Does Multi-Level Marketing Equal Scam?

DOES MLM = SCAM?

by: Cary Christian

When you think of Multi Level Marketing (“MLM”) do you automatically think of scams? It’s hard not to since most scam businesses on the Internet use an MLM structure. The MLM structure provides the greatest benefit possible to the promoters and the people they bring in on the very top levels, which is why it is chosen so frequently by those out to make a quick killing.

In my opinion almost all MLM programs offer much more than they can ever deliver, and I’ve never found one I like. And believe me when I tell you I have searched high and low to find a decent MLM program.

Is it simply impossible for an MLM structure to work? No. Are all MLM programs scams? No. You might be surprised at those answers given what I just said above. But it’s not the MLM structure that does not work, even given the inevitable numerical impossibilities you eventually run into. It’s the way the majority of MLM programs are put together by the promoters.

I think there are five major problems with most MLM programs:

1. There isn’t enough money in the upper levels of the downline. People have to build too deep to earn any money and they ultimately drop out when they do not. This hurts you because you’ve wasted your money and your marketing resources on a failing effort, but it also hurts the people above since they are constantly having to recruit to keep pace with the attrition in their downlines.

2. Most MLM programs do not market a product, OR do not market a product that breaks out of the business opportunity market. If you assume there are 10 million biz op seekers online (pick any number you like, it really doesn’t matter), you’re only out there selling to each other. It’s an inefficient market where every potential buyer is also a potential seller. MLM needs to sell outside this market to create real profit opportunity.

3. Many sell one-shot products rather than consumables which limits the opportunities for profiting from real business activities. The MLM structure should be secondary. It should offer an incentive to outstanding recruiters, but the ability to profit by selling product must be the primary focus of the program.

4. There should be two separate and distinct opportunities to profit, the first being selling product, the second, recruiting. Most MLM programs combine the two. Take Amway and Tupperware for example. Not everybody wants to SELL Amway and Tupperware products. The market for people who might want to BUY those products is much larger. An MLM program cheats itself by not separating these functions and concentrating on them as two separate lines of business.

5. As discussed earlier, MLM has earned a bad name because of all the scams associated with this type of structure. This makes it more difficult to recruit a downline and even more difficult to sell products.

I believe the time is coming where we will see a successful MLM business built online that will break the mold and show others how it should be done. There are several opportunities available today that have a shot at this but they are still selling product and recruiting as one function rather than two and there still isn’t enough profit in the higher levels of the structure. As a result, it is still only the early birds that are getting fed.

If you’re thinking of participating in an MLM opportunity, consider the above factors in making your evaluation. It might save you a lot of time and money!

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