Multi Level Marketing or MLM for short has been around for so many years already. According to some sources, as early as the 1920’s there’s been a business model that uses this kind of strategy in promoting or selling products. Over the years, here in the Philippines, some MLM companies have sprouted and a lot have vanished into thin air. Some have claimed that they have earned a lot in this kind of business and some say that they only just lost their money in joining this kind of investment.
So, is MLM or Multi Level Marketing for you?
First of all let us understand what is Multi Level Marketing. It is a marketing strategy in which the members or the sales force is compensated with the products that they sell, and earn whenever their recruits also sell the products. These recruits are commonly called the down-lines. Selling of the products are done with the use of word of mouth, but, with the age of social media, it is also done using the social networks by members of the MLM business. Members also gets compensated when they recruit new members to join the business of selling a particular product. Common products that are being sold are health drinks, soaps, whitening solutions, prepaid load, etc. How do you earn from this? What we usually hear is you get discounts on the products that are exclusively available from the business. These MLM companies offer up to 70% discounts on the products that you would purchase and eventually sell to others at retail prices. The MLM companies also give premiums of compensates you whenever you recruit someone to join the company. And depending on the level of recruits, you get a certain percentage from the sales they have generated. Some MLM companies also have a scheme of building your network by placing your down-lines on a left and right group and get a bonus whenever you have paired one from your left and right group. And there are a lot of other means of earning when you join the company and purchase an initial package from them. A lot have criticized MLM companies for being a bogus business and sometimes labeled as a form of a scam. Some would even say that only the first ones to join are the ones who profit from the business just like in this diagram:
Some say it is just a trap!
It may be true that these accusations have been proven, but, sometimes it is also true that there are people even not the first one to join have profited from this kind of business and they have been doing it for years already. A lot have offered this kind of business and some of them are nowhere to be found now, or some have just quit doing it. There are still some who are doing it consistently and live up to what they have been doing: selling the products and recruiting. The way we see it, there are Multi Level Marketing companies that are legitimate and true to what they are selling and there are others who are just after the recruits and the signup fees to get revolving funds to compensate the recruiters. You could easily see which one is true and legitimate and the ones who just want you to recruit and recruit again for profit. Those who are legitimate and true to how MLM works usually have the following elements in their scheme:
- There is little or no enrollment fee.
- The company completely explains itself, its products, and its services before you sign-up.
- A member’s main source of income will come from selling or offering the company’s products and/or services.
- A member can make money at ANY level of the model without recruiting new members.
Also, we also believe that for an individual to prosper,you should be doing something for you to earn. So, if the MLM company promises that you will earn by doing nothing or letting your down-line do the work for you, the company is doing something fishy. Aside from the elements, here are some questions you might want to ask yourself before engaging in a MLM company:
- Are the products being offered sale-able and see myself using the products? – For example, the MLM company that offers prepaid load for mobile use or gaming. If you are a post-paid subscriber, definitely the products will be useless to you and you won’t have credibility in selling the product for you are not using it. So, if you see yourself using the products and services, and you can be confident that you can sell it, then you may want to consider joining the MLM company.
- Can I afford the joining fees or the initial product package? If the joining fees are too high, then forget about it! If it is a struggle for you to produce the joining fee, then what do you think others would also feel when they join you? As stated in the elements of a legitimate MLM, the enrollment or joining fee should be free or minimal. If the fees are that high, most probably the money you pay for would just be for the benefit of those up above.
- Am I ready to risk being labeled as a scammer? Sad but true… If you truly believe in the product or the company that you represent, being labeled doesn’t really matter to you now. With all the scams that involved MLM companies, you can never erase the stigma they have brought upon the MLM Businesses. This burden you will have to carry and prove others wrong.
- Do I have the right personality in this kind of business? Assess yourself. If you think, your personality doesn’t fit being in this kind of business wherein you have to be sociable and active, you better think twice or thrice.
- Am I ready to be turned down by my friends? The first ones to whom you will offer your products would be family members and friends. Because of the stigma produced by the shady MLM businesses, most people would initially reject you once they knew what you are offering is a Multi Level Marketing business.
If you have assessed yourself to be fit for this kind of business and you believe in the products to be useful and beneficial, go ahead, join and get involved in the Multi Level Marketing Business. But, if you feel that this business model is not suited for you, follow what you feel. Starting a business with doubts is not a good sign that you will succeed in this kind of venture.
So, is Multi Level Marketing Business really for you? Share your thoughts and if you have questions, we’ll be here to share our experiences… Successful ones and the not so profitable ones… Let’s learn from one another. And, a final thought about MLM… Not all Multi Level Marketing Businesses are scams. There are also success stories in this kind of business. You just have to be careful and very analytical on this kind of business, and do not rush things out by being fooled by the pictures of bundles of cash, expensive cars, cheques with huge amounts, etc.