Multi-Level Marketing or MLM is sometimes referred to as network marketing schemes, pyramid schemes, and referral marketing. Multi-level marketing is one business model that you should steer clear of if you want to be a successful online business owner.
Can you really make money doing multi-level marketing? Chances are you will not. There are many other business models available that can give you better chances of being a success online. One business model is Affiliate Marketing. To receive Free Report “Six Pillars to Success As an Affiliate” Click Here now.
Multi-level marketing is a marketing strategy used by many companies to sell their products and services on the Internet. Affiliate earn commission from what they sell and also from other distributors that they refer to the company. Commissions are paid upwards first then down to other members. Compensation plans can vary from company to company. Companies create their own compensation plan.
In theory, these compensation plans sound great. All you have to do is recruit a few distributors, whom each recruit a few other distributors, whom each recruit a few distributors, and soon you are earning money on tens or even hundreds of distributors.
Times have changed though, and there are no longer many opportunities available for the little guy in the multi-level marketing arena.
Studies by independent consumer watchdog agencies have demonstrated that between 990 and 999 of every 1,000 participants in Multi-level marketing companies lose money, as reported in the book, “Amway Forever: The Amazing Story of a Global Business Phenomenon.”
However, according to reports from the Federal Trade Commission website, it is not that bad – only 99.25% of Multi-level Marketing participants make little to no profit, with the most significant proportion of participants operating at a net loss. Which begs the question: How are these companies able to stay in business?
Two things: First, they sell their distributors the story that they can make it to the top and lead the luxurious life. To ‘prove’ this, they showcase the tiny number of distributors at the top of the pyramid who are making money.
They also downplay the expenses and time involved to make any real money, as well as the fact that new distributors are likely to alienate friends with their newfound zeal for the company’s line of products and opportunity.
Second, they churn and burn distributors at a crazy rate. Once a distributor has purchased the required “starter pack” and “training” and “extras,” and also put in many hours trying to ‘make this thing work,’ they give up.
Can’t really blame them.
Which begs the question: Who is making money in Multi-level marketing?
Three groups of people: Those who start the MLM companies, their friends who are the very first ones to join and thus be at the top of the pyramid, and a third group…
…the shovel sellers.
Being an MLM coach can be quite lucrative.
You can work with anyone in any company and help them to build their business, for a fee.
You can create and sell courses on how to recruit and motivate a downline.
Moreover, you can sell books, audio sets and so forth on having the ‘right motivation’ and tactics to succeed in a big way.
Products like these are gobbled up by aspiring Multi-level marketing distributors, and sometimes even purchased in bulk by companies for training their downlines.
If you are thinking of joining a multi-level marketing company, you should consider again. You should only participate in this business model by just selling the tools that help new distributors to be successful in their opportunities.