MLM has become a very popular way to make some extra cash.
Some people even get into multi-level marketing hoping that they will be able to quit their job and treat MLM as their full-time business.
Are the tips given to you by your upline really all you need to know in order to succeed with your MLM opportunity?
The truth is that MLM is not as easy as it seems and that the wrong marketing approach will definitely doom you to failure.
Let's find out what you can do to make your MLM business more profitable and also what other business alternatives you could opt for instead.
What is MLM?
MLM (multi-level marketing) is a form of business in which independent representatives make commission by selling a company’s product to a customer.
Most of the times, reps also make money by recruiting other people in their team. They also make commission from their team’s sales.
This business model is called MLM because of the recruiting aspect of it, where representatives can be in different “levels” depending on their ability to recruit and make sales.
Is MLM legal or is it a pyramid scheme?
There are a couple of things that differentiate MLM from pyramid schemes:
- Pyramid schemes focus on recruitment, while MLM focuses on product sales
- Pyramid schemes don’t offer quality products (since they focus more on recruitment), while for MLM having a good product is a must
The problem is that many MLM businesses are JUST about legal.
Because recruiting makes them more money than selling products, therefore when you join a team you are often pushed to recruit as many people as possible.
This results in MLM companies having the biggest part of their profits come from recruitment.
However, they still maintain their legal status because they are selling a quality product.
How does MLM work?
Usually, an MLM compensation plan is very hard to understand at a first glance.
This is because of the compensation being based on levels.
Arbonne compensation plan for example, offers their consultants 4 different ways of making money:
- Profits from their personal sales
- Earnings from their team’s sales
- A Mercedes programme for vice presidents and up
- Cash bonuses
The consultant’s levels are:
- Independent Consultant
- DIstrict Manager
- Area Manager
- Regional Vice President
- National Vice President
If you are interested in the Arbonne business opportunity, then I recommend you read my Arbonne review first 🙂
Why do people join MLM?
MLM has become a real popular topic among people when it comes to “starting a business”.
The problem with “ordinary” people (I don’t mean it nastily!) speaking of business opportunities such as MLM, is that unfortunately there is a lot of false information such as “My friend posts a lot about Juice Plus on their Facebook profile, therefore that must be the right way of making money online”.
We are constantly bombarded on social media with people trying to promote “the next best thing”.
What is even worse is seeing the amount of false claims people make about earnings and opportunities.
So I believe this kind of misinformation leads people to join MLM because they think that is an easy business to get into.
Can MLM destroy families?
I have seen some shocking stories on the internet of how MLM businesses have destroyed people’s lives.
The truth is that, although making money with MLM is really difficult and the success rate is really low, many times people do things they shouldn’t do, which are not the actual business opportunity’s fault.
This father put his whole family in a very difficult situation when he decided to quit his full time job as soon as he joined an MLM opportunity.
He did it because he was promised that he would have easily made a 5 figure a month income.
Now, think about it…
Who’s fault is this? Surely the recruiter should have never made such false promises, but the man trusted this recruiter without first doing his research.
Nobody can make money overnight after starting a brand new business (Except for a few cases)!
MLM businesses may have their own faults, but at the end of the day it is your responsibly to do your research and keep your family safe.
This applies to any business opportunity, not just MLM.
MLM success rates
I have found this case against multi-level marketing right on the FTC website.
In summary, Jon M. Taylor, the writer of this case, says that he analysed 350 MLMs and 100% of them are recruitment-driven.
This means that the vast majority of commissions is paid to those at the top of the pyramid. This amounts to 1% of representatives.
99% of people will lose money, because of the initial investment they need to make to join the MLM opportunity and the aggressive recruitment they are forced to do, which will only benefit those at the top of the pyramid.
Will I definitely fail with an MLM business or can MLM make you rich?
Would you want to be at the top of the pyramid for the sake of making yourself rich and all the others below you miserable?
I certainly wouldn’t!
While of course you could be switching your focus towards selling products, I think you might encounter 2 major problems:
- You will never sell much without a good marketing strategy. Spamming people on social media is not the right way to go!
- Your upline will likely push you to focus on recruitment as it is better for them
If you wish to try MLM, then here is what I recommend:
- Find an MLM business that offers a product that has great potentials
- Avoid brands such as Avon. Too many people promote them!
- Join the MLM via someone who will give you space to do your thing, rather than someone who will push you to recruit
- Before investing in your MLM business, invest in your marketing education
- Focus on selling products by attracting customers to you (E.G. via your blog). This way you won’t have to harass anybody since the right prospects will choose to come to you.
What is a cheaper and less risky alternative to MLMs?
Joining an MLM opportunity can cost a lot of money.
On top of that, you need to invest in your marketing education in order to avoid failure and money loss.
I find that Affiliate Marketing is the cheapest way to start a business as it allows you to start with $0 to $50 per month.
Here is an example of the Affiliate Marketing model:
- You start your own blog where you talk about pets
- You write regular pets related content using keywords that allow people to find your articles in Google
- These articles might contain affiliate links that send people to buy a product you promote. You do not own this product, nor you have it in stock. You send traffic to the product’s page, people buy from it and you get commission
- The blog might also display ads that pay you for every thousand people that view it or for every person that clicks on it
What are the benefits of this business model?:
- No need to pay to advertise your business
- No need to invest money if you don’t want to
- You get to write about things you love and also get to help people find the answers to their questions
You can learn more about this in my How to Make Money Online Legitimately post 🙂
I hope you enjoyed reading this article!
What are your thoughts about MLM? Can MLM make you rich in your opinion?
Let me know by leaving a comment below 🙂