Primerica. Mary-Kay. Herbalife. It-Works. Wake Up Now. All these are the names of ‘companies’ that use a network marketing or multi-level marketing (MLM) structure. Multi-level marketing is a strategy (or ‘scheme’ as I like to call it) that allows a sales person to make money not only on the product they sell but also off the sales of people they recruit to sell. Sounds simple enough right? And sounds like a great way to earn some extra income on the side right? Wrong.
Cue The Rant!
The scary cult like following these companies have is enough of a red flag for me to say no thank you. Have you ever talked to anyone selling Primerica? You’d think Jesus himself gave it to them to sell. That’s how much they believe in it. It’s like watching a pastor sell you on religion.
I’m weary of businesses that have all these awesome amazing ways to make money but never tell you what you are doing or give you any details up front. Have you ever seen those videos where there people describe this company but they are vague and leave you with more questions than answers? They do that for a reason.
There are four inherent things wrong with these MLM “businesses”.
1. Too many people selling the same product; market saturation.
The first thing people who sell these products say when you mention the common sense argument of, “Hey so if I join you and then get 3 other people to join me, aren’t we over saturating the market?” i.e. flooding the market with the same product and signing up people to sell the same stuff we sell? You are basically creating your own competition.
They’ll respond with something like “Not everyone will succeed, and so the market will never saturate.”
Well what are you really doing then? They say they are recruiting “winners” to build a real business.
But that’s not true. What they really are doing is planning by design to profit off of “losers” who buy into your confidence.
No one in the business world takes network marketers seriously when they talk about the infinite market need for their product or services. Economics doesn’t work like that. It’s all about supply and demand. No matter how you paint it, you are creating an unsustainable business.
2. The way it’s organized; it’s essentially an enhanced pyramid.
This usually gets anyone who sells this stuff riled up. Because of the negative connotations of pyramid schemes they like to completely differentiate themselves from those. Even though they are basically a type of pyramid scheme. Think of the hook they sell you on. But it’s really not about selling the product. It’s about selling others “the dream”.
Where’s the money coming from from those at the top? From the sucker from the bottom. As in every pyramid scheme.
3. The morality and greed factor.
Ethically if you look at what these businesses are doing you’d realize they’re wrong. When they try to sell you body wraps or term life insurance, they aren’t looking out for you. They are trying to make money off of you. They want something. They play to your greedy side, selling you how easy it is to make money with the company.
These company models make the bulk of their money from distributors– not from selling product. And that makes it a pyramid.
People can make money in an MLM. The moral issue is: Where is the money coming from? Selling product? Then why not sell the same product in the “real world”?
Because everyone knows that the real incentive is the pyramid aspect, and the product is just the excuse to make it legal.
-Exploiting your friends and family and straining your relationships.
They call your friends and family ‘the warm market’ because you have a built in relationship with them. And these are always the first ones they suggest you sell to because they’ll be more likely to buy into it.
Family and friends should be treated like what they are. Family and friends. Not as marks for exploitation.
The bottom line is that these “business in a box” opportunities you guys are pushing are nothing but poorly disguised pyramid schemes.
You don’t have a brand and you are not an entrepreneur. You’re simply a minion of someone else’s. So don’t walk up to me and try to sell me the dream. I’m living mine as a real entrepreneur.
That’s it for this week. Don’t forget to cue the Sir Charles.