An ideal get-rich-quick pyramid scheme is a trap, with a pressure of recruiting your own people, the so-called “legs” and achieving target sales points. Thousands of media articles, platforms, videos giving criticism and backlash to it. But, how come it still exists today?
What is Multilevel Marketing (MLM)?
MLM, direct selling, pyramid scheme, or network marketing is a form of business that finds individuals that he or she needs to reach financial independence by joining a company. Most MLM companies operate privately and aren’t well known to consumers since their products do not appear in public stores or malls. Doing MLM doesn’t let you come to the office, but still doing well at home and assisting yourself with a laptop and a phone to contact your uplines and downlines.
The key of direct selling is “word-of-mouth” (WOM). WOM in Marketing is the “old but gold” advertising tactic that contains pure and genuine review towards products or services that he/she has used. Probably, in MLM, the nature of WOM would be fabricated by promoting products as brilliant, expensive but worth every penny, even if they would take comparisons of MLM products to others in the market and use any approach to prove their products are trustworthy to use.
How Does MLM Work?
I would say the one whole network of MLM is gigantic, and it’s barely possible to know the highest leader in the game. Basically, once you are hired by a salesperson and join the corporation and pay the entrance/member fee, then your mission is to employ your “legs”. By doing this, you will be paid by hiring your legs by the organization, and they would be salespeople and hire theirs. It’s a lifeblood of MLM existence.
In addition, to earn more money, MLM produces their own products, the major are household, beauty, hair treatments, daily routine products that are easily accessible to people’s life. They are expensive, literally; but, when you’re a salesperson purchasing them, you would be discounted around 20-30% compared to retail prices (i.e. Amway deducts 30% for their IBOs). Having said that, salespeople usually make efforts to promote their products to their family, relatives, friends, even other communities they participate in.
Therefore, making sales and recruiting help salespeople earn money. The top tier in the network would earn the most. (Hayes, 2021)
This is the most boring and annoying part of joining MLM. Most of the meetings with uplines are welcoming new legs and introducing them to the company and the structure. Also, highlighting achievements of the organization creates credibility to new legs at the beginning, as they could be skeptical and have not known much about the company they join. Some people I met joined this and saw their reactions were too unrealistic and sometimes, brainwashed.
Some meetings you will meet other uplines and tell their motivational story in this journey. Most of them express pride and happiness in MLM business. They would bring some backlashes criticizing them and proving their own way is that they are always right and becoming an independent business owner in MLM is a right decision.
This is the most frustrating aspect of joining MLM. You’d hear your uplines say that this kind of business is profitable, helping you out of the rat-race of job security, and you’ll soon reach financial independence if you work hard on it, etc. Sounds intriguing; but clearly, it’s about making efforts to recruit, to make sales and repeat it over and over. I’d say recruiting is difficult as you need to find any suitable candidate in a broad network, reach out to them, invite them to your business structures, and keep track of their process on and on. Some people earn a lot of money and some find it difficult and even lose theirs, how tragic!
Why Are MLMs Still Alive Now?
Until this point, you’d find out the real face of this immoral business. However, MLM still has chances to thread away some areas. Fair Trade Commission (FTC) is a bipartisan federal agency with a dual mission to protect consumers and promote competition (Federal Trade Commission). Based on FTC regulations, an example of MLM companies like Amway still thread away some of the regulations and keep working on its organization. A specific circumstance was distributors are required to buy back their downlines unused products if they choose to quit. Since then, Amway is known for the role model leading the game, and other companies follow to keep them alive. (Bond, 2021)
MLM is a total propaganda system of fabricating its own world of making wealth, without morality. Getting to know its operation helped me to avoid and warn other people to be aware of and make wealth with integrity.