MLM Myths & Questions Answered
The biggest mythsabout MLM or Muliti-Level- Marketing are 1. Its pyramid selling and 2. Its a ‘get rich quick scam’
Lets look at these in more detail.
1. Pyramid Selling bacame notorious in the 70’s where unsustainable chain letters, promising riches if you sent a small amount of money to some-one you didn’t know on a list of names were common ‘junk mail. Eventually they were banned are still illegal.
The reason why MLM gets mistaken for something similar is down to the income stream you receive for building a distribution network.
Let me give you an example: Any company that makes a product has two major costs. Production and Marketing
Costs of production are fixed and as a rough guide costs of marketing are about 55% of retail cost.
There are several business models as to how companies market their products. The one most people use is to spend a percentage of the marketing budget on direct advertising…TV, Papers etc.. the rest is used to provide a mark-up to wholesalers and ultimately retailers to put the product in stores where you buy it.
In MLM none of the 55% is used in direct marketing. Instead it is passed down to the ‘distributors’ of the product as commission on sales. The medium of marketing is ‘word of mouth’ rather than conventional methods. But if the product is good then we all know the power of recommendation and soon a large distribution network is built.
One of the earliest companies to use MLM was AMWAY, whose $7 Billion of cleaning and other products are still being sold through 3 million distributors.
AMWAY gives a clue to building a successful MLM business. ‘Consumables’ or a product or products that get used up and need to be replaced. The other main factors, in my view are innovation and size of potential market.
2. The ‘ Get Rich Quick Scam’
It is understandable that many people are persuaded to join MLM businesses with visions of riches due to the ‘potential’ earnings. They eagerly sign up and start marketing some inferior or obscure product and soon become disillusioned when the payouts fail to roll in.
Their failure is usually caused by 2 factors. They started by focussing on the earnings potential rather than the product and market. They also failed to realise that, as with most things in this life, its about hard work and persistance. You pretty much get out of life what you put in and whilst dreaming is great…don’t expect results without putting in the hours.
Hopefully, having read this article you will approach what this opportunity has to offer. Spend the next 15 mins viewing the presentation ( Click Here). It will open in a new window.
Then evaluate the product and the market. If you are a smoker…try it…if you don’t smoke…get one for a friend who smokes and ask them to try it… When you are as convinced as I am….You’ll know what to do.
Questions and comments are always welcome.
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