You have probably asked the question, “What is an MLM opportunity?” At some point in your life, if you are looking to earn extra income, you have likely come across some MLMs. In this post, I’m going to discuss MLM opportunities, and why you should really investigate them further before you jump in.
The Definition of an MLM
What is an MLM opportunity? You have no doubt heard about MLMs, even if you don’t really know what one is. Some of the most well-known MLMs are Amway, Avon, MaryKay, Nuskin, and Herbalife.
MLM stands for Multi-Level Marketing. According to Wikipedia, “MLM is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company’s products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.”
The MLM Sales Strategy
In an MLM strategy, there are potentially two revenue streams: One from selling the products, and the other, getting a commission from sales of your “down line” people. Down Line people are those that you recruit to sell and to recruit more people. In other words, you get a sales commission from your own sales, but you also get a commission from the sales of the people you recruit. The commissions get higher and higher as you get more levels below you.
Often, down-line people are required to buy large quantities of expensive inventory to start their MLM business. And often, periodically, they are required to buy a certain quantity or dollar amount of product to keep their MLM status active.
You Have To Buy Inventory
I know that one of the MLMs I was involved in required an initial purchase of $600 wholesale worth of stuff, with a $250 wholesale purchase every quarter. If you missed the mark on a quarter, your next quarter purchase was at full retail price. So, you absolutely could not afford to let sales drop at any time.
As a result, I was stuck with hundreds of dollars of unsold inventory, and I was broke, And I couldn’t EBay the stuff, or sell it on Craigslist, because the MLM had rules against that.
How To Spot an MLM
- If there are down-line people, it’s an MLM
- If you are told that you will earn a larger percent commission than your down-line people, you might be in an MLM
- If there is more emphasis on recruiting people than there is on selling the product, it’s likely an MLM.
People Fail At MLMs
“According to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission’s website, at least 99% of people who join MLM companies lose money.”, according to Wikipedia
Here are some reasons why people fail at MLMs:
- MLMs are often sold as get-rich-quick schemes. When people don’t get rich right away, they quit.
- People don’t realize when they take on a MLM business, that there is a lot of work involved.
- There is a cult mentality. It feels like you need to drink the Koolaid, and if you don’t take part in the Koolaid, you become a social pariah.
- Some people just aren’t made to be a salesman. Not everyone can do it with effectiveness.
- People don’t want to bother their friends and family with a sales pitch all the time.
- There is a high rejection rate from your prospects. Some people have a hard time being told “no” over and over again.
- Only the guy at the top makes the money. The person at the bottom does the hard work, but the people at the top reap the benefits from the work of the down-line people.
MLMs Work For A Few People
If you understand that you will be putting out a substantial amount of money, and a huge block of time and work, then you can make an MLM opportunity work for you. You must be a born salesperson, who can sell “ice cubes to the Eskimos”. You must be willing to push the line of friendship with your neighbors and family, to the point of being annoying. And you must be ruthless with your sales pitch, recruiting people who you know can’t afford to lose money, as 99% of people who start an MLM business do so. It takes being somewhat of a fake person to do MLM sales. If you can do that, then you would be perfect recruit.
My Own Experience With MLMs
As a young adult still living at home with my parents, I was pushed to join the MLMs my parents were always involved in. They were heavy into Amway. They sold solar panels for Jesus. They got involved with a term life insurance outfit. Those were just a few that I remember. And even after I was on my own, I got involved in a large makeup and skin care conglomerate MLM which shall remain nameless here.
Funny story: I was kind of on my own as a consultant of said MLM, because I lived in such a rural area, and my up-line person lived 3000 miles away. So most of my training had been over the phone. There came time to go to a conference of said MLM consultants.
I was told it was a “consultant dress” affair. Consultant dress for me was just to dress nicer than jeans and t shirts, because where I lived, I visited ranches out in the mud and snow. Anyway, when I went to the meeting, I wore a nice pink paisley skirt with a white blouse and dressy demin jacket. But everyone else was in a black skirt and jacket, a suit!
I never felt so out of place in my life. No one spoke to me! It was the strangest feeling. Not only that, but the meetings were all about praising the founder of the company, eating her sugar cookies and touching her dress as she passed by. It all screamed CULT!
I didn’t stay in for long. I was left with a boat load of product, and because consultants have to pay for all the sales materials, samples, and consultant tools, I was stuck with that too.
Wealthy Affiliate is NOT an MLM
Wealthy Affiliate is a small business platform, where you are taught how to get a business website up and running, but you are also given the opportunity to promote Wealthy Affiliate’s product. You do receive a commission for every person who purchases a membership through your influence. However, this is not a tier system. If you sell a membership to me, you receive a commission. If I then go and sell a membership, I get a commission, but you do not. You get commission for those you convert, and I get a commission for those I convert. If I were to leave Wealthy Affiliate, but the people I recruited stayed, nobody would get a commission from my sales. Those sales would go back into the company.
After reading this, if you still feel that an MLM opportunity is right for you, then go for it. However, there are better ways to invest your start-up money, and definitely better ways to make extra money for retirement and grandchildren. And please don’t fall for the get-rich-quick angle of the MLM. Like every other job you could do, it takes work and sacrifice. Put your money and skills to a better, more worthy cause. Join Wealthy Affiliate!