MLM otherwise known as multi level marketing is not one of my favourite business structures and I will outline the reasons below.
I am sure you will all know what MLM is in one shape or form but it can usually be recognised as a program which promises its members money in exchange for referring more members.
You know the usual rhetoric, sponsor 5 people and they will sponsor 5 people who will each go on to sponsor another 5 people etc etc.
Usually there will be more than one level so not only will you profit from your downline but also people below the people below you and so on.
Often there are complicated leg systems where you will need to place members you refer into two separate legs and then build each one down.
Then we have things like spillover which effectively pushes people into your downline which you may not have referred directly.
That is it in a nutshell and I am sure that by reading this, you are starting to get an idea of how ridiculous some of these systems are.
They are overly complicated and very few of them work.
Is Multi-Level Marketing A Scam?
Now I know that I will get loads of emails stating that people make great cash from them and I am sure that it true but it will never be a business model that I would ever put too much effort into and quite honestly most of them are doomed from the start.
It just annoys me how people are conned out of their hard earned cash for systems that promise the world and deliver nothing.
What concerns me most though is that the structure of these companies (sometimes shell companies) has a limited lifespan before the mushroom cloud consumes people’s internet marketing dreams.
What if someone puts their entire efforts into one of these systems only to see it crumble before their eyes and they have lost everything they have worked so hard for.
While I appreciate that it could be good introduction to internet marketing in theory, it seldom is.
People spend a fortune promoting someone else’s company with their advertising budget. This is also the fundamental flaw in affiliate marketing, however affiliate marketing does not depend on the structure of one company which is usually built on a foundation of quicksand.
Affiliate marketing is far more flexible and robust. Simply put, it does not matter what amount you spend on advertising as long as there is profit.
Promote to your friends and family.
This is a pet peeve of mine. If people you know, want to know exactly what you are doing they will ask! To put friends and family under obligation to jump onto your dream for the benefit of the company you are promoting is not just illogical, but potentially destructive to relationships.
Leave your friends and family out of your business. I say this because there will probably be times when you need their support, not intervention attempts after you have dragged them into a ‘business opportunity’ which has a high probability of failing.
Tenacity is needed to make money online as for most people internet marketing is trial and error. Some of these errors can be costly.
The key is in being able to identify legitimate opportunities of which there are thousands. They are however hidden amongst ridiculous amounts of rubbish. That’s why I have designed this site so that you can leverage my experience and attention to detail.
Believe me when you start making obscene amounts of cash working from home, you will have their interest and attention and you will be taken seriously.
I can feel my blood pressure rising writing this post and I have not even dropped the big bombs yet.
People are lazy.
Most of these MLM programs are targeted at newbies and the hype around these programs is something sinister. It plays on people’s greed button as well as their naivety.
People hear that there are millions to be made from internet marketing programs (and there is) and believe that they have found ‘The’ system that will do this for them. They don’t want to put in work or effort of any kind and expect to be rolling in it within months.
Best advice for you guys, take all the money you plan on spending on program after program and use that cash to buy as many lottery tickets as possible. I am serious when I say that your odds are much much better doing this.
So when these guys state that you only have to promote 5 people and everyone else will do the rest, take it with a bucket of salt. People who buy into the hype want to see the instant riches they were promised. When this does not happen, do you really think they are going to put the work in?
Chances are you will be left trying to motivate your downline and constantly replacing all of the drop-outs. Effectively this will leave you swimming against a strong tide.
Okay, before I drop the major bomb here, let me ask you this. How are the owners of these programs making their money? Is it through the ‘fantastic money churning system’ they have designed or is it from selling the idea of a ‘virtual cash machine’ to people? If you can answer that, you will have a greater insight into how most of these systems operate.
Now for the big one…
There is no product!
This is the biggest red flag you could possibly see. Many of these programs actually have no product whatsoever! The SEC to my knowledge has tried to stop this to some extent but really they have made it worse.
The reason for this is that these people can continue to operate simply because they have thrown together a junk product that nobody wants.
Think about this for a minute…
These programs are selling and self perpetuating their program. The members are the commodity!
Are you starting to see how this can only fail. Many companies with great products are going out of business. Now we have a program with a rubbish product whose commodity is its members and in order for the company to survive it constantly requires more members!
This is quite simply impossible to sustain. What happens is that when it has reached critical mass and can no longer sustain itself, it collapses from the bottom up.
Guess who has been making money from the beginning? The people at the top and they will continue to make money off their members right up until the end when the whole this collapses in spectacular fashion.
In fact the irony is in the pitch, remember 5 will refer 5 will refer 5. If this were to happen in theory and I say in theory because it never happens in the real world, the whole structure of this business model would collapse in record time. It would exceed it’s ability to sustain itself very quickly.
An example of this is: If you took one cent and doubled it every day for thirty days you would end up with $10,737,418.23.
In other words if we had hundreds of thousands of people all required to sponsor 5 people to make money, where are they going to find these new members to continue the downline. The amount of people willing to buy into a junk program are limited.
So considering that there is often no product of value or of limited and consumable (ie not on-going) value this would collapse rapidly.
I know many people will disagree with me but these are my reasons for hating MLM. I know that a lot of money can potentially be made from them but they are typical of pyramid schemes where the owners make a killing and everyone else gets screwed.
I personally do not like to play games where I make my money at the expense of someone else losing theirs, unless it’s a game of poker.