has used a customer direct approach since day one. Back before the Internet, all you needed was a phone to call the 800#. Every customer orders directly from the company so you don't have anyone pestering you. Their system was so effective, and even created such a threat to Amway, that Amway ended up moving away from the "upline" distribution method and shipping products directly to the customer.

You still have to have a "sponsor" with Melaleuca, but it would take someone pretty short sighted to push you if all you want to do is buy the products. If you ask around, I can almost guarantee someone you know is already signed up and you could join under them. Melaleuca has a lot of customers that never push the business, so you might be surprised how many you know if you ask.

[ANDREB12345]

I think MLM is a great business,not all of them are scams.I think you have the wrong concept about MLM.Im involved in this business and its awesome.I did look into it before i started it,and i found it to be very profitable and the leaders and mentors are very helpful in getting my business off the ground.

[billbenson]

I think MLM is a great business,not all of them are scams.I think you have the wrong concept about MLM.Im involved in this business and its awesome.I did look into it before i started it,and i found it to be very profitable and the leaders and mentors are very helpful in getting my business off the ground.


What do you do? Are you making money by selling product or bringing in new people? If it's from bringing in new people, do they have to buy product to come in and how much? What's the drop out rate?

[Damon the Marketer]

Old MLM's did not last very long because nor many people could pay the subscription while not making much money. Now that time has changed and everyone can make a decent income, MLMs are growing in popularity. These companies are lasting longer because everyone could have the opportunity to earn money if they just work hard enough.

You registered to make a post defending MLM?