Disclaimer: This is purely information that I am presenting that I have seen in the past. While this may not apply to all MLMs, it is important to understand how the other side of MLMs works.
Imagine this scenario. You are enjoying your day, minding your own business when you end up getting a phone call from a friend, perhaps a family member that you haven’t heard from in a long time. He asks you if you would like to meet up for lunch and you agree. As you are catching up with your friend, he begins to talk about a business opportunity that you might be a good fit for.
They explain that they have been working for a business for the past few years, and claim that this business has been changing people’s lives for the better. They mention that it has changed their life as well. They tell you things such as
Be your own boss
Earn six to seven figures
Become financially free
While this all sounds great at first, you get this feeling that something doesn’t feel quite right. They invite you to an event of some sort, and you decide to go to check it out. You go to the event and see that there is a sudden positive energy in it. A speaker comes to the stage, talking about things such as financial freedom, and earning six to seven figures while also throwing out words of motivation.
The speaker then starts talking about how the company has been changing lives. As the speaker keeps going, those words keep popping up.
Financial Freedom
Be your own boss
Six to seven-figure earners
Passive income
Then they finally mention that the company sells a product. This can range from beauty products to financial products, etc. There is one thing that these companies have in common. They have a product, and the only ones that can sell it are their distributors and coaches. Anytime that you make a sale, you get a commission. You tell your friend that you think about it, but you can’t help but feel that something is still off.
After taking some time to think about it, and doing research on the company, seeing how it has been changing people’s lives, you message your friend/family member telling them that you are interested in joining.
One thing to keep in mind, when a pyramid scheme or a cult is presented to you, It will not present itself as such, but rather come wrapped in a package with a bow tie, disguised as a million-dollar opportunity. When it presents itself, it will not present itself as a stranger, but dressed as your family, or friends. It will come disguised as everything that you have ever wanted.
What is an MLM?
To give an idea, Multi-Level Marketing is a business model where a company sells products or services through a network of distributors. It’s structured through many levels, which is often described as a pyramid.
What happens is when a person recruits another person, they become your downline. Every time that person gets a downline or recruits another person, you also get a commission from them as well.
What makes MLMs so attractive?
There is a reason why these are so popular in the first place. Most of these companies promise you that you will be able to become your own boss. Perhaps you have a boss that treats you like crap all of the time. If you think about it, most people are trying to leave the rat race and do their own thing. So if you are willing to put in the work to become your own boss, why would that not be attractive?
Financial Freedom
This is another thing that MLMs will promote heavily. The ability to have financial freedom. Wouldn’t you want to be able to have financial freedom? No longer having to worry about paying your bills, being able to travel without having to worry if you can afford it.
Flexibility
Let's be honest here. If you could work whenever you wanted, wouldn't you want to take that opportunity? To be able to catch up on sleep, and not worry about oversleeping. To not have to worry about having to commute to work again. At this point, I think everyone hates having to deal with traffic on the way
While this may be too good to be true, it is still important to treat it with caution. This quote sums it up perfectly.
"In MLM, you're trained to believe... that you can't achieve real success without them, and... you can't trust those who disagree.”- Jon M. Taylor
Many times in the past, MLMs have been labeled as cults. Now, it can be hard to understand how this would be the case, it's when you start paying attention to the signs is when you realize it.
Having charismatic leaders
While this is not a sure sign at first, if you pay attention to their motivational speakers, and coaches, you will notice that they can convince people to join them effortlessly. That and they can motivate their followers to work harder, set higher goals for themselves, and so forth.
Recruitment Focus
MLMs often focus more on recruiting than promoting the product itself. While recruiting is not a bad thing, however, if it's the only thing that it focuses on rather than the product, then it's a possibility that there is more going on.
Herd mentality mindset
As you start participating more, you will see that you will find others who are developing the same mindset. They are full of hope and inspired, and often follow the company’s values and vision without questioning it.
So what’s the problem then? What is it that can make MLMs questionable? There are a few things to look out for.
Very expensive costs to start
Getting into an MLM is not free. Most of the time they will require a fee to get you started. Not just for the products, but for the recruitment materials as well. I’ve seen where the lowest is $99 to get your products and recruitment materials, to up to $300. Though I wouldn’t be surprised if there was a higher price than that.
The structure of the MLM
Remember how I mentioned that MLMs can often lean more on recruitment rather than the product itself? This is something that needs to be understood. When you recruit people into a MLM, most times you will get a commission and create a downline. Take the photo for example.
When you first start recruiting, it will be small at first, but when those you recruited start recruiting people, it starts forming a pyramid. While this is not the case for every company, it can end up forming a pyramid scheme.
So what would cause a person to not want to leave? If the evidence is there, why would the person choose to stay? Well, there are a few reasons.
Arguments if it’s a legitimate business opportunity.
There is often a lot of skepticism when it comes to this. Though to be fair, wouldn’t you also be skeptical at first if a business was offering you a job to create your own income as high as six figures? While most would be willing to jump in, others would think that it was a scam, because we all heard the phrase “Too good to be true”
Claims that people have achieved financial success
This is where it can get tricky. Those who have been in this kind of company for a long time will claim that they had lots of success when it comes to promoting their product. To make it more believable, they will show how much they have earned during the time that they have been active with that business.
Emotional Investment
If you have made friends within that company, chances are that you would not want to leave. Especially when you have all developed the same mindset. There is also the fear that once they know you are leaving, they want nothing to do with you. They believe you are giving up and not working hard enough.
Lack of awareness
While this is not the case with everyone, there may be times that the person refuses to leave because they are not aware of alternative business opportunities. They stay because they don't know what else to do.
So what is the best way that this can be addressed? There are a few ways.
Providing information about the MLM business model and the risks involved.
While this may seem like wishful thinking, in reality, this would help out when it comes to determining if the person wants to continue pursuing being in that company. Help them understand the risks so they can choose what they want to do next.
Learning how to diversify
One thing that needs to be stated is never to put all your eggs in one basket. It’s important to diversify your income sources in case you end up losing one source of income. That way you don’t get hit as bad, and you will be able to manage to pay your bills, groceries, etc.
Encouraging Participants to focus on products more than recruiting
If you have used the product for a certain amount of time without complaint and enjoy the product, it would be best to mention it to the participants to promote the product more than the recruiting process. While there have been laws to prevent MLMs from making recruitment their top priority, there are still companies that still mostly do only recruiting.
Any time that you decide to join an MLM, always make sure that you do your research before you go in. That information could save you a lot of heartache and headaches in the end.