How DO You Choose Your Programme or Opportunity?
MLM - Is it a business or a Scam?
by Jenny Stewart
Jenny Stewart 
It is too easy to yell scam!
Just because you have picked the wrong business and cant make money from it - doesnt make it a scam.
Often the difference betwen and scam and a useless programme is the INTENTION of the owners when they set up the business, because they usually have the same unhappy ending for the people involved in their referral chain.
This is particularly true in MLMs and PTCs. There are many many many busineses using mlm systems and other network marketing programmes around that were not set up to sell a product or service and profit by it. Far from it - they are set up to get some quick, or in the case of the really clever ones, not so quick cash, before they get out - leaving the downline with their pockets empty and their time wasted.
It is this manipulation of legitimate selling systems that have given many businesses who sell through networking a VERY BAD NAME. How many mlm programmes have little or no product or surf sites who exist to recruit but not help their advertisers sell their wares? Half of them are seemingly legal - but they wont be around in a few years time.
You may or may not like the multilivel marketing system but the legitimate ones invariably have a great product or service to sell and not just a load of paperwork to show that they are legal.
Multi level marketing is a sales and marketing system - it is not a business in itself. The majority of the "10%" or legitimate MLM companies are business that could change their sale system to a conventional one and continue their businesses quite happily. Mary Kay, Herbalife, Tupperware, Avon are just a few examples of these.
It is said that for an MLM to work it needs the combination of 4 main ingredients
1. Good product or service
2. Good honest management
3. Good compensation/payment programme with principal earnings from sales and not referrals (otherwise it is a coverup for a pyramid or ponzi)
4. A large investment in its product or service before starting and continued investment in its product development once established.
If any of these elements are missing - it is very unlikely that the business will be sustainable and is possibly even a scam.
Multilevel marketing has gained a very bad name over the years, and especially since the internet became used as a marketing tool because this system has been adopted by the less than scrupulous and the less than competent to turn a sales system into a businesses in itself.
And it is not.
Dec 30th 2007 14:51
It is too easy to yell scam!
Just because you have picked the wrong business and cant make money from it - doesnt make it a scam.
Often the difference betwen and scam and a useless programme is the INTENTION of the owners when they set up the business, because they usually have the same unhappy ending for the people involved in their referral chain.
This is particularly true in MLMs and PTCs. There are many many many busineses using mlm systems and other network marketing programmes around that were not set up to sell a product or service and profit by it. Far from it - they are set up to get some quick, or in the case of the really clever ones, not so quick cash, before they get out - leaving the downline with their pockets empty and their time wasted.
It is this manipulation of legitimate selling systems that have given many businesses who sell through networking a VERY BAD NAME. How many mlm programmes have little or no product or surf sites who exist to recruit but not help their advertisers sell their wares? Half of them are seemingly legal - but they wont be around in a few years time.
You may or may not like the multilivel marketing system but the legitimate ones invariably have a great product or service to sell and not just a load of paperwork to show that they are legal.
Multi level marketing is a sales and marketing system - it is not a business in itself. The majority of the "10%" or legitimate MLM companies are business that could change their sale system to a conventional one and continue their businesses quite happily. Mary Kay, Herbalife, Tupperware, Avon are just a few examples of these.
It is said that for an MLM to work it needs the combination of 4 main ingredients
1. Good product or service
2. Good honest management
3. Good compensation/payment programme with principal earnings from sales and not referrals (otherwise it is a coverup for a pyramid or ponzi)
4. A large investment in its product or service before starting and continued investment in its product development once established.
If any of these elements are missing - it is very unlikely that the business will be sustainable and is possibly even a scam.
Multilevel marketing has gained a very bad name over the years, and especially since the internet became used as a marketing tool because this system has been adopted by the less than scrupulous and the less than competent to turn a sales system into a businesses in itself.
And it is not.
Dec 30th 2007 14:51
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Comments
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Cheryl Baumgartner
 Medical Billing/Coding/InsuranceIt must be a legitimate product, and it must be something you feel strongly enough to tell people about without getting paid for it. After all we do that everyday with restaurants, movies products. Of you can do that then you have something you can work with. Dec 30th 2007 16:05 |
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Jean DAndrea
 RetiredMany MLMs are legitimate businesses, however, the way they are marketed often makes them seem otherwise. I'm referring to the "Make $1000 by next week" type of thing. People are drawn in by the advertising hype, and leave disappointed in a couple of months after not making their $1000 in a week. This is often due to inexperience in marketing, rather than any fault of the product or company. Of course, there is also the factor of the upline - do they help or do they just recruit? Too many work on recruiting only, and make their money that way, rather than through marketing the product. I believe MLMs can work, but it takes a lot of time and effort to make it so. Dec 30th 2007 19:20 |
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justin12
 <a href=" http://www.spymac.com/details/?2323656" target="_blank">look here reale life of street ,together we can help this people!</a> Dec 31st 2007 07:22 |
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Jenny Stewart
Hi Jean The point I was trying to get across is that MLM is NOT a type of business in its own right - it is a sales method. Whether or not your business will suceed or not depends on a lot more factors that the sales method . i.e. the other points I set out in the list. I am sure that the reason many people go wrong with home businesses is because they think of mlm as a kind of business and not as a sales method for the business they are getting involved in. Maybe if people thought that way round -i.e. do I like the business? - and THEN do I like the mlm sales system ?- they would avoid a lot a scams and have much greater success with the legitimate mlms. I wrote this topic yesterday after a conversation I had with one of the leading motivation coaches in Latin America. He has always stresed the importance of ALL the elements in a business that is marketed through multilevel marketing and NOT just the sales method used and it gave me the idea for this article. Dec 31st 2007 13:21 |
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Jackie Fenwick
 Thank you very much for the information. You made several good points on MLM and the company I chose to be a distributor for built their company different from the the main stream MLM. Their differences are: the founders/owners have total control over research, manufacturing, debt-free, the people who chose to become distributor are treated like a partner or shareholder, their marketing plan pays out from the total company sales volume and finally the startup cost is less than $200. And again thanks for your information Dec 31st 2007 17:50 |
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Eric Smith
Online ProfessionalThe term "MLM" is so closely related to illegal scams like Pyramid's, Ponzi's and the like that I don't use the term at all in my Marketing. If i see a program that is promoted as an MLM (and I haven't heard of it previously) I run in the opposite direction. Legitimate Businesses with a REAL product or service are generally promoted as a "Network Marketing" company. But to answer the topic at hand, yes I agree with Jenny "Network Marketing" is a system of duplication not a business in and of itself. The business is generally the person (company or entity) that becomes the distributor - the ones doing the work are the ACTUAL business. Dec 31st 2007 21:00 |
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Jenny Stewart
Both Eric and Cheryl have gone straight there - it must be a legitimate product and business. I dont think it matters whether you call it network marketing or mlm or internet marketing at all. At the end of the day you are only talking about the WAY in which your product or service is marketed. The keys to whether it is a legitimate business are still the same - product, product development and investment, , good management and a good compensation plan. Jean you are right when you say that there are some good products sold by multilevel marketing that can also go bad, but this is generally because they fail on the "good, honest management" point or the compensation plan issue. There are companies who use MLM movitivation in such a way that they are almost sect-like. But that, to me is part of a lack of good honest leadership. Interestingly enough, the figure of 90%:10% unsustainable mlms to sustainable mlms around is one that many professional mlm insiders will also agree on. Jan 1st 2008 10:10 |
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Cheryl Baumgartner
Medical Billing/Coding/InsuranceEven though MLM is not a business Each individual involved must still remember this is THEIR business. Many network marketing failures never learn to treat what they do as a business. If you are a distributor of a product it is still your business and you have to treat it as such. That lesson often gets omitted in the case of many of these MLM's Jan 1st 2008 11:02 |
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Arthur Webster
Just plain honestyHi, Jenny et al, Why pick on MLMs - there are literally hundreds of I.M. biz ops out there that are not MLMs but are the scrapings from the bottom of a very filthy barrel. My main bone of contention with MLMs is the enormous degree of price inflation caused by so many levels of commissions being paid. When an MLM has a product, no matter how good it is, there must be some degree of transparency in the pricing structure for the end user - in far too many this is missing. As someone who was prescribed Herbalife products for a while, I can say that I was absolutely shocked by the 'rep' price compared with the Farmacia base price. I know many MLMs will not let their affiliates try to wholesale the product because the retailers simply would not sanction the prices the rep has to ask - yet they are quite happy to cut the affiliates potential profit by providing wholesale supplies through their own 'wholesale' sectors. Another aspect that should have more attention paid to it is the way some MLMs motivate those who would join. One such, that was recently advertised in Apsense gave many money reasons but failed to mention any benefit from serving customers or creating a better or healthier life style for their customers - this I find absolutely disgusting. If the only way they can justify their existence is the type and size of pecuniary benefits for the affiliates, they should not be in business. Jan 1st 2008 11:39 |
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Eric Smith
Online ProfessionalHi Arthur, The retail price on many (most, in fact) products sold via Network Marketing can be extreme but in many cases there is the option of getting the product at up to 50% less than retail by becoming a representative and/or buying larger quantities... For example a company I know really well automatically gives 10% discount to reps if the order is less than 50 PV (50PV = Roughly US$70) - This increases to 20% for orders equal or greater than 50PV, 30% for orders over 150PV and so on up to 50% off the retail price. A similar system applies to regular "preferred customers".... ... suffice to say - there are options for reducing the cost of your order. The exception to this is companies that have a "One buy price" Omegatrend (an Australian Company) had a similar system where everyone paid the same price but after a qualifying period you could get "half price shopping"... Jan 1st 2008 13:29 |
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Jenny Stewart
Hi Eric, I think that you are strengthening rather than weakening Arthur's arguement on the pricing of many articles sold by network marketing or multilvel marketing or whatever you want to call it.!LOL The retail price of these articles is often very much higher than a similar product sold through the "normal" system and unless you want to become a distributor - which MANY people dont - the prices become inflated. Equaly, they cannot be bought Wholesale from the factory in the normal way -and so you do not get the price competition seen in "normal distribution". If you want to buy cheaper and become a distruibutor, then you have to buy minimum orders with many companies too. I have given up buying many products sold by mlm for that reason. It is more expensive to buy as a customer and, unless you want to get involved in a lot of paperwork, it is a bit of a pain if all you want to buy is toothpaste! Jan 1st 2008 18:34 |
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Cheryl Baumgartner
Medical Billing/Coding/InsuranceYou are right about the pricing on many products. If you look at the price of say vitamins then go to your local health food store, the products in the health food store are much cheaper. In the price of those products you are paying lots of hidden fees. Include shipping and handling for many of the products and you can be paying close to double what you would pay by just going to the health food store and buying it. Also as a distributor, you often have to keep a supply on hand. There is a woman in my off-line networking group that does Mary Kay. She has to keep so much on hand to fill orders. Jan 1st 2008 19:25 |
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Jenny Stewart
Hi Cheryl, I think this could well be included in the "downside" of the MLM system of some of the Companies that Jean was talking about. When the sales system more or less obliges you to become a customer of more product that you personally need or want, you either give up, or end up hooked. The second option often happens as a result of the excessive "motivation" provided in some companies that is almost cult like in its zeal. And motivation of this kind is the creator of what we know as "mlm junkies" who will sell almost anything, as long as the sales system is mlm. Jan 2nd 2008 10:38 |
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Eric Smith
Online ProfessionalI make this statement as an overall observation... not directed at any one individual. I have noticed when "price" becomes an issue it is often from those who are stuck in a "JOB" mentality... Trading time for income for 45 or 50 years then retiring on 50% of what they couldn't afford to live on in the first place. When money comes "easily" (whether thats from a rich relative, interest on savings or welfare) it seems to GO just as easily. It will often be the opposite when one has had to sweat to make their weekly pay check... "I worked hard for this and i'm not going to let it go easily"... Some Network Marketing Companies source their products from Bulk Wholesalers - I found this out when i was a Melaleuca distributor - PAN pharmaceuticals (manufacturer and wholesaler) was shut down by health inspectors due to poor hygeine practices - we later got a notice from Melaleuca stating some products would not be available until they got a new source for some products. I'm guessing this was related to Australias TGA regulations on importing products but suffice to say, in this instance one could probably get the identical product in the supermarket for a lot less. But overall, Network Marketing companies "generally" spend Millions of dollars every year on research and development of new products etc. and these products need to pass strict guidelines. I have seen families buy "Home Brand", Black & Gold", "Savings" etc, brands to feed their family then buy "Top shelf" alcohol for their entertainment - for people with this mentality perhaps they should keep buying their Carcinogenic concoctions. 3 Years ago my income was $700 a month (YES a month). I was at home caring for my daughter and receiving government income support. I still managed to pay my bills and had enough left to spend on building my Networking Business. I was then and am now on Autoship (Business Protection) and have not needed to cancel my shipment for any reason. But then - I don't drink, Don't smoke, and I have my priorities in order. I can't help but wonder with what mentality the price of products is argued at being too high ? Jan 2nd 2008 14:13 |
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Eric Smith
Online Professional... also... I have never had to buy more than we needed for personal consumption in any month - in fact we often run out before the end of the month if we just buy the monthly PV minimum... Jan 2nd 2008 14:16 |
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Jenny Stewart
Your arguement might be fine for health prodcuts that you and your family use Eric, But the same arguement would not stand up for a person living alone, or for a product that it not consumed daily. i used to buy Amway products many years ago - and then Foreever living products. Some I could use daily, but the majority never justified a whole order from me for myself - so i just gave up. I mean how much soap powder can a (then) childless home use!! LOL The products were excellent, but complicated to buy, unless I wanted to pay the full price. i.e. becoming a disstributor myself etc etc And yes you are correct that many of the big companies who use MLM have enormous research and production plants. However, especially in health care, there are many many other alternatives and some of them a lot cheaper. I dont see how you can argue that people who dont agree have a JOB mentality - I've worked for myself for many many years. I spent much more on stuff like that when I did have a JOB and didnt have to worry where next months income was coming from! And as the head of a family I consider that I have a responsibility NOT to pay more than I have to for the things my famiy need. (and no I dont buy designer alcohol either! LOL) What seems to be clear is that you have found a company whose product you like, use and can sell on with an ethical company who uses MLM as their sales system. Well in the artifcle - it does say that there are maybe 10% legitimate companies - so you picked one.- but about all the rest? Jan 2nd 2008 15:14 |
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Cheryl Baumgartner
Medical Billing/Coding/InsuranceEric the truth is that price may not be a concern for you but if you are marketing a product, price will indeed be a factor for your prospects and customers. Whatever product of service you market they will want to see the value for their dollar. It's very easy for me to show the value with what I offer. But other network marketing opportunities cannot do that so easily. If I am selling dishwasher detergent at $10 per bottle, I must show my prospect the value of buying it as opposed to going to the grocery store and picking up a bottle of Dawn or Palmolive for $3. Believe me, rich people (I'm not talking those born into money but those who acquire wealth) don't become rich by throwing money around but by looking for the value in the dollars they spend. Even if money is not a concern for them they do not "waste" it. I don't waste it either. I recycle to save money and shop for the best value for my dollar. That does not mean I buy cheap. That means I buy the best value for my money. That's the mindset most of your prospects will have, the best value for their dollar. Jan 2nd 2008 16:05 |
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Gerry P.
 ConsultantMy association with Amega Global and Amway has been fruitful. I'm doing the business online and offline. Each one in my network (downline), who is doing the business in the right way, is also making money. Inquiries on how one can get into the business without hitches will be entertained by or my successful associates. Good luck! Gerry Pira Jan 2nd 2008 16:29 |
Hi Jenny,
Something I might add is watch WHO you sign-up with!
To make a long story short the first mlm I signed up with was
and still is a legitamite opportunity but the "leader" brought to me
by a trusted friend proved to be less than ethical. I ended up leaving
that company and the work I had put into it because I simply could
not lower myself to work with someone like this!
DON'T LET GREED BE A DECIDING FACTOR IN THE BUSINESS YOU JOIN!!
Deal strictly with the facts and when you encounter people who sugar-coat
the business or will not admit to any negative aspect...RUN THE OTHER WAY!!!
Dec 30th 2007 15:10