Let’s dispel the mysteries of MLM and find out: What is MLM and what can it do for you?
Uncovering the myths of MLM (multi level marketing) can lead to the realization of your online business success. Want to know if you are you stalling your own success online by believing these ridiculous rumors? First, take a second and put it in perspective.
Everyone that is in multi level marketing, from the just-started entrepreneur to the self-made millionaire, has at one point heard about it for the first time. In case you haven’t noticed, there is a lot of misinformation about multi level marketing, direct sales, and network marketing out there. You are not alone in your search for answers about this controversial and unconventional business model.
Let’s get down to the brass tacks.
MLM is a long-standing business model that has proven itself profitable for generations
It stands apart from its peers because it has the unique ability to generate individuals their own income on their own timeline. And there are plenty of MLM superstars out there with impressive and inspiring success stories that have taken advantage of it. And here’s how:
MLM is the only business model whose sales force is compensated on their personal sales as well as the sales of their recruits. MLM, despite its success, doesn’t get the respect it deserves. Corporate culture as well as inquiring individuals are suspicious of its ability to generate and share its income, and somewhere along the way it has been preyed upon by illegal companies citing MLM as their own and earning MLM a bad name. Simply put, it has sparked controversy. I’ll discuss one by one the myths of MLM and what they mean for your business.
MLM is a business model
The first question I usually get from anyone hearing about MLM for the first time, after “What is MLM?” is, “Is it a pyramid scheme?” The short answer is NO. MLM is a business model, and a successful one at that. However, the long answer starts with asking this question: what do you believe a pyramid scheme is?
A pyramid scheme by definition is an ILLEGAL practice in which profit is only generated when a distributor recruits new distributors. In an illegal scheme, you only see commission from building a “downline” and products never make an appearance; money just changes hands. Legitimate MLM businesses do make profit from generating new recruits, but this is where the similarities end. There are multiple ways to make money through legitimate MLM businesses and here’s how it works.
- You buy product at the wholesale price and sell it at retail, pocketing the difference
- You make commission on each person you recruit
- You make commission on the sales your new recruits generate
How is this different than the illegal business model? People are buying products and you’re providing it to them. You are paid the commission from your “downline” of recruits because it’s you who has recruited them to sell and therefore you are making the company x amount of sales they would not have had without you. You are serving as their marketing plan, logistics officer, customer service representative, and saleswoman. You’re doing a job and getting paid for it on commission. It’s pretty simple.
The top earners are not the only earners
Another one of the many myths of multi level marketing is that the top earners in the company are the only ones that actually make any money. There is an unfounded belief that they’re “not like the rest of us”. This is silly. There is no hierarchy of distributors where those already making money will always make more money than you. Everyone is on an even playing field in MLM. That’s the beauty of it! Everyone has the same job: distributor of product. Top earners earn their salt and generate every sale just like you do. The only advantage they have is that they’ve been doing it so long, or so well, that people eventually just join them or order from them through word of mouth.
The point is that in MLM, everyone can be a top earner. There is no built-in-barrier.
MLM and the dream
MLM does NOT profit from selling people the dream instead of the products. Legitimate MLM businesses profit from a distributor recruiting more distributors TO SELL PRODUCT. Everyone who is a distributor is selling product. Just like the stigma that every MLM is a pyramid scheme, there is a stigma that every MLM doesn’t care about selling the products. I don’t even know how this would be possible in my business, since profits are entirely generated from recruiting new distributors to sell. The warning flag of an illegal scheme is that, as discussed earlier, money is just exchanging hands and no product is reaching customers. We are in direct sales, key word being Sales. This is a profession and, if used correctly, really can drive you to realize your dreams!
The big boom
Another of the many myths of multi level marketing is that they’re designed to fail through market saturation. The myth extends that all MLM businesses will eventually spread until the limits of their target market are reached and then there are just gads of distributors hanging out, not making any money. Here’s the news folks: the demand in supply and demand fluctuates. We know this. But this isn’t a design flaw, it’s just that–part of the design. Let’s take an example that is often used to describe market saturation and why it’s NOT a good example of MLM.
If one coffee shop opened in a small town, it would probably have a great revenue. And if ten coffee shops opened in the same small town, these stores would have little to no revenue. However, MLM isn’t hosted in a set place with a set market. It can operate online, nationally, and sometimes internationally. Customers don’t have to come to a building to buy it so your “hot market” is not people who already frequent coffee shops in your hometown, but instead anyone who can find your business online.
Your market is only limited to the methods of your communication and your efforts to send that message. So spread the word, and make your words count. Great content will garner you great results.
The door-to-door salesman
Direct sales garners images of door-to-door solicitation, vacuum cleaners and chocolate bars. Direct Sales is not synonymous with “desperate”. Some distributors still find success through party sales and strangers they meet on the street, and word of mouth will never be out of style; but direct sales has (like everything else) moved to the internet. Billions of people are linked to this pre-existing network. MLM nay-sayers will try to tell you that it’s stupid to assume the entire world is your market. So let’s be clear. All internet consumers are your market. Optimizing advertisement of your business online is so advanced from selling door to door it’s not even fair to compare them. It’s an enormous missed opportunity NOT to be using the internet.
Family and friends aren’t your target market
Sales is not a way to leech money from friends and family for things they don’t want or need. This negative belief comes from many MLM businesses that advise distributors in their first 90 days to solicit to family and friends before going out into the big wide somewhere. If your family and friends are excited about the products, then go for it! But if they’re not, don’t panic. For most in direct sales their family and friends are the “coldest” market they have. The hottest market is still the internet.
The reason your MLM company of choice has advised you to do this is not because they want you to fail, it’s because they want you to be excited and successful, and sales from family and friends who like and trust you will give you a sense of accomplishment. However, it’s not great advice because your target is not your lukewarm network, it’s the red hot web where millions of people are making inquiries every day, hour, and minute for problems YOU have the solution to. The possibilities aren’t just endless, they’re exciting!
Startup costs that don’t break the bank
If you’re in or are considering an MLM company that has high startup costs for initial signup, spendy first order demands, auto ship requirements forcing you to order every month, and hidden fees, you’re in the wrong company! You don’t have to go broke to start a business. I can’t speak for all MLM opportunities, but for mine you can order as much or as little as you want and sell it any legal way possible, even through boutiques and salons. In fact, you get ADDITIONAL savings in your first 90 days, not additional requirements to purchase. There is no reason you should spend more than you’re able and willing, and though there might be smart ways to order (for example, larger orders get you larger discounts) it is NOT a requirement. You’re free to run your business your way. Welcome to entrepreneurship in MLM!
Products and a career that works
Don’t let misinformation sour your taste for this opportunity. And don’t ever believe you can’t sell because you’re just not the “sales type”! Sales is for everyone, and becoming an online entrepreneur in MLM is for everyone with a dream, a drive, and that hunger to succeed. For anyone looking to improve their income, freedom, and flexibility a career in direct sales, MLM, and network marketing is made for you.