You’re probably already familiar with multi-level marketing also widely known as MLM. This business scheme is also referred to as the pyramid scheme and has taken many different forms over the decades. Different MLM companies offer different types of products, with some not offering any products at all. Regardless of the kind of products and services that a company sells, the fact is that they primarily rely on recruiting. They will recruit more people who will recruit other people. All of those recruits “invest” to be able to get in the company and be able to recruit others and earn commissions.
You’re probably reading this because someone you know is trying to recruit you and you’re so close to getting convinced. However, because you’ve already heard much about MLMs, there’s a tinge of worry and doubt in your mind. It’s a good thing that you’re trying to learn more about this business model before committing. So, read on to know the facts that you might not yet know about MLM.
How Do Multi-Level Marketing (MLM) Businesses Work?
MLM companies have gotten better at disguising their company’s true nature: that they are indeed MLM or pyramid companies. They will offer overpriced products and have recruits use a website or portal that makes the company look even more professional. They also organize events that show how grandiose and successful their companies are. MLM companies that offer products can operate legally as actual businesses. Some even have offices in primary business districts all over the world.
MLM business models and products may differ, but there are telltale signs that a company is one. One of the most prominent signs that you’re dealing with an MLM recruiter is when his or her social media accounts are filled with posts that exude extravagance. Newer recruits may pose together with more established leaders in the company — leaders who drive expensive sports cars, live in huge houses and travel the world. Meanwhile, more experienced recruiters may already have their luxury items to show their “success.”
Then, the story will always be the same – the products they offer are government-approved and have been seen as effective. There can be some truth to that. However, the products are usually overpriced. Furthermore, as part of the presentation, the recruiter will tell you that they’ve chosen the company to enjoy financial freedom and that they want you to experience it as well. They are willing to share with you the secrets and the success — only if you invest.
What Makes MLMs Dangerous?
Some people are typically blinded by the fact that the company’s primary income comes from continuous investments, not product sales. This is the reason why many who have invested but are unable to recruit continuously do not realize the success they thought they’d experience.
Here’s why MLMs are dangerous:
- You need to “invest” to join. If you don’t pay, you’re not accepted.
- Once you’re in, you’ll have to buy a certain amount of product to keep your account active. You can purchase these products either for your use or reselling. The problem is that the products are usually costly, making them hard to sell. If you don’t buy, you can’t get your commissions.
- To make up for the deficit, a member needs to recruit to get commissions.
- At the end of it all, it’s a MUST to recruit and make sure that your recruits continue to recruit.
- Even if you’re good at selling and recruiting, you’ll also be faced with another problem: saturation. If your area is already full of members, who else can you recruit? The upline or recruiter who convinced you to join won’t tell you about it until you find out too late that the people you thought you could recruit are already members — apparently, you’re not the only one who thought they would make good recruits.
Can You Make Money in MLM?
The answer depends on where in the pyramid you will be. Of course, you’ll start from the base. However, you need to look at how many levels are already on top of you. If your area is already saturated, then you’ll have a hard time looking for people to recruit, until you lose interest without enjoying even a tiny percent of the financial benefit promised to you.
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