Is MLM The Way To Go During Recession?

The Internet is being bombarded with all sorts of offers to participate in different kinds of MLM programs. And I’m often asked about those programs, if they are a good thing or not, a good investment of time and money, or if they’re just a scheme, some sort of a pyramid scheme.

No, they’re not “some sort of a pyramid scheme”. They ARE a pyramid scheme. That’s just how it works. If you’re at the lowest level you’re going to have a hard time making any real money. You need to move up the ladder to do so, to recruit people. And the time comes when the market becomes fully saturated.

I wrote my BA-thesis in anthropology “Salesmen or Missionaries” on MLM companies, comparing them to NRM (New Religious Movements). The results were actually quite scary.

A morning "mass" - "It's a great gang that sells a Kirby". But at least they have a real product.

If you come across something where the focus is on selling you the system and all the benefits but the product seems almost irrelevant, you can be certain you will not make any money on it unless you are at the top of the chain. They’re not selling a product because there is no value in the product, they’re selling a program. That’s a pyramid scheme.

This is a classic, offering money, white beaches and fancy cars (images) but actually, no product.

The recession is a great time for MLM, because desperation drives many people to try it. It brings bunch of people into the lowest level who invests in the system and that’s what the top needs to survive. Both MLM and NRM target people that are vulnerable, people in difficulties, whether personal or financial. If the desperation is sufficient and paradise tempting enough, you can get people into anything. Just ask a suicide bomber.

My advice, after both participating in MLM and studying those systems academically, is just don't do it. Consider this: Even though you might be entering early enough and desperation be widespread meaning there’s a large market now, consider where the money comes from. Is it the value you create for the end customer, or by recruiting another level below you (read: exploiting others desperate for money). Invest your energy and money elsewhere and you are much more likely to succeed, no matter how tempting the MLM “paradise” may sound.

What's your experience?

Hjörtur

Comments

[Oppline]

The article fails to mention that businesses in general start out by failing. Most businesses will NOT last 5 years. Yet many of those who keep trying succeed.

The reason most people fail in ANY business is because they enter into business without first getting the necessary business skills.
The article also fails to mention that many succeed in MLM. Most new millionaires in recent times started out in MLM. Case in point is Ignite Inc. of Dallas Texas. It's growth is challanging that of Google's and they have had weekly payrolls of One Million Dollars.

MLM also offers minimal costs in starting a business and often with programs which offer residual income which is far better than that offered by the crippled Social Security program.

The article I am responding to advises that one should, "Invest your energy and money elsewhere and you are much more likely to succeed", is too ludicrous to comment upon as it offers no example businesses.

Oppline

[Anastasia Schuster]

Great article. Boy the MLM's are all over Twitter. When I'm followed I check the profile. Anyone that mentions getting rich or changing your LIFE or even have passionate videos that never mention the product...I don't follow. I'm tempted to actually Block them, but I feel that might be too rude.

There's a real fine line there between MLMs who don't really sell products vs. product companies that choose to market through home-based businesses.

As an example, just on the side I happen to sell www.SwissJustUSA.com products. I did it because I LOVE the products and my whole family uses them. I do not sell them to get others to sell under me and so on where someone at the bottom of the pile never makes anything. In fact, I don't have anyone under me. I just sell the products. I'd hate for companies like this to be dragged through the mud with the heavy hitting MLMs that do exactly what you're referring to.

It's even happening in my own industry of tourism. It's so frustrating to see people out there claiming to be travel agents when all they did was meet someone at Starbuck's who talked them into becoming a "referring agent" thereby getting them travel deals & the chance to make lots of money (cough, cough).

Real, qualified, experienced, trained & passionate travel agents have enough of a hard time conveying their value to the marketplace (thanks to the internet) and certainly don't need in-experienced "travel agents" out there who do damage to the reputation of agents as a whole.

Nothing replaces the value of a REAL travel agent.

And no - I'm not a travel agent - never have been. It's a VERY difficult job. But I know the value of travel agents and see what MLMs in this industry are doing.

Ok - I'm getting off my soap box. But just wanted to convey that I am 100% with you!

[Peter]

This article is totally ignorant. What about the MLM companies that have been going for years and are on the stock market?? Amway, Herballife?. Most of the established ones are increasing their turnover. So obviously product is moving, reps are moving product and getting paid for it.
For someone who has studied business this blog on MLM is badly researched and not based on fact. MLM works but not everyone works their MLM business. Same as other businesses.

[Authority Networker]

Internet network marketing is about people first not business plans or profits. Build people and people will build your business. You must be able to identify the needs and frustrations that your potential clients face. Then you should develop an attractive and personal business identity. This is the concept of attraction marketing, a new system where you develop ongoing relationships with clients by educating your buyers first and then moving them along the buying path in your communications. Making yourself an indispensable source of information can establish your credibility and identity as an authority networker and generate free, fresh MLM leads and paid signups MLM and build your downline fast.