MLM-Unlimited Potential With Controversy

The Payment System:

MLM uses multi-tier payment systems that distribute commissions into a hierarchical referral network of sign-ups and sub-partners.

Sales Rep "A" signs up with an MLM program. "A" earns 1st tier commissions on sales of the MLM product/service. 

"A" recruits other sales reps ("B", "C", etc.) to sign up for the same MLM program. All future sales & recruiting by new Sales Reps "B" and "C" result in additional, lower 2nd tier commissions for "A".

Snowballing, this system rewards a chain of hierarchical Sales Reps who may or may not know of each others' existence, yet generate income for the higher level signup.

What makes MLM controversial?

Reason #1:

The strength of MLM is the power of multiplication through word of mouth (WOM). The weakness of Multi Level Marketing is that same WOM advertising.

MLM companies can't TOTALLY control its associated sales force. As a result, zealous reps sometimes over state the MLM's sales plan, with implied promises of quick, easy, wealth.

Combined with the fact that MLM is easier to describe than to do, over selling opens the door for criticism.

When someone is promised wealth without work, they're going to be angry when it doesn’t happen. This is why the scam accusation is leveled at MLM with such hatred. However, victims of inflated MLM claims must also share some blame.

Veteran police from the bunko (con) squad say, the only person that can be conned is the person who's looking for something for nothing.

MLM looks easy. Truth is... It's not. Success in MLM requires the same vision, time, effort, creativity, dedication, training, entrepreneurship, as any profession.

If it were easy as falling off a log, everybody would do it. What makes a MLM home based business attractive is very little start up money is required compared to enormous profit potential.

When the opportunity and the challenges are explained correctly, no one should feel deceived or scammed.

What is needed in the MLM industry is serious education to weed out those who in their zeal tell lies, and promote false expectations.

Reason #2:

The multi-tier payment structure is the both blessing and curse of Multi Level Marketing. The payment plan is so potentially lucrative that many MLM sales reps concentrate only on recruiting sales reps into their 'organization'.

As a result many people in the MLM industry end up in the NFL Club: No Friends Left.

In their zeal to get recruits they use what is called the '3' foot rule. Every warm body within '3' feet is a potential recruit.

The problem is, every warm body within 3' can smell the greed on their breath.

The key to success in MLM is to treat it like a regular brick and mortar business. Concentrate on sales of the product/service. ONLY when that model is successful does it make sense to seek recruits.

Why? Because when an MLM business owner is making money she's not desperate for recruits. Oddly enough, that's when recruiting just seems to happen, naturally.

Finally, MLM is controversial because of unfavorable comparisons to illegal pyramid schemes.

Pyramid Schemes are so named because because victims put money into an upside down funnel. Each level has fewer people, till only one is left at the top of the pyramid. Everybody loses except the top one or two levels.

Pyramid schemes used to be easy to spot. If no product or service was purchased it was a pyramid type scam. Astute crooks have added product/service elements to their schemes, making it more difficult for even government regulators to legally discern the difference.

A general rule of thumb is the perceived value of the product/service. If the value of the product/service is perceived as low by too many people, its probably a pyramid. Perceived value, like beauty, is obviously in the eye of the beholder.

Later, in this report you'll find some recommended MLM Companies. As a general rule, older established companies have many times proven in the court of law they are not pyramids.

For more information about the difference between Multi Level Marketing and pyramid schemes visit this U.S. Security and Exchange Commission Website.

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