Myth: Make Millions With Multi-Level Marketing (MLM’S)
We have no intentions to harm the MLM industry here. There are a few good opportunities out there that offer excellent earning potential for the right person. However, we do not think that the MLM industry is the biggest money making mechanism to come along, that will earn you millions of dollars with little effort.
The thing to keep in mind is that no reputable MLM company will ever ask for a lot of money up front, although some require an initial investment for supplies or membership. If you are promised fast and easy money for little effort, don’t bite! The best MLM’s can earn you a nice living but you will have to work for it, just like any other job.
Many MLM advocates point to the success of such established direct sales companies as Tupperware and Mary Kay Cosmetics to prove how well the concept actually works. But the big corporations no longer want to be thought of as an MLM. Many now refer to themselves as direct marketing or direct sales companies.
There are a number of warning signs that you should look out for when deciding if an MLM is right for you. Avoid the following:
- Operations where the emphasis is on recruiting others rather than on selling a product.
- Operations where members are not allowed to choose how much of the product to purchase each month.
- Operations where you are required to send the organizers a substantial payment, or worse still a monthly fee, for the privilege of selling their product.
- Operations promoting obscure or intrinsically very low value products. Be particularly wary of anything to do with health care or health promotion such as vitamins.
- Operations promising you vast sums of money for little or no time, trouble or effort.
A recent MLM emphasized the “five-get-give-get-five” concept that so many MLM promoters use and that is so misleading. It works like this: If everyone in your “downline” sold 5 monthly subscriptions, your organization could look like this:
How does it add up? When you multiply 15,625 subscribers, times a $50 commission, times twice a year, you get $1,562,500. Not bad! But, to understand why this illustration doesn’t hold water, consider this: There is a high attrition rate in MLM, so we must assume that 90% of your people will drop out. In other words, four or five of your original first level people are going to drop out! So, you may have to sponsor more than 30 people to find five that will go on to sponsor five others.
Many people believe that MLM selling is about getting other people to sign up under a distributor and do all the work. But anyone entering MLM with this idea in mind is going to fail. The only way to succeed in this business is to find a good product that you are excited about and mike it available to other people who will also get excited about it.
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