I don't know about you but I haven't had the best experiences with MLMs and Network Marketing Opportunities. Now let me make it clear, I'm not a HATER! Don't let the title fool you. In my opinion there are way too many people that bash MLMs, Network Marketing, Affiliate Marketing and some home based business just because they couldn't make money with it. I don't sip on that "Hator-Aid". I think that's some old simple Simon stuff when people do that. It distorts reality and makes it hard to determine what's legit when you have people whining online because of their own shortcomings or because they can.
So to be clear I'm not one of those folks! But as someone that has dabbled and researched some MLM and Network Marketing opportunities I've noticed a few legitimate gripes against this industry. So let's explore and discuss them together later in this article. My hope is to actually discover legitimate companies that address these gripes in the proper way. Because honestly I would love to find a great home business that I could promote without feeling dirty or brainwashed.
Before we do that, we need to define Multilevel Marketing (MLM) aka Network Marketing. In a nutshell it's when you earn a commission for selling a product and you also earn a commission when someone you recruit into a company sells products as well. You can probably lump most home based business opportunities into this definition as well.
Hopefully that helps you understand what we're talking about. Okay, let's get into the reasons folks think MLMs suck.
1. The Reps, Agents, Brokers, etc.
I've come up with some rep types. It's not a complete list but it's probably covers a lot of reps you may have run into or you're guilty of being (Sorry in advance.).
– Fart Reps:
They come on really strong at the beginning, it's almost obnoxious. They answer all your emails or phone calls. But then once you're signed up and they have earned their commission, they slowly vanish into the air just leaving remnants of their presence.
– Stevie Wonder Reps.
Have you ever seen a horse that has blinders on. It literally covers their peripheral vision. They can only see in front of them and where the rider leads them. Well there are some reps that are just like this. They'll only paint a sweet picture of their company. They won't tell you any of the bad stuff as if good companies don't have any cons or annoying things. They literally want to keep you blind so you don't actually do your research.
– Squirrel Reps
These guys are literally nutty about their company. They scurry around the web or offline telling everyone how great their company is. But if you dare pose questions about certain practices, the product or legitimacy of their company, they go nuts on you! They might chatter off at the mouth with profanity, name calling and attack your work ethic or intelligence. I've run into quite a few people like this when I've written reviews on Ameriplan & ZeekRewards.
– Sarah Palin Reps
These reps go rogue and pretty much play by their own rules. They don't stick to the script or policies. They may engage in activities or practices that aren't sanctioned by their parent company to recruit other reps or to make sales. These reps are far more dangerous than "Stevie Wonder" reps because they'll flat out lie to you rather than keep certain information from your view. These types of reps can actually cause a parent company to go down or be fined.
– Similac Reps
These reps breath smell of Similac and they're wet behind the ears. They are the baby reps. They're new to the company and they're trying to recruit anyone and everyone under them. The problem is they haven't been successful on their own and they're depending on recruiting you to make their first commission. Or in my case, they want me to join under them because they know thousands of people trust my judgement and will usually join what I recommend. Either way, these reps have it wrong. They don't understand that folks are less likely to join under someone that hasn't had some success. It's totally psychological. Folks feel they can succeed if they can see someone like them succeed too. But as a similac rep you're at a disadvantage. It sucks because how can you prove your success if you can't get anyone to sign under you. But that goes along with some of the other reasons I'll cover later.
So that's my list of rep types. It's no wonder why people are left jaded and then bad mouth MLMs. Is it fair? Not really, but you can see how it happens. I hate to admit it, but I've probably ignored legitimate companies because I've encountered one of these rep personas here on my blog or out on the web. Sadly, I'm probably not alone. I imagine many other people are probably unfairly assessing companies in the same way. Hopefully this article will stop this trend and we can discover the real reps which brings me to another rep type.
– "100%" Reps
There is a little urban saying that goes "Keeping it 100!". For those of you that are "hood challenged" it means just being 100% real or honest. These reps that don't pull any punches. They just tell you how it is. They know that you'll find out the good and bad anyway. So they'd rather you know it up front so you don't waste their time or yours. Reps that keep it 100 will tell you the pros and cons about a given company. They'll let you know some of the stumbling blocks that the other reps try to hide. But any rep that is 100%, will try to help you around them. Either way, they give you a choice to make an informed decision that isn't biased towards just making them a commission. If you've read my body of work for a while, you know that's what I try to do with anything I personally promote or research. Sometimes folks appreciate it and there are times where folks don't. Unfortunately the 100% rep is a rare breed to find. But they do exist. It just takes some digging to hunt them down. Hopefully a few will chime in at the end of the article. 😉
2. The Products
We spent a lot of time on the reps but with any company the product will really make or break the company. Unfortunately with many MLM businesses, the products are either questionable, overpriced or have limited appeal. This can make selling them very difficult which means you're less likely to succeed. No disrespect, but I think many of the health and wellness businesses fall into this category. Have you ever tried justifying to your family or friends that they should pay significantly more for a cleaning product because it's "green" or "safer"? Most will look at you sideways and prefer to go to their local supermarket and get a cheaper alternative (even though it may be an inferior product). If you pick a company that promotes a product or service that you wouldn't use or can't see anyone else you know using, then it's probably something that you're not going to be able to succeed with. Folks that tend to do well really believe and actually use the product or service they're promoting. So they can speak from true experiences and not a script which most people can see through. I know from my own experience I've converted way more people to the companies I promote when I show and prove that I have worked with the company and succeeded. So when you're choosing a business, you need to focus on the product line as well as the commission structure (if you can understand it. More on that later.). If you just pick a company because they pay the highest commission or the Rep tells you that they're making tons of money, you're more likely to give up and fail if you can't reproduce the same results.
3. The Compensation Plans, Matrix or whatever the hell you call them….
This is probably the biggest issue for me when looking into MLMs and Network Marketing opportunities. I'll be the first to admit, I suck at math. When I see numbers it gives me the "willies" and a cold sweat. So with that in mind, there may be some bias in my next observation. I've noticed that many MLMs make their compensation plans difficult to understand. Sometimes there are overrides, matrices, levels, legs, arms and whatever other body part they come up with to describe it. I know the argument for them is that it provides a rep various ways to earn more money. That may be the case. But it may also turn people like me away from them because I don't have a PhD in Hieroglyphics to understand how much damn money I actually earn with your company. I don't necessarily want to watch a long ass presentation or speak to a cult member… I mean a rep to figure out the compensation plan. Ultimately it shouldn't take an SAT score of 1600 to decipher your compensation plan. All I want to know is that If I sell x amount of product I earn x percentage of that sale! The same simple explanation should should apply to whoever I recruit into the company that makes sales. This nonsense about filling in the legs or levels to earn 1/2 a point, blah, blah is just confusing for the sake of it. Again this may just be MY pet peeve because I'm a simpleton but I suspect there are others that feel the same way.
4. The Start Up Fees.
There is this lie being fed online and offline that any type of work at home opportunity that requires a fee is a scam. So many legitimate MLMs and Network Marketing opportunities are unjustly categorized this way because of the advice of people who are too lazy to point out the distinctions between a business and a job. In most cases with a job you shouldn't pay a fee directly to work for a company (and even that is flawed because many of us pay indirectly for a job). With a business there are start up fees needed to get your business off the ground which could be inventory, a store front, website, employees, advertising, etc. So obviously money is needed to start a business and thus doesn't mean it's a scam. Now with that said there are some business opportunities that aren't legitimate. So you need to research them like you do any other opportunity. But the mere fact that you need to invest money doesn't make it a scam. The fact that you may not make your money back doesn't make an MLM a scam either. It just means you couldn't cut it or had poor support and training. Now even if you do understand there are fees required for a business, depending on how expensive they are it may be a deal breaker. Some programs expect you to buy a certain amount of product per month to stay a Rep. That's all cool and dandy if you do use those products and services regularly (i.e. Internet, Cell, Phone, Certain Grocercies). But if not, then you may end up with a lot of unwanted product cluttering your home. Then there are companies that don't have this requirement but expect you to cough up a high start up fee and then a monthly fee thereafter for the privilege of selling their products. This can become very excessive depending on the company. It's hard to swallow these type of fees if you're not making any money. Again, it doesn't necessarily make a company a scam. But it's something that may turn folks' way especially if they're tight for money.
5. The Long Ass Meetings or Presentations.
I don't know how many times I've been asked to go watch a presentation online or come to an offline meeting to learn more about a given opportunity. Look, I've been in this game long enough to know that there is going to be a hard sales pitch or some Jeidi mind trick to get me to join. I don't like being pressured or hypnotized into anything. All I need is the basics. How much will I make (in plain English), what's the product and service, and how long has the company been in business? All the other information about how the owners are multi billionaires, and that your company farts smells like perfume makes no difference to me. Maybe the other information is important but let me dig through that on my own time and pace. Your initial job is to give the most important information first (Who, What, How and When?). And no, because I don't want to endure your presentation it doesn't mean I'm not a serious business owner or prospect. It's just my time is precious and I like having control over it without feeling like your next commission or meal ticket. There are also some companies that require a regular meeting with other reps. I can see the benefits of this if it's to help motivate you or provide you with additional information to help you make more sales. You learn faster from other successful people. But if the meeting is about making me feel like crap for not succeeding or trying to convince me to upgrade to some magical system to make more sales, then it's just a bad use of my time.
Now it's your turn..
So what do you think? Do you agree with these observations? Would you add some others or change them? Let me know your thoughts below. Again there are some great companies out there.
As I said at the start of this article I'm not an MLM or Network Marketing Hater or trying to call you or your company out. So don't get your panties in a bunch if anything I covered above happens to pertain to you or your parent company! I think if you find the right company that you truly believe in and the products are useful, you can make some great money! But unfortunately some of the reasons above may prevent people from exploring these great opportunities. The goal of this article is to help people make more informed decisions about the MLM & Network Marketing opportunities they explore.
My other hope is to discover companies that have addressed these gripes. I know enough about this industry to make me dangerous but I don't know everything or all the great opportunities out there. So I'm always looking for additional sources of income and so are my loyal subscribers. If you feel confident that your company addresses all these points and willing to prove it, then chime in with some detailed information below. Don't just be lazy and say hey just visit my website, call me or email me. Keep it 100% and open right on this blog post so others can benefit. I'm sure if you do, then folks will definitely want to contact you. But your responses will probably be measured by some of the reasons we've covered in this article. 😉
Either way I'm looking forward to hearing your experiences with MLMs, Network Marketing and other home based businesses.
By the way, if running your own business doesn't really float your boat and you're looking to be an employee rather than the boss, check out the following page by clicking here. If you've enjoyed what you read and want more, consider being a subscriber by clicking here.
thanks for the post
I appreciate the response, Eddy. I apologize for coming off that way, and will try to keep it to a minimum ;), though I was confused by your closing paragraph, because you made it seem like you were interested in hearing about others’ experience with their MLM business, and that’s what I was trying to address.
But anyways, I agree with you on #2 100%. You certainly have to believe in the product for any real business to work, and if you don’t believe in it, and are there just to bring people on board for the money, how can you expect others to believe in it? Personally, I get rubbed the wrong way when people promote the company in a way where the product isn’t the focus. I.e. “Now, these products are great and all, but what’s really exciting is the money you can make!”. Right at that point, you feel more like a recruit than someone that is supposed to benefit from whatever it is that they were showing you, and then the product no longer seems as legitimate.
Also, how can anyone be sure that any given MLM company won’t fall under the same failure criteria as the pyramid scheme? Now, there is something to offer, so there is perceived value there; however, you still run into the same problem of running out of people to show it too. And most are based around some infinite, recurring purchase, so it really seems like they are all doomed to fail, but are just on a slower path to that failure.
The last thing I have issues with are the conventions and events, because I recently went to one with mine. I went there to gain valuable information, tips, and advice that I can use moving forward, to grow my business. Though there were a few people that spoke, who did give some decent advice, I found that it was more of a hoo-rah get excited event to “inspire” people. I understand that some people need inspiration in this style of business, but I was truly looking for valuable information that I could use, and was a little bit disappointed with what I received. I suppose the issue with those is that it is a catch all event for a large number of people. A lot of people at these events are generally established, and need inspiration if they have hit a plateau, but it doesn’t provide value for those that want/need advice and information.
-Taylor Ashton
No worries Taylor. I’ve heard about MLM events like you described and the same complaints. Every year I go to a Vegas trip that is totally sponsored by Wealthy Affiliate and our meetings are about how to improve the community and products for our members. So I agree with you that’s how those meetings should be. Thanks for sharing again.
Hi eddy with a -y,
I really enjoyed this article and your perspective on the “dreaded” mlm, and the associated bad rap it has gotten from companies trying to sell a miracle product. With this as well as the parallelism that many people see to the horrifying pyramid scheme, it can be gut wrenching when some asks you to “check out this awesome this I found, I’m sure you’ll love”, only to find yourself in a living room with many other people and some miracle drink marketing company talking at you (no, of course this is not anecdotal).
But I digress, it’s refreshing to be reminded that there are genuine people out there with something they truly believe in that WON’T harass you to join their club. I never imagined I would ever hop on board to another MLM side business with the bad experiences I’ve had, especially since my current profession as an engineer doesn’t leave me wanting.
Wouldn’t you know it though, I found myself invited by my neighbors recently to take a look at this interesting savings membership from this company called Team National. As per my past experiences, I immediately felt uncomfortable, but agreed to come check it out, in order to be polite. The next day, he had a long time friend come with his wife talk to us about the company, and then show some incredibly cheesy videos about these incredible savings and compensation plan for referring it. It was then that I was thinking about how I could remove myself from the situation without being rude, but after the introduction, he simply asked, “do you have any questions”. Well, he opened up the floodgates because I had hundreds, and I figured I would take him up on his offer.
After hours of questions, I was shown the “Big N Marketplace”, which is where you go to do everyday shopping through what is basically a portal that links to hundreds of retail companies like advanced auto parts, walmart, home depot, and target. Then, we were shown the “home decor/factory direct” section, as they told us about these incredible deals we could get on home furnishings. I recently bought a house, and have hammy down furniture from college, so obviously it perked my interest. I told them, hey we’ve been looking a new tempurpedic/memory foam mattress – find us a deal on one. They go to the link, search through the categories to mattress, find the memory foam styles, and boom they ones ranging from $500-900. I was actually blown away at that point, as previous in store shopping led me to believe one under $2k would be difficult to find.
After hours of questions, and the very refreshing and genuine conversation that took place in addition to, what appeared to be, effortless help. I was actually drawn in. I learned more about the compensation possibilities, and was pleasantly surprised by how they structured it – instead of this person getting this %, then the lower down getting less, and less, and so on, each 2 year membership sale leads to a point, and a lifetime membership leads to 3 points. No matter if you’re 5 levels deeps or 100 levels deeps, the points count the same for you, your upline, and downline.
Now, I know the points thing isn’t fun for you to look at, but I broke it down to $/point on the simple basis (once again, you can eventually get way more/point once you begin to build the business because of the ability to expand the structure of your hierarchy, but that’s too detailed too soon). Ultimately, the first and most basic way to earn money from people who have bought a membership by your referral is 20 points, 10 on the left/right. That comes down to about $75/point just for you, if you nail the point distribution.
After ALL of this, I sat there and went through a mental spreadsheet to do a cost benefit analysis to see if I could convince myself that this was worth it. With the answers and subsequent proof of those answers, and the visual savings along that I could have with things I either already buy or are already planning to buy, I finally sold myself.
Now, I know the story is a big long and detailed, but that is the kind of person I am – I am very analytical, and therefore I understand that people don’t want to be starved of information. Moving on to a summary, this is the pro/con list that I have generated from my somewhat short time with the membership/being with Team National:
Pros:
1: The people.
The ones I have had the pleasure of dealing with and being around – the guy and his wife that recruited me – are so far, some of the most straightforward and genuine people I have met. They are real people with normal profession who make up the network of people that I joined. I’ve been on the phone with biologists, nurses, and even other engineers to hear their story and how they were successful, and it has been incredibly refreshing so far.
2: The savings
The savings are absolutely no joke. I currently do my online shopping through the portal. I’ve bought things like dog food, dog toys, to toilet paper and car stereos (upgrading a cassette style radio in a tacoma and my grand prix, which had the CD player die). Since I’m super frugal, anytime I find a better deal online elsewhere, I choose that, but I’m finding out that most of the time, I’m finding the best deal through one of those 400+ companies who are a part of that membership. The BEST thing is, you’re not limited to your deals and coupons that you are already using. With this, you are simply going through the portal, which directs you to the retailers website. It tracks your spending to said retailers and applies the applicable rebate % to it and stores all of that on your personal portal. I’m also looking forward to finally upgrading some furniture sooner rather than later through the factory direct portal, since I will find a better deal nowhere else besides maybe craigslist (I don’t advise purchasing a mattress through craigslist).
3. The compensation plan structure
There are a multitude of ways to make money through the company, but the simplest way is through purchases of the membership through your referral. You can make your $1500/20 points, however you can add “business” centers, which break “you” into more horizontal structures. These business centers earn you $2500/20 points, and you will still earn $1500/10 points left and right, since those business centers will be located below the initial “you”. It goes on and requires more specific questions and feedback before it becomes too convoluted to process at first. Also to note, is that there is no recurring purchasing you have to make to stay on board. You can technically start earning money from referring the membership without actually purchasing it! And you can enjoy the membership for life with the lifetime option.
4: The fact that this is not a lottery ticket.
For some that’s a con, because they want to hit the lottery with just the right slot machine you mentioned, but that’s not realistic. It obviously takes time to build the business and to make money from it, but it can be rewarding if you put enough time into it and research to better build your own knowledge base of the company and what it has to offer. The other thing I like, is that this message is resonated by my upline and the people around them.
5: The team aspect.
I have been pleasantly surprised by how helpful my upline has continued to be. They haven’t disappeared, they still come over in person when we need face to face interaction. In fact, just yesterday he came over for dinner that preceeded us sharing the membership information with some people. They have also added a few membership sales “underneath” us, so that we can benefit from them the same as they are.
Cons:
1: The upfront cost of the membership.
The upfront cost can be a little steep for many, even if you can forsee the value in it for yourself. The 2 year membership is $795 and the lifetime membership is $2195. This can be very daunting for many people, but the recommendation I make to others, as well as myself, is to take all the information home, and just work the numbers out for yourself. YOU have to be able to see that value in it, no one else can force you to do that.
2: The fact that many people will still view it as a pyramid scheme.
Since it’s MLM, it still gets viewed as a scheme, so it can definitely be mentally tiresome to learn how to better promote the membership, without getting lost in the details, but at the same time not coming off as shady looking for another sale.
I know this is long, but hopefully it reflects some of the quirks you were speaking on. Like I said, I enjoyed your perspective, and would like to hear more of it.
Regards,
Taylor Ashton
Taylor even though this is well disguised self promotion, you did add some value which is why I didn’t delete it as a spam. But keep the comments coming without the self promo next time. Lol
I had to leave a comment here because I TOO was involved in the MLM Industry. I’d like to address is there are other out of pocket expenses besides auto-ship and start up fees.
Some people may not realize that they have to market the business. If people think that they should call up their friends and family and that’s how they are going to make millions that is not the case at all. Friends and family should be left alone.
This is why it’s important to have other avenues besides friends and family members to promote their product and business opportunity.
Also, if the whole MLM business goes under, where does that leave the reps? Do people really own these businesses? I’m not saying that businesses don’t go under that are not in the MLM spectrum, but I feel that many people may put too much trust and may not have any input with the big dogs who started these MLM businesses.
I also love the fact that you stated that the product should be of value. Why sell snake oil? There are plenty of products out there that people will use and buy, but it should be a product that the person stands behind.
I feel that if people want to venture into the MLM Industry they should ask the rep what is the product. If the product has no value, then they should not even bother. Why waste your time and money on a business and product that you don’t stand behind.
I get what you mean Eddy that a persons chances of being successful will diminish if they don’t stand behind the product and learn how they are getting paid. I call those comp plans complication plans because there are too many scenarios. If’s, and, and but if you get….
Anyhow, l really enjoyed reading your article, you know how to make people laugh, but with truth. Thanks!
Hey Evelyn,
I couldn’t agree with you more! Thanks for chiming in! I appreciate the thoughts and the kind words.
The Similac rep, was the first sentence an homage to Martin Lawrence?
Glad you got the reference Jason. Lol