Many people believe that MLMs (also called Multi-Level Marketing, direct sales, or network marketing) are a scam.
I have to confess. I used to be one of them. I used to be the person who thought that all Multi-Level Marketing companies were a scam, or a pyramid scheme.
The Federal Government has ruled on the difference between MLM and a pyramid scheme, the difference being, MLM has products that are sold. The pyramid schemes expect a high buy-in with emphasis on signing others up, with no product in exchange.
My first experience with MLM was back in 1989 when new friends of my husband and mine, invited us out to dinner. We had just met this couple at church and we had kids about the same age as theirs. We enjoyed their company and were excited when they asked us out to dinner. Being recent college graduates, we told them it would have to be to an inexpensive restaurant because our budget wouldn’t allow for an expensive dinner.
The Smith’s were in the same economic place so we went to the local Denny’s. When we got there, my husband and I ordered our meal and the Smiths ordered just soda. We were surprised and offered to buy them a meal, thinking it was lack of money preventing them from ordering a meal. They assured us it wasn’t, they had just eaten at home. Our look of confusion led them into the “Pitch”.
The Smith’s had joined Amway and wanted to show us “the plan”. Sorry Amway, you were among the first, before distributers were taught the appropriate ways to share the plan.
That’s all it took. I never wanted to get involved with any Multiple Level Marketing plan~ ever!
I didn’t understand the business model, I wasn’t financially literate, as Robert Kiyosaki has defined, so I didn’t see any value, all I saw was our friends sneakily getting us to see their business opportunity.
It’s true, MLM does not have a good reputation with some. But that doesn’t necessarily mean it’s bad. The theory behind Network Marketing is strong: Relational and word-of-mouth business building has always been one of the strongest ways to build business. Most traditional-style (that is, non-MLM) business owners will tell you that the best customers are the ones who were referred through word-of-mouth from satisfied customers.
So why does MLM have such a bad rap?
I see the reason is that, although MLM companies do offer a variety of products (usually good products at reasonable prices), many marketers see the possibility of making more money with their “downline” (the people they sign up, or sponsor who will sell products and share a cut of the profits) than with actually selling products.
I know people who have not been successful with MLM. And, I know people who earn a living (not “get rich quick” but actually earn a living) with MLM. I’ve seen people who’ve tried an MLM with the get rich quick mentality and when they didn’t get rich quick, they quit.
The first thing I learned through Net Work Marketing is that to be successful, it’s work. Hence the title, net WORK marketing. My friend Anthony McNeil wrote a post for his blog, asking us to think about the message we’re sending.
Is network marketing a scam? Not all MLMs are scams, unfortunately, some are. For me, using word-of-mouth or attraction marketing does not make MLM a scam. Having a compensation plan that shares portions of sales to the distributers who sponsor other distributors does not make a scam. You need to research, get more information about the company you’re looking into to decide!
Tell me your experiences, do you think network marketing is a scam?
July 3rd, 2010 at 9:00 pm
Hi Linda
I must have been living in a cave or something for much of my life, because the first time I was introduced to networking marketing, the thought that it was a scam didn’t even enter my head! Maybe I’m just too trusting …
I could see the potential for what I was being shown, however, at that point in time, I simply wasn’t interested.
I find that when I’m asked if my MLM company is a pyramid scheme, I tell them “no it isn’t” (of course), but when I ask them to explain what they think a pyramid scheme is, the majority of them can’t even give me an answer!
I believe that people ask this particular question because either they or someone they know has been scammed with a business opportunity before, or they’ve tried it but not realised the work involved and have dropped out, blaming the company rather than taking responsibility for their own actions (or inaction as the case often is!).
Sadly, there will always be people out to scam others. The majority of network marketing companies are legitimate but as with anything, anyone considering joining one should do some research to find out whether the company is suitable for them or not.
Each network marketing company has their pros and cons, and I don’t believe that any particular one is necessarily better than the others. It comes down to personal choice and what suits the person joining.
Fortunately, more people are now learning and applying much more effective (and appropriate) ways of marketing their businesses, including actually LISTENING TO the person they’re speaking with, not just pitching AT them and using the old “everyone is your prospect” routine that has been taught for such a long time.
The most surprising encounter I’ve had with a fellow network marketer was roughly five years ago with a lady in my community, who I actually know quite well. She is a representative for a company that sells a product that I tried through another friend, and I was wanting to purchase more of it.
I rang the lady about it and she sounded very excited that I’d rung her. I thought that was a little amusing at the time and a few days later, I found out why …
When I met up with her to order this product, she sat down beside me, whipped out her flip-over presentation book and starting telling me all about the business opportunity and how close she was to getting a car!
What the?!
I tried to interrupt her a couple of times to explain that I wasn’t interested in joining the business and that I just wanted to order the cream, however, she simply wasn’t listening to me – at all! She obviously had her sights set on me joining her business.
When she’d finished her presentation, she gave me a few pamphlets and wanted me to sign up then and there! I figured that she’d forgotten what I wanted in the first place, so I thanked for her time and told her I’d get back to her.
I left somewhat bewildered over this and needless to say, I didn’t order any products from her at all, and I politely declined joining the business when she rang me the next day.
I don’t know whether she is still involved with this company (or any other), but if so, I hope she has since learned the following:
* LISTEN to the person you’re speaking with and get to know what they’re looking for.
* CUSTOMERS are just as important to your business as business partners.
* NEVER ASSUME that you know what’s best for someone else.
I agree with you, Linda, about success with network marketing … it requires work!
Network marketing (or any other business for that matter) requires determination, perseverance and a desire to succeed, however, one of the huge advantages to network marketing is the power of leverage.
Great post, Linda.
~ Kylie ~
Kylie Doak@MarketingSolutions recently posted..A Blast From The Past
July 3rd, 2010 at 10:08 pm
Kylie~
I thank you!! You are so right!! And you are a teacher at heart, it’s obvious by the comments you leave! You are a dear friend Kylie and your example and direction has been very helpful!
~Linda
July 3rd, 2010 at 10:58 pm
Thanks, Linda! That’s an awesome compliment!
You’re a dear friend too and I’m rapt to have met you.
~ Kylie ~
Kylie Doak@MarketingSolutions recently posted..A Blast From The Past
July 3rd, 2010 at 11:09 pm
I just told my daughter, Lilli what rapt is! She loves to hear Australian slang too!
July 4th, 2010 at 6:42 am
Over the years I think people got turned off of MLM not because they thought it was a scam but rather the reputation it received over the years from those who marketed it wrong.
Network marketing is work and there is a learning curve to go through, yet many people would tell their friends, family and co-workers how easy it was to make money, that there was no selling etc etc etc.
It is these marketing techniques that I think have turned off a lot of people.
Peter Fuller MBA recently posted..Why I started my own Home Business
July 4th, 2010 at 7:27 am
Thank you Peter! I think you are so right! I’m learning that from personal experience! The key is in attraction marketing! Giving value first and let those interested find you!!
September 16th, 2010 at 3:28 pm
They are not all scams Linda. You just have to be careful and do your due diligence. Companies such as Primerica have done very well, but I still consider them MLM as they rely a lot on the same type of MLM structure. My word of advice is “if it sounds too good to be true, dig deeper”
Aaron@HDTV Reviews recently posted..Samsung UN55C8000 55-Inch 3D LED HDTV Review
September 16th, 2010 at 7:13 pm
Aaron~
Thanks for your advice! I love it! if it sounds too good to be true, dig deeper!
September 16th, 2010 at 7:24 pm
Hi Linda,
Great subject! Personally, I’ve always seen true value in the network marketing model. It’s really one of the only ways for the average person to own their own business with a low investment, no overhead or employees, and have an opportunity to make serious money.
Because the cost of entry is so low, though, the majority of people in this industry quit when the going gets rough….and it gets rough! Those of us who stick it out, and put the time and effort into building our businesses and growing ourselves with personal development, have much to gain.
Now more than ever in history, people are willing to consider options they never would have even given any thought to in the past. Good or bad, they’ve realized they need to step up and take responsibility for their own futures – they can no longer rely on employers, the government, or their retirement funds to take care of them.
The key is to know what you’re getting into. Like any other type of business, some are reputable and some are not. Given a good deal of due diligence and a never quit attitude, I believe anybody can create tremendous success in network marketing.
Kathy Jodrey recently posted..Team Building Ideas- Tribe Style – Summer Scenery Series 6
September 17th, 2010 at 5:26 am
Kathy,
You said it all! It is obvious you understand and love the industry! It is true, anyone willing to do the work, and have the proper attitude (being connected with a great leader doesn’t hurt either) can succeed in network marketing! Thank you for saying so!
~Linda
September 16th, 2010 at 9:05 pm
Hi Linda
A few years ago I tried MLM. It is definitely not for me. Didn’t enjoy the experience but I know people who do enjoy it and make a good income. I much prefer blogging and eventually will monetize my site with products I will recommend; following product reviews. Much prefer building relationships with fellow bloggers and visitors to my site. Love writing so blogging is the right fit for me.
Patricia Perth Australia
Patricia recently posted..Lavender Health- Lavender Essential Oil
September 17th, 2010 at 5:21 am
Patricia~
You are not alone when you say MLM is not for me! (And I am glad to have gotten to know you in this blogging community!) It’s fun to know you are working on monetizing your blog. It will be grat watching you succeed! I really enjoy your humor section! And of course you already know I’m lavendar essential oil user!
~Linda
September 17th, 2010 at 8:02 am
Linda you sure went old school when you mentioned Amway. I remember back in the 90′s an ex-boyfriend of mine had friends who held Amway parties at his apartment. I also remember the old pyramid scheme where everyone puts in $20 and the person at the top receives it then moves off the pyramid, next person moves into that place. I actually got involved in one but the person who was holding all the monies just upped and disappeared, this was before I got a chance to be on top. So that was my first and last try at that. Those were the days.
Karen Cruz@passioninwords recently posted..Letter of Resignation
September 17th, 2010 at 11:14 am
Karen,
Yep! That was old school, it was a long time ago! You experienced a real scam! I can image how all the money givers were feeling when the money holder up and disappeared! Hard way to learn in my opinion!
~Linda
September 18th, 2010 at 6:34 am
Hi Lynda,
The problem I see with most mlm companies have very little to do with the actual mlm company.
Online most mlm businesses don’t have a physical product. I think a lot of people have a hard time wrapping their heads around products that are digital or downloadable type of products.
It has been my experienced that most marketers market sell the Sizzle and not the steak. So the person on the other end is filled with illusions of grandeur. Once they come off of their high and realize it might actually take some real work to create an income. The first thing they want to do is blame others for their short comings.
Mostly out of ignorance they are quick to cry scam. I have seen some good programs be accused of being a scam. As the saying goes it only takes 1 bad apple to ruin the bunch.
Larry Rivera recently posted..Your MLM Business Is Not Your Business…
September 18th, 2010 at 5:07 pm
Larry~
We really need to take time to investigate the business before we jump at the sizzle! I see you know what you’re talking about!
~Linda
September 19th, 2010 at 2:09 am
Right I agree totally when I first got started marketing I joined stuff without researching it first. Then of course after the fact I would research it and be like goodness me.. What did I get myself into.
I always say do these two things first.
1. Google the company
2. Google the person you may potentially work with
If all you find is bad stuff about a company look the other way.
If you don’t find any information at all about your sponsor online, there is a good chance they don’t know how to market online.
New people who want to network market online, really do need to find someone who is a experienced online marketer. Doing it alone can cost a fortune in trial and error. I learned the hard way and bought on my emotions. That was a terrible mistake I don’t wish on anyone.
Larry Rivera recently posted..Everything You Need To Know About CommentLuv
September 19th, 2010 at 3:37 am
Larry~
Thank you for sharing! It’s great to hear other peoples advice! I agree, I wouldn’t want anyone to make the same mistakes!!
Linda
September 18th, 2010 at 4:14 pm
Hi Linda,
Great post. I for one got caught up in some MLM scams that had the focus of signing people under you to make money with no real product. I still don’t have the mindset that all MLM programs are scams, but now I try to focus on relationship building and helping others to be successful online.
~ Tim
Tim Colletti recently posted..Basic Online Business Techniques For Success
September 18th, 2010 at 5:04 pm
Tim~
Yes, I’m focusing on the same! I have developed fabulous friendships online!
September 20th, 2010 at 1:10 am
I think I am an MLM companion. I refer people to a site called Points2shop and I get paid money when they sign up and do an offer.
It’s pretty ok money for a teenager but I won’t make a living off of it. I enjoy it though because they are a great site and offer many fantastic prizes to their members.
So I really see no shame in being a MLM companion as long as you know you are not ripping off your lead.
September 21st, 2010 at 2:10 am
I fully agree with you Linda. I think alike, such type companies always be fraud. They just make solid network and earn profit. One of my friend got caught up in some MLM scams that had the focus of signing people under you to make money with no real product. Keep on..
September 21st, 2010 at 8:56 pm
Hi Linda! I initially started in network marketing in high school and no idea about network marketing. Years later I am in my third company and I love it. Never once has it crossed my mind that this industry or business model doesn’t work. Of course it does but as you mentioned, it’s called netWORK marketing. You have to work and you must also understand and know how to market yourself.
There are to many people succeeding, that I personally know, for me to give up just because it gets a little challenging. Thanks again for this post.
Golda Smith
September 21st, 2010 at 9:05 pm
Thanks Golda! I’m glad you took the time to leave a comment! I love hearing that you never doubted the value (and necessary work) of network marketing!! Tomorrow I’ll get my commentluv blog up and running so you can see how easy it is to spread the luv!!
Linda
September 21st, 2010 at 8:59 pm
I am old enough to have been part of pyramid schemes, mlm scams (travel for one), and MLM’s that work. You really have to do the work in networking. Build the relationships, do the research, help the people, and leave a legacy. Thanks for writing this!!!
September 21st, 2010 at 9:02 pm
Thank you Dana!
You are so right, you speak from experience!! That’s what I always say… network marketing is just that, work!! Thanks for visiting my blog! Tomorrow I’ll have my ‘commentluv’ post up so you can learn how to spread the luv!!
Linda
September 22nd, 2010 at 4:58 am
Great post.
The truly big reason is we are so impatient.
We want it to happen yesterday and are not willing to make personal sacrifice to build a long term income and business.
September 22nd, 2010 at 5:11 am
Maggie~
Thank you for saying so! I couldn’t agree more! Patience is a virtue that we have to work at acquiring! I’m like most, I want it all yesterday!!
Linda
September 22nd, 2010 at 5:45 am
You know what’s crazy about the idea of mlm having a bad reputation? Is that it is totally NOT TRUE at all.
The DSA – Direct Selling Association – did a survey and found that about 20% of people have a negative connotation with multilevel marketing. Whereas 20% of the population they surveyed had a very positive association with it.
The remaining 40%?
Were indifferent!
I think rejection stands out so much in peoples minds versus acceptance and positive imagery, that they overblow it on this idea that multilevel marketing is such a bad thing. They get a few rejections, read a few scammy websites (Like scam.com which is one of the worse trollpits known to men), and get scared.
The fact of it is, people would love to have the opportunity to find someway to make more money as long as they’re exposed to the idea correctly.
Also, it should be considered joining only a mlm that is really product-oriented, whether you’re a business builder or more of a product retailer, it doesn’t matter. The company should be all about product for the most part.
That sets a lot of people at ease.
To the top,
-Gregory Elfrink
gregthewriter.com
Gregory Elfrink recently posted..Make Money in MLM Lesson 3- The Power of Network Marketing Books!
September 25th, 2010 at 9:37 pm
Thank you Gregory for visiting my blog! How are you doing? Is your life rockin’ and rollin’?! Hey your comment was put into my spam folder! I’m glad I caught it!
Your comment has some awesome stats that I never knew! That’s a new post waiting to happen! I’m anxious to read your most recent post!
Linda
September 23rd, 2010 at 2:34 pm
Hi Linda,
Oh, how I relate! I have met some of the most unprofessional people ever in Network Marketing and of course I have met quite the opposite, centered, loving and highly evolved leaders. This will continue to be since most people’s perception of NM is that it requires no investment including time, skills, business acumen etc. Quite the opposite is true and most people would be better placed working in McDonald’s than coming into our industry because they just don’t understand the concept of personal development and work!
Sorry about the rant – but it is a pet subject of mine. Thanks for raising it.
Blessings
Clare
Clare Kelway@Attraction Marketing recently posted..Introduction to Mastermind to Personal Power
September 25th, 2010 at 9:23 pm
Clare~
No apologizes necessary! I can totally relate! Like you, I’m into attraction marketing! I’m anxious to read your latest post!
Linda
October 16th, 2010 at 12:52 pm
Hi Linda,
I was also drug into the company mentioned and from that point forward I just had this feeling of myself that I just could not shake. I understand that many companies sell a product as I am with a network marketing company that does offer one, I do not shove it down peoples throat as the latest and greatest.
I am one that knows there are different people all over the world that enjoy different ideas, thoughts, ways of life and have different expectations out of life. Some people believe that MLM’s are scams and some are but normally it is certain people within the organization that “sell” the “scam” with high hopes and dreams.
See before I allow anyone to start getting involved with what I do, I explain it will probably be the hardest thing in life that you ever do, it takes more then a few hours a week and it is not easy! I first find out “why” they want to have a “internet business” and if their why is to make money – I tell them to ” kick rocks” ( in a nice way I send them away).
I look to educate and attract people that are tired of trading time for money, they are tired of working 70+ hours a week, miss their family and just have had enough of corporate hypocrisies. I was that guy, store manager for a major retail company for 15 years and missed every family event because I was working!
In my opinion, a scam is where you pay for something and get nothing of value back. This is where many things like we do here is not a scam, we provide education, value and a networking environment.
Thank you for the very provoking post and I look forward to many more like it!
October 16th, 2010 at 2:03 pm
Robert~
Thanks for reading and commenting! I appreciate all you say! Experience is our greatest teacher! Sounds like you understand what it takes to succeed! I look forward to networking with you too!
Linda
October 6th, 2011 at 6:36 pm
I know of a few companies who are still existing and are predictable scams.. I don’t know why our local offices can’t intervene.
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Alonzo,
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