Hey guys I wanted to discuss some things with you today about multi-level marketing. The truth behind multi-level marketing is primarily a sales driven opportunity, so if you do not have the gift of the gab success in this business model will be difficult. I have witnessed this type of business since the late 80’s because my mother was a Mary Kay Representative. I saw her do meetings in our home; I noticed a ton of product that she purchased to sell to others. She reached a small level of success within Mary Kay, and it was a great step for her growth process. After a few years her desire started to dwindle, and she was left with the entire inventory of unsold product. Due to inexperience with accounting and a lack of recordkeeping my mother never really knew if her revenue exceeded her expenses. Mary Kay is still around today and their competitor as well the popular company called Avon. Now the new MLM trend to hit the U.S. is Utility companies looking to take a grapple hold on this business model.
I once ventured into MLM through a company called Mona Vie; they sell juice as a business model. I began my journey in this business for $300 dollars upfront costs for an entry level distributor. A family member introduced me to this fabulous experience. They also sell a monthly juice plan that ranges from 1 to an unlimited amount of bottles billed per month. I failed at this business because I never wanted to be a seller and I never will. My family member and everyone involved that I knew personally through the business also did not succeed with this company. I guess I do not like the awkward situations that selling places people in on both sides of the equation. The morale of the story is the people who benefitted from Mona Vie is and will always be the high level executives at the top of the food chain.
The real truth is the people who primarily benefit are the executives at the top and the 5% of high level sales persons who can influence a big herd of people to follow the triangle business model. The executives make money 1 of 2 ways, the first is by charging astronomical upfront set up costs for every member they sign up for company services or inventory to sell. The second is they make money off the pyramid scheme and off the effort of the people under them to deliver with the second source of revenue, the actual business of the business. For Mary Kay it is selling cosmetics, for Mona Vie it is selling juice, for ACN it is selling utility services. Anybody who pushes a vague concept is selling a dream or a way to get rich more than an actual business model.
Facts about The MLM Business:
It has a 97% failure rate for all MLM Distributors
It is a billion dollar Industry for the top earners
It is time consuming
This is a sales and recruitment driven industry
They say they don’t advertise, but they do spend millions with recruiting / online advertising
You have to be a follower towards the company’s morals and ethics with full faith
High level communication skills are a necessary trait
The ability to convince others to sell the same dream to others
It’s a pyramid scheme at the root of any MLM Business
Resources for MLM:
Positive ACN Review: http://mlmfiles.com/acn-
Negative Review of ACN: http://www.mlmwatchdog.com/
Negative Review of Stream Energy: http://www.mlmwatchdog.com/
In conclusion I am a bit skeptical about the MLM industry because sales people push so hard to convert people over to do something they are not fully familiar with and with no real training. Why would I buy $300 dollars of product before I get the training needed to help me succeed with selling the product? Because that’s how the companies make their money, they want people to succeed, but they also win when people sign up to become distributors and fail. Because those distributors and the people under them gave the executives a big one time fee to be a part of the team. Remember the old phrase; nothing in this life is free.
IF you put enough time and energy into something, then I believe you can reap some rewards, but with such a high level of failure I will forego participating in MLM marketing. I will take the slow and steady route towards becoming financially independent and that is investing slowly into paper assets now and in the future real estate.
Comment if you have had success or failure with MLM?
Also share any insights you have with the truth behind Multi-Level Marketing?
Rich Uncle EL
I think MLM can work for people if they know how to work it. I, like you, suck at direct sales, so it's definitely not for me.
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Only if they are a big time sales persons it can work. The problem is most successful sales folks already have great jobs, pushing homes, cars, insurance, and pharmaceuticals, they don’t want to do mlm. Plus the high failure rate, i wouldn’t want anyone i know to do mlm. Thanks for the feedback.
I was a part of a MLM business years ago when I was still in college. It was called Quixstar. I think it was a subsidiary to Amway, except it was online. The internet was just becoming prevalent and they made it sound like the next big thing. It was a pyramid scheme where you would earn commissions from those below you. I paid like $100 or $200 for the introductory products. I also went to a few seminars where they sold CDs and books on how to sell. It seems like their business model is to make money off of those CDs, books and lectures which many gladly paid thinking they would be more successful selling the stuff off the Quixstar site.
Yeah ive been approached to do this mlm as well, im telling you it’s a find bodies to sell a dream to business. Then they take the up front fees to keep the business going. Scam I say.
You are right, there is a huge failure rate in MLM. Look at the failure rate of any business, that is also high. Restaurants are like 90%, and have a high entry hurdle. Even RE investors fail. What matters most is drive, determination and ambition.
Another note, any business with a $300 entry hurdle attracts a lot of people that should never get in. They get their $300 worth, and that's it. They were not cheated, just bought product that they could not sell, or use, maybe.
I am not a MLM fan, but I do know too many people try to take the easy way out and never have success. The journey to success takes a lot of work, and some risk, but it can be done no matter what business you are in.
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I agree that every business venture has a high failure rate, and the thing that gets to me about MLM, is how big the turnover rate is compared to restaurants or RE investors. These expert sales people are convincing and pushing people to sell product, and they know for a fact most of them will fail. To me that is unethical business practice, and that is one of the main reasons I wrote the piece.
My friend recently is involved in this and asked me as well. It's something that if you can keep going for years I think it can pay off, but people get involved with $$$ in their eyes and part-time work, something usually fails.
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I would stay away, I rather buy stock and build wealth that way. Thanks for the comment.
I was approached once in a bookstore. The guy was telling me how amazing the business was. When I asked why he was telling random people at a bookstore and trying to get them to join, he couldn't answer me.
My friend in college almost got sucked into an MLM business. Luckily he is a smart person and as he attended the meetings and asked more questions, it became clear that it was more of a scam than a business. But many smart people get sucked into the energy and stories these people tell. If you are pressured into joining, ask why there is pressure to get you to join.
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I agree it is a big rush to sign people up and then invite all your family and friends to the same thing, why because they want to get the most out of people while the getting is good, and move on to the next set of folks. Its a big business for the higher ups and they are using the smaller folks to fund their careers. I just want people to see the truth.
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I have also bad experience about MLM, I'm trying to make it success tell me how to do it. Thank you
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I feel we must learn from our past bad experiences. It is very difficult to win in the MLM business, and I would not want to steer you in something that has such a high failure rate. See how to build real wealth in my new post.
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For most, this is a get rich quick scheme. Unless your are willing to do lots of recruiting and training on an ongoing basis, you will never succeed in MLM. But even if you are willing to put in the effort, it still takes a certain type of individual with great speaking skills to thrive. Lastly, to stay successful, you must stay with it or your recruits will fall one-by-one.
We have seen several friends get into MLM only to quite after a few months. From what we've observed, most people who get into MLM start off selling to their family and friends. Then, once they've exhausted those contacts and move outside that list, they see that success is much harder as there is no longer the emotional tie to their sales pitch.
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Well said and hopefully people will do research before thinking they will be the next super star sales person.