Multi-Level Marketing – A Business Model with a Problem

Love it or hate it, Robert Kiyosaki, famous for his “Rich Dad” brand series of books and Mark Victor Hansen, who for more than 30 years has helped people reshape their personal vision of what’s possible, both extol the virtues of Multi-Level Marketing (MLM) and network marketing, and for good reason – they have made millions from it.

So why is it that so many people shy away from this business model?

What’s the problem with MLM and network marketing?

I remember many years ago the words “pyramid scheme” was on everyone’s lips.  The press had a field day with it and the words “pyramid structure” still carries a certain amount of stigma.

But really that makes no sense at all. If you look at any commission-based business you will see that they are all pyramids! The VP is at the apex, below him are his sales directors who make less than he does, and below them are the sales managers, and so on, just like any “normal” business.

Perhaps it’s the initial reaction to the sign-up fee asked by some MLM companies? Have you ever investigated the franchising fees of say, McDonald’s or UPS? The sign-up fees involved with any MLM program are peanuts compared to those.

Of course you could also use Bernie Madoff and his ponzi scheme as an example of a pyramid scheme, but Madoff took peoples’ money and gave nothing in return. There are actually hundreds of bona fide, everyday companies that have sold millions of dollars worth of product via MLM. Some good examples are Amway, Melaleuca, Vemma and USANA, some of which are not even recognized as having such a structure. These companies consistently deliver excellent products and services to happy customers, via commissioned salespeople, who have area managers and district managers, all the way up the line to the top of the pyramid.

So why the bad rap?

The major problem is not MLM per se, it is after all just a business model, and a good business model too. The problems that have given Multi Level Marketing a bad rap are some unscrupulous people who have started these businesses. Their objective – just like Bernie Madoff – was to create an illusion of a prosperous business and a good product, and then sucker the underlying pyramid foundation of customers into believing that they would get something of value.

MLM is, by its very nature open to:

  • Those who have not done well in their chosen business or profession
  • Those who have little investment capital
  • Those who know little or nothing about running a successful business
  • They have no sales experience
  • They don’t know anything about cultivating business relationships
  • They feel they are not earning enough
  • They have the “get rich quick” mentality

Any of these points isn’t a bad thing in itself, but unfortunately there are a number of network marketers that fall under these headings and their problem is that they never do anything to improve themselves!

So consequently a lot of network marketers:

  • over-sell and ‘turn off’ prospective customers
  • discuss business in all the wrong places – social events etc.,
  • are so bad at what they do they always sound desperate for a sale
  • they neglect the few existing customers they have to focus on new recruits
  • they give a hyped-up version of their business and stray from the truth

These people are the reason Multi Level Marketing can have a bad name. It’s certainly not the majority, because with all the above bad practices, these people do not and cannot stay in the MLM business long. They are the bad apples that give the rest of the good, honest MLM’ers a bad reputation.

So what’s the solution?

If you have decided that you want to give MLM or network marketing a try, there is one fundamental thing you should understand straight away. This is a business and it is YOUR business.  You need knowledge and the right attitude.

If you’ve never been in sales – learn how to sell from the experts

If you have never networked before – learn from the experts

If you are serious about building your own business, welcome to a world of extremely long hours and hard work. You are about to undergo a two-year college course in a few weeks!

Learn from the MLM experts. Learn from the network marketing experts. Read books about different marketing techniques, join local groups, attend all your company’s weekly and monthly meetings, get on mailing lists and learn.

As a successful small business owner you will soon earn the respect you deserve for all your hard work.

Gabriele Cramer-Knebel
Network Marketing Made E-Z!

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3 Responses to Multi-Level Marketing – A Business Model with a Problem

  1. Donna says:

    Indeed a great article to read. Gabriele thanks for sharing it here. Your blog enlightens the online marketers that MLM is not all about spamming and indeed you can gain various benefits from it when being used wisely. Allowing MLM into our business could give us the chance to know the benefits we can get through it.
    Donna recently posted…Never Give Up on a DreamMy Profile

  2. Mark Brown says:

    Hi Gabriel,

    Thank you for spreading the word on the most reliable business for anyone who is willing to be productive and attain whatever they would like to have based on their motivation drive and desire.

    One of the biggest benefits I have realized is the great connection with like minded people like yourself who actually want other to succeed.

    Breathe, Believe, and Receive
    Mark Brown
    Mark Brown recently posted…How Does Video Marketing Help YouMy Profile

  3. Kim Clark says:

    Excellent article Gabriele. Muli-Level Marketing is the best way to build an ongoing monthly residual income. As you pointed out some people market the wrong way and turn people off from MLM. However, when trained to market the right way entrepreneurs can earn a good living with MLM.

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