Have you ever been in a situation when one of your friend, neighbor, or a relative elaborate about imported shampoos, cosmetics or any product and pushed you to buy? Also, he or she hard-pressed you to join in a group to make huge amount of money in short duration by paying a token amount. If so, you are a victim of Multi Level Marketing.
Multi Level Marketing is a method of selling products or services by joining persons in a chain method systematically by building in a pyramid or hierarchical manner.
All your desire to join the group of multi level marketing starts simply “to get rich by making easy money in a short time”. MLM appeals even lucrative to those who are greedy. Typically, MLM marketers reach to the people who are jobless, undereducated, and poor. Or who wants to become rich quickly “in any which way”, and the victim is doomed if they have a wide network of friends.
How it starts ?
Mainly two types of people join multi level marketing schemes. First type wants to pursue it as full time job, taking it as their full time activity. Others enroll to the scheme to do in their free time as a part time activity.
People who are in the first type are generally poor, unemployed, and undereducated. They are mostly from villages, small towns without any proper exposure, as MLM companies also deliberately target this segments, as they are easy bait. They initially boost themselves that multi level marketing is a self-employment/ entrepreneurial opportunity to make easy money. However they don’t understand that Multi level marketing is a complex hierarchical system on which they have no control.
The other type people are working segment looking for other ways of income. They are deceived in different ways, by advertisements, by watching videos, by reading tutorials, by colorful catalogs, and even with interactive website with operational branches globally. Soon after the second type of people join MLM, they start looking every person they know as a potential prospect. Every moment is a potential selling opportunity. Capitalizing on some free time becomes full time investment on MLM. As a result, they start thinking about to take as a full time activity, leaving the current job and taking MLM full time desperately as the job is effected when they become poor performers by overly focusing on MLM activities. People get deeply involved counting on to exploit their relationships as the story continues.
Why it is a scam ?
Businesses exist to provide value to customers, distributors, employees, and to economy. Most of the multi level marketing companies does not make any significant contribution and starts with a sole purpose of making money. However, very less than 1% of all Multi level marketing distributors hardly ever make profits, mostly except the founder and a very few people who joined at the time of founding!
MLM marketers motivate with slick videotapes and pumping sessions periodically. They make to fully focus on making more people to join in your group. In addition, they will entertain you showing different people on videotape who got benefited by joining X Multi level marketing company. They dazzle you and say, they were like YOU at one point of time and they became rich and living luxury life after being part of MLM. Some times even you may meet a person whom the person over you worships, coming in a fancy car to give tips on how to do MLM. With all the sessions and drama, one will be pulled neck-deep into the Multi level marketing.
Almost in all pyramid schemes of multi level marketing the millions of top-level distributors, money is raised from new joinees at the bottom level. More than 90% of the money raised as sign-up fee for new joinees, training materials in form of CDs, cassettes, events and tutorials. Also, on aggregate models like shampoos and cosmetics free volunteers consuming add up to 50% of the total volume is generated.
Multi level marketing is identified as illegal in many countries as exploiting human relationships. Still many multi level marketing organizations exist without making any contribution to the society.
One of the rules mentioned by FTC on multi level marketing is that sales made by MLM firms from non-distributors should be more that 70%. However, most MLM firms said they get only 18% business from non-distributors, which implies that all MLM firms are illegal.
How people are exploited ?
In most cases, they buy the material provide by the MLM firms with a hope that they can make money in the near future. Soon they get to know that the sales they make becomes less than 5% of what they spend as an investment to do better sales.
With multi level marketing, many people are exploited, lost valuable time, deceived in order to create a long-term career. Multi level marketing created deep wounds and many people are exploited. Most of the people soon or later realize that it is not a career choice. When people eventually get out of multi level marketing they fully keep quiet. Even people around that person also keep quiet, as they know that he/she is a loser. This continues with thousands of people while the multi level marketers sell one success at the top since thousands of failures unseen.
Multi level marketing is a disease that reinforces the wrong beliefs about business. It is exploiting vulnerabilities in different socio-economic segments and creates deep wounds for people that take long while to recover from.
Avoid getting into Multi level marketing schemes. They are everywhere Amway, many insurance companies, health, and almost into every kind of category. If you are already involved, the sooner you realize the truth, the quicker you can reconcile in your life.
Reproduced with permission from Marketing Guru.