Spotting an MLM (Multi Level Marketing) companyPosted: November 10, 2009 | |
I meet people involved with MLM (Multi Level Martketing) all over the world. The products and organisations they are involved with vary from high end hoovers to telecoms to training.
The one thing that is the same is they all claim two things.
1. They are going to be rich.
2. They have the ability to bring you in and make you also rich.
Nothing could be further from the truth (in most case’s). The first thing someone involved in MLM will tell you is ‘this is not MLM’ and they will usually tell you it in a defensive way !’
Here is how MLM works…. in nutshell it looks a bit like a massive pyramid, of course its not a pyramid scheme because they are illegal, its MLM (see what I’m getting at here).
Gerry CEO sets up a company selling a product, could be anything at all, a hoover, a tv or something else. Gerry decides that rather than employing staff he is going to empower a bunch of people to sell it for him on commission only.
So Gerry now has 5 people selling his company and giving him, say 80% of the sale total, now Gerry decides that 5 people is not enough to sell his product but he doesnt have enough time to train more people so he instructs his original 5 people to go out and become managers or VP’s as the Americans will call them, they will each get 5 people each and get a cut of the money when its on his way to Gerry.
The company now looks like this
1 x Gerry
5 x VP’s
25 Sales Reps
But 25 reps still is not enough to cover the states so, its time to go again, time to recruit again
1 x Gerry
5 x VP’s
25 Sales Reps (now trainee VP’s)
125 Sales Reps
1 x Gerry
5 x VP’s (now mega VP’s)
25 Sales Reps (now trainee VP’s) (Now VP’s)
125 Sales Reps (now trainee VP’s)
625 Sales Reps
I won’t continue with the math lesson but you get the point, the company will continue to multiply weekly by 5 times (unsustainable some might say) now there is nothing wrong with this level of growth or company structure the issue for me comes in the way these companies continue to market themselves. They will tell you that you can move to VP quickly by recruiting and that you will be a millionaire within two year. Great SIGN ME UP !! OK so take off the rose coloured glasses and look closer, how can the money split that many times and make you rich ? Why is the company you are working for more interested in recruiting more people than the actual product.
The keys things to look out for in spotting an MLM company.
1. There is no salary.
2. There might be a sign up fee for training.
3. There is more focus put on recruiting than selling the actual product.
4. They will make you rich and you will be a VP soon.
5. Bob from Stafford made £2 million last year ! (ever met him?)
I’m not saying MLM is bad or wrong I just think that people should go into it for the right reasons and know what they can expect to achieve. On the bottom level if you are happy with the commission then by all means its a good idea to go for it, just don’t be expecting to make millions at it, unless of course you are on the first 2 or 3 levels in which case I hear there are good deals on Lambos at present !
If you are going to do an MLM always do MLM part time to start, never give up your job !
Here are a few MLM based companies where the product they are selling is good, however whilst you will make ok money at the base level, don’t believe any of the nonsence about making it rich quick.
Victoria Jackson cosmetics, £3 per sale
Kirby Hoovers, £300 – £600 per sale but you will have to work 80 hours a week
Any telecoms partners will pay you between £10 and £20 per sign up.
I am currently doing some further research on the following companies and will post seperate posts regarding them, 5linx, ilearning global, billion dollar benefit and Genistar.