My Beef With Multi-Level Marketing
Photo by swissrolli.
Last year I had two different, and yet strikingly similar, experiences with Multi-Level Marketing (MLM). For those who don’t know, MLM (also known as Network Marketing) is a business model that combines direct marketing with franchising. In both instances, I chose not to become involved. In this article I would like to explain why.
My first encounter with MLM arose because a close friend invited me to a meeting to get my opinion on a business opportunity. As she later admitted, she was never interested in my “opinion”. Her mind was already made up about the opportunity, and this was just her way to get me to the meeting. Well she did succeed in sparking my curiosity, and since I had nothing else to do I went along. This first MLM opportunity was with a company called ACN and basically involved reselling the services of a telecommunications company.
The second MLM experience I had last year was with a guy who took it upon himself to get to know me. I remember the first time we met, and he started to randomly talk about how these vitamins he was taking made him feel “great”. At the time I didn’t know what to think about this, but on our fourth meeting everything clicked. On this occasion he presented me with an MLM proposition related to Amway (interestingly he never mentioned Amway, although I later discovered that was who the opportunity was with). Basically this opportunity involved selling a range of different products, one of which was vitamins (of course!).
With this background in mind, here are the 2 biggest problems that I saw with Multi-Level Marketing.
1. The Products and Services Do Not Add Value
The meeting I went to for the first opportunity was held in a large movie cinema. There was a flashy movie presentation, and then a procession of people gave us their MLM success stories. After this meeting for newcomers, there was a training session for existing marketers. Since my friend was staying for this meeting and I wanted to better understand this opportunity, I stuck around. It was an eye-opener.
In this training meeting, I came to understand that the opportunity basically involved reselling the services of a telecommunications company. It became obvious that it offered little to no value to the potential customer, as the service was in no way cheaper that simply having a contract with the telecommunications company. The trainers encouraged marketers to divert queries regarding the benefits of the service with phrases such as “you will be doing me a favor by doing this” or “you will be helping my dream of working for myself come true”.
In regards to Amway, I’m sure there is nothing wrong with their products. But is anyone actually buying Amway products because they are the best quality and/ or value? It seems to me that most people purchasing the products are doing so because they are wrapped up in Amway or feel pressured to by someone (yes, I’m sure there are some exceptions). This leads me onto my second problem with MLM.
2. MLM Strains Relationships
Now from what I observed, MLM in many ways has a cult-like following as people get heavily wrapped up in the idea of making “passive residual income”. The income model closely resembles a pyramid, and for this reason success with MLM is heavily dependent on recruiting further people to join. In this sense, everyone you know - friends, family and work colleagues - become potential recruits and sources of income.
As I’m sure you can imagine, someone who becomes too wrapped up in MLM is going to be extremely annoying. In this way, MLM can strain, and can even permanently damage, relationships with the people closest to you. And remember, in many cases it is going to be questionable whether MLM products and services do actually add any value.
Final Thoughts
As should be obvious from this article, these are my opinions only. I am only familiar with the MLM opportunities mentioned, and I happily admit that I did not get involved with them past the first presentation. I am very open-minded, and I’m sure many people have good experiences with MLM. MLM is often linked to personal growth, and I’m sure many people gain confidence and learn valuable networking lessons getting involved. That said, if you are involved in MLM or are presented with an opportunity please consider my points above, try to cut past all the hype that is likely to be associated with the presented opportunity, and use your own mind to decide the value of the opportunity.
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28 Comments
November 12th, 2007 at 2:39 pm
Hi Peter - I’m new to your site but am liking what I see!!
Earlier this year I had my own personal “brush” with an MLM scheme - in fact my business mentor at the time recommended it (I have since lost a lot of respect for her). It was during a time when our income was challenged (my husband had just been laid off) and so of course the allure of the money was the key. But I found the following problems with the whole thing:
1) Whilst the product was ok and at the time really quite innovative (it was video email/messaging) - the customer service was shocking and as we’ve seen this year, there are now free (and better) services out there.
2) The skepticism I encountered from friends and family was a major barrier to them wanting to sign up - even though the product would have been a great way to stay in touch with everyone (my husband and I travel the world permanently).
MLM is, in reality, not that much different in structure to many other corporations out there (the fat cats at the top make most of the money, with tiered employees sitting below them, doing the selling and earning an income for doing so) - it has just got such negative connotations that it stops people from even considering the products involved. That’s why I think people involved in MLM have to resort to the more devious ways of introducing their products first before mentioning MLM.
Whilst I have no doubts that it works for some people, I didn’t have a great experience with it and am probably not alone.
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November 12th, 2007 at 2:47 pm
Lea,
Thanks for sharing your story. I am VERY interested to see the comments regarding this article. I’m sure most people have had a brush with MLM at some stage.
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November 12th, 2007 at 4:38 pm
Very interesting article. As an aspiring entrepreneur I dabbled in a number of MLM opportunities including Amway. The premise was Amway offered a fabulous set of products at discounted rates. You were to buy all the products you normally use in day to day life from your own Amway business and encourage your family and friends to do the same. My problem with Amway was the quality and price of the products. From soap and shampoo to tooth paste and food bars the prices were double or triple what you might pay for something comparable at Wal Mart. Not to mention inferior in quality.
The one memory that always sticks with me from my days (months) of dealing with Amway is when my “upline’s” brother moved here to San Diego from Texas. He was pretty skeptical of his brother’s business but tried to be supportive. I got him a job at the mall (where I worked at the time) and on his first day he showed up with white crap all over his lips. As soon as I saw it I knew what it was.
“Use the Amway toothpaste this morning?” I asked him.
“Yeah, how did you know that?”
“Just a guess.”
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November 12th, 2007 at 4:44 pm
Hi Peter
I agree with you. And a lot of innocent people get caught up in the lure of making all of this huge amount of money which doesn’t ever actually transpire.
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November 12th, 2007 at 5:12 pm
I’ve been through this also. From selling knives, Amway, to a MLM meeting where I have no idea what they were selling except they wanted my $200 to join up. People will do anything to scam your time, money, and contacts, just so they can sit around and reap in the profits.
Good for you for not falling into the trap.
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November 12th, 2007 at 5:35 pm
Well it seems I am not the only one with negative feelings toward MLM! Thanks Lenny, Anja and Rudy for your comments.
Lenny, I’m particularly interested by your comment as I don’t have any firsthand experience with Amway products. It just seems to me that if their products are everything they say they are, there would be a demand for them to be stocked in regular stores such as Walmart.
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November 12th, 2007 at 5:43 pm
Peter I salute you for giving your opinion on this topic. If more people had the opportunity to read articles like this, they would not fall for some of the manipulative marketing out there.
@ Lenny - The toothpaste story is hilarious!
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November 12th, 2007 at 8:26 pm
I’ve had “friends” who were involved with Amway and Mary Kay. As soon as they started pushing their products it was clear they weren’t friends, they were just high-pressure saleswomen who didn’t care about me at all.
When I was a kid I got suckered in by a company that sold greeting cards. I ended up just buying the cards myself. There was no way I was going to try to take advantage of family and friends. It was a good lesson.
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November 12th, 2007 at 10:11 pm
I’m in ACN and I don’t see a problem with asking a favor. Why not use service you already use, but help a friend by doing it? That’s the one thing about ACN that I find is valuable, that you cannot find in most other MLM’s.
This will sound like a pitch, but I’m explaining so everyone understands this. At least with ACN, ACN is offering you a service you are already using. All an ACN rep is asking you to do is support them in whatever reason they are doing ACN (to better their financial situation, spend more time with the family, etc.) and just pay the telecomm bill to ACN, instead of Qwest, Verizon, AT&T, Vonage, etc. That’s all.
There is nothing wrong with asking people to see it, so they know what your opinion is. If people tell you this and they have an ulterior motive, is that the ACN’s fault? No. Your friend in ACN cannot read your mind and know if you will or will not like ACN, without you seeing the presentation.
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November 12th, 2007 at 11:31 pm
As with anything, there are “right” ways to do things, and “really really bad” ways to do things. Most MLM’ers are taught the “really really bad” way. It stems from really wanting to help people out because you think the products are great, but then when you realize you aren’t selling enough to make your mortgage payment, the pressure comes on to “sell more - promote the business more” - at which point the marketer loses perspective and becomes the annoying relative everyone wants to avoid.
There’s even a name for this in the industry - you’ve joined the NFL. “No Friends Left”
Glad to see you avoided joining that club.
There are better, less obtrusive, ways to make a living online. And you even get to keep your friends.
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November 13th, 2007 at 11:36 am
They used to be quite popular. But the MLM wave seemed to have died off here.. I guess at the end of the day, those who stayed behind where those still up the triangle.. if you know what I mean.
Cheers,
Ellesse
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November 14th, 2007 at 6:09 pm
For the MLM business model, I mostly agree with your second point. However, the product not adding value is really the company’s fault–they could’ve sold something else or sold it another way.
I’ve had run-in’s with MLM’s. And came to 2 similar conclusions:
1-direct selling strains personal relationships. There was no internet when Herbalife and Amway were founded so you sold to people you knew. This is why affiliate marketing is so much better, while it’s effectively the same model with less cultish motivation.
2-If you sign up for an MLM you’re basically married to that company. Whereas online you can sign up for everybody and make far more money.
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November 22nd, 2007 at 2:47 pm
My personal experience with MLM is that my “mentor” was more interested (and aggressive) in signing up users, rather than focusing on their “quality” products.
It’s like going to Future Shop. The salesperson spends 5 minutes on selling how great the item is, and when you buy it, they spend 15 minutes telling you how crap it is, to sell you the 3 year Extended Warranty. The profit margin is huge on EW as there is no cost, no labour, no inventory.
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November 25th, 2007 at 8:20 am
Shipes!!! Not what you would call a “warm market” here. I dropped out of college after one year and started my first business. I’ve learned this: The government makes the money. Entrepreneurs earn money. Good entrepreneurs create money with good ideas. I love freedom. That’s why I started a business. I had an mlm experience two years into business. I went to some events. I started to read books and my world exploded (exploded!!!!! in the mlm sense) My business generated over two million dollars the fifth year. Largely due to the information I gained from these events and books I read (hundreds). I was visualising and taking risks and thinking big. I would have done better, if I had read more on being profitable. Revenues are Crap, Cash Is King. I look at life as a puzzle and mlm has contributed much, just not money. Then again neither did college. My college friends are teachers and corporate employees now. Into logistics and medical equipment, ones a doctor. They all have condos or town houses and 2005 or newer car. Turns out 70k or 80k isn’t all that much money anymore. I traveled and did whatever I wanted (kinda) for the last ten years. I have to think a lot and plan. They just go to work. I think mlm’s will become more popular. Because my friend have to make more money. They might have kids. They will need to go to college. The Business to be in today is providing people who bought a college degree a way to earn an extra 5ok per year. You do that. And Your Set, So are my friends. Add Value.
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November 26th, 2007 at 12:34 am
Just to clarify peter, the thing I got from mlm, was inspiration to think big, read books, don’t compare myself with others, don’t follow, lead, set goals with pictures, stuff like that. I did not use the mlm business model to earn money, I own a commercial construction company, this is where that 2 million in revenue came from. Peter I come from a small town and people just don’t do big stuff here. When I was exposed to this “event” It blew my mind. I went for it.
It was magic. I used the information in my construction business, where I had belief. As for your two points, your right.
1. Products: every product I’ve seen in mlm is over priced when you discount the packaging of hope that is sold with it.
2. Strain relationships: I agree. Mlm leadership talks integrity but then encourage you to play games and act out of integrity (with your fiends no less)
People who gain amazing amounts of wealth (money and time freedom) interest me.
Its like a pretty girl I just can’t help but look.
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November 29th, 2007 at 4:43 am
Another tragedy. Yeah it is about another multi level scam which is still on going. I realy dont understand why people fall for it.
The blog is about us and how we suffered. Read it and be careful.
http://goldquesttragedy.blogspot.com/
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December 1st, 2007 at 9:27 pm
I have really enjoyed this blog. The title sucked me in, lol. This post is quite close to home for me, for I am in an MLM. I have not read through all the comments. A majority of them seem to have negative experiences effecting their posts. I am very successful in the MLM you spoke of similar to Amway. I thought I might be able to comment something spectacular to help folks understand MLM a little bit better.
But I am no
Here is my best attempt to salvage the comment beating MLM has taken
I was in the Army for quite some time. There were good soldiers and bad soldiers. I didn’t take advice from the bad soldiers and I didn’t let there horrible actions effect my view of the Army. I loved every minute of it and surprisingly enough, I still had bad days like everyone else on Earth 
Despite the horror stories of the military and bad soldiers, I was still very successful and honored to fulfill my Service.
I wish success and prosperity to all who fight for it. Keep the blog rollin’, Peter.
P.S. I am open to discussing this matter more intimately. Questions and Stones are welcome
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December 5th, 2007 at 10:01 am
[...] a better life at thechangeblog.com. If you enjoyed this article, be sure to read his article My Beef With Multi-Level Marketing. (No Ratings Yet) Loading [...]
January 19th, 2008 at 9:58 am
Yes Peter:
the MLM structure causes people to act in inauthentic ways. They have no regard for your humanity but only see you as another prospect. but that is the problem with a lot of selling not just MLM. Often if people would really take time to get to know you they would see that their product is not right for you.
I just wrote a gently tirade at http://eloquentwebsites.com/articles
I almost expect them to start passing around the coo laid at some of these presentations! though I have found some good products I do not like the million tier system and all the crazy recruiting techniques.
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March 12th, 2008 at 2:00 pm
[...] Avoid multi-level marketing gimmicks and getting in too deep right off the bat. You can usually make more money by going into business in an area where you already have expertise and can provide a valuable service to others. I’d suggest getting started while you still have full-time employment. This will help you to test the waters and work the kinks out before you jump off into the deep end. [...]
May 3rd, 2008 at 10:16 pm
Hi Peter,
Sorry that you had a bad experience with MLM.But there are good companies out there with products which gives value.I am with AGEL for the past one year.I paid just the sign up money,i am not forced to buy anything.Totally,we are following internet marketing apart from recommendations from preferred customers.
I learned a lot about personal growth,positive thinking,leadership.I started to read lot of books to help myself.My entire thinking shifted in a positive way.I am going to retire earlier than the conventional age.These are the benefits i see with MLM.
In any filed,there are good and bad.Do your research,believe in your self,anyone can do it.
Best wishes,
kannan viswagandhi
http://www.truemlmrockstar.com
http://www.growing-self.blogspot.com
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June 10th, 2008 at 7:01 pm
workathomejoe– I take issue with some of your comments but especially this one:
“My college friends are teachers and corporate employees now. Into logistics and medical equipment, ones a doctor. They all have condos or town houses and 2005 or newer car. Turns out 70k or 80k isn’t all that much money anymore. I traveled and did whatever I wanted (kinda) for the last ten years. I have to think a lot and plan. They just go to work.”
You think your doctor and teacher friends don’t have to “think a lot” and plan?!
You may be making money but your aspirations aren’t doing your vocabulary and writing abilities any favours. I’d rather have great linguistic ability than money.
I’m VERY familiar with Amway. And many other MLM companies. I get the genius of it all. But I finally decided what it was that was always holding me back from joining:
THE SYSTEM LACKS INTEGRITY.
The people who get in early are the ones who make the most. Not necessarily because of their hard work or intelligence. Mainly because of luck and opportunity. MLM companies will always tell you that there’s no danger of saturation. But if you were one of the people to hear about Amway when it first began, before it started to piss people off, before everyone and their dog would roll their eyes at even the mention of the name, don’t you think you had it easier than someone joining today? So much easier, in fact, that Amway started focusing their efforts on Quixtar! Amway saturated the market.
The people who get in later work their butts off and as the possibility of recruiting gets smaller and smaller, these last people do all the unglamourous accosting of prospects– a terrifying concept for some people and undesireable at best– buying up product from the company while making next to nothing, while the people at the top benefit substantially from all their hard work. Sure the big wigs work too: Giving talks to desperate hopefuls about how rich they are in order to inspire them. They also coach people who are already interested in the opportunity. Talking to people who want to hear you? Not very labour intensive or intimidating.
I have so much more respect for my husband who works for the government prosecuting criminals. He’s excellent at what he does and provides a necessary service to all of society. No matter how hard or well he works he will only increase his income if the government decides to give him a raise. He has to get the job done no matter what it takes and there’s no charging for hours like a defense lawyer.
He may never be rich. But he oozes intelligence, accomplishment , value and most of all, INTEGRITY.
I’ve known people in MLM companies who like to think they’re smarter than the average Joe just because they found a way to legally make a bunch of money without a lot of work. They may be be clever and gutsy. What they aren’t is WISE. They fail to see the value in hard work. They talk about working hard now so they can be available to spend oodles of time with their kids later, taking them travelling, yadda yadda. They fail to see how crucially important it is for our kids to see us work. And not just volunteer efforts here and there because you want to volunteer. But to work hard out of a sense of need, of urgency, commitment and honour.
I think that any time someone is getting more than the effort he puts in to get it, something in his soul shrinks. He is missing an opportunity to grow his endurance, his commitment, his talent, his humanity.
Life isn’t about leisure and pleasure. Life IS about work and charity.
There’s a reason why MLM followers are not the kind of people most of us want to be around and it’s NOT because they annoy us with their selling. It’s because they are shallow in their souls.
(Disclaimer: I am not referring to direct sales companies such as Usborne, Arbonne and the like who sell valuable products at respectable prices. I’m referring to crap like Amway and United Pro Media.)
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August 7th, 2008 at 11:03 pm
The problem is not mlm. The problem is that the distributor was not targeting the right people with there message. Everyone is not a prospect for every product. Here is an example: If you are a real estate agent trying to market a million dollar home are you going to advertise to or speak with people that you know can’t afford it? of course you wouldn’t. You would probably send your advertising pieces to zipcodes where you know people could afford such a house. In mlm people need to really understand who there target market is and focus on the people that have already demonstrated that they are prospects because they have purchased similar products in the past.
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September 19th, 2008 at 11:25 pm
I have got almost daily calls from KW asking to talk to me. I went and listened to what they had to say. I absorbed everything including the pyramid concept and decided to stay where I am at weichert. Weichert is the most professional organization that I have ever encountered and it is a pleasure to work here. I guess in the long run it is a gut feeling. We all have to follow our heart and follow what we believe.
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