Pyramid Schemes are Rad!

Posted by 20 July, 2008

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Before I get jumped on by my one reader, I am neither for or against multi-level marketing (MLM) companies or network marketing companies. I’m writing this article in response to the people that are the naysayers, but have little to no experience with MLM companies.

I have been involved with two different MLM companies. Both of them were services so there wasn’t any inventory to purchase. In my opinion, they are both reputable companies (one is on the NYSE, so at least it is financially reputable). I did find out that neither company was for my wife and me. The main reason: I felt extremely uncomfortable selling to family and friends and thus discontinued “educating” people on the products.

MLM companies do get a bad rap, but not without cause. In my opinion, there are a few companies that have had questionable selling techniques and even more questionable products, but there are also some MLM companies that I feel are legitimate. Here are a few things to take into consideration when deciding on a MLM company:

1. Are you interested in selling to your friends and family? A lot of them say you are not selling, you are educating or informing, but let’s call it what it is – sales.
2. What sort of turnover rate does the company have for it’s “distributors”?
3. Do you have to purchase inventory?
4. What are the startup costs? What are the monthly costs?
5. Are sales increasing or decreasing?
6. Are you providing a product or a service and what other competition is currently out there?
7. A lot of MLM companies sell “miracle” vitamins and the like. Ask “Where is the scientific proof that these magic pills provide benefits?” Let’s see the facts! Let’s see the medical studies!

I have a few friends that have done very well with MLM to the extent that they discarded their traditional day jobs. However, in spite of knowing successful MLMers I found out it was not for me. I tried two MLM companies based on the criteria set above. Both required little start up cost (I’m cheap, so that was huge!). Company #1 had its particular market cornered, while Company #2 provided a service that was cheaper than the other established companies in its market. However, Company #2 had that pesky problem of competition in a saturated market, whereas Company #1 did not. Company #1 actually provided a service that was not readily available to the public, which was a big draw for me since I could see the need for the service provided (and I actually use the service on a regular basis and has served me well). So you may be thinking, “Well, if Company #1 had a cornered market, provided a needed product and you actually believed in that product, what happened?” Demand. Just because I found the product to be valuable did not mean that those around me felt the same way. It’s easy to corner a market with a product few think they need.

Perhaps poor salesmanship is to blame for my MLM disenfranchisement, however I think that the real reason is my refusal to alienate my friends and family by pushing products and services in which they have no interest. Why some MLMers are able to do this and others (like me) can not, I have no clue. In fact, if you can shed some light on this question I would love to hear your thoughts.

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