multi-level marketing- is there a single good example?

[gfunkusarelius]

multi-level marketing- is there a single good example?
i think i know the answer to this, but i see a lot of people looking for advice on how to discourage friends/family from entering into a MLM scheme. so if there is evidence that MLM plans are inherently bad, then should we even have to discuss what they are trying to sell? i know that this is a loaded question since, chances are, the people who are pinning there hopes on some particular MLM scheme wont accept "MLM iss are bad, period," but at least if we had good evidence to establish the bad things that motivate people to use this method of sales, it might be a wake-up call for people who are on the verge of partaking... there have been a number of times i heard products i was tempted by and remembering the simple phrase "if it's too good to be true, it probably is" was enough to snap me out of my temporary stupor.

[petre]

A google of "success rate MLM" turned up:

http://mlmblog.typepad.com/blog/2005/09/quixtar_trainin.html
http://www.mlm-thetruth.com/STATISTICS.htm

I do not vouch for the accuracy of any information at those sites, but perhaps they will help.

Another angle: Ask your "recruiter" what statistics are available on how new recruits perform. If the claim is that the company doesn't track that, ask yourself how a company could possibly monitor and improve itself if it doesn't track how well its employees do? (answer: it doesn't MATTER how well its employees do, the company still makes money). If the statistics are not provided for any other reason, ask yourself why the company would miss the opportunity to encourage new recruits by freely giving out such information instead of just giving a handful of specific examples of success? (answer, the numbers are probably pretty dismal)

[Ipecac]

Not exactly what you asked for, but here's some information on MLM's from the Federal Trade Commission:

http://www.ftc.gov/bcp/conline/pubs/invest/mlm.htm
http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.htm

[gfunkusarelius]

ah, i wasnt thinking of MLMs as being good or successful as financial endeavors, i was thinking more of the integrity of the products. from what i have seen, they are always either equal to or inferior to products you can buy via standard outlets (and much of the time, they are total scams). i think the FTC is a good starting point.

[Kochanski]

Good links for you: http://www.quackwatch.org/01QuackeryRelatedTopics/mlm.html
http://skepdic.com/mlm.html

I don't know whether any of this will convince someone who has heard the siren's song of the MLM. The get rich quick urge is there in too many people and the MLMs are seductive.

[Walk The Line]

My experience with a MLM:
Last year I was cold-called by a MLM program, and was asked to set up an interview. I figured I'd give it a try, but as soon as I got there, warnings bells went off.

The interview did not go well. First, the manager said I was late, though I was there at the time we agreed to. I had difficulty getting specific answers as to what exactly I'd be doing. And the last straw was that the manager I spoke to basically wanted an answer that day as to whether or not I would be hired. I wanted some time to think about it and do some research on the company.

Needless to say, I didn't take the job.

Later on, I got a call from the same manager asking me to set up an interivew for the same job, who had apparantly forgotten that we had an interview.

With these MLM's always remember the saying "if it sounds too good to be true..."

[ChristineR]

The only way to make money in these things is to establish an extensive downline and sell them stuff. Unfortunately, many recruits know this already, and are buying into the idea that if they stick with it, it will soon be "their turn."

[John Jackson]

It's the concept of MLM that is flawed rather than the products or prices. Unfortunately many people fail to realise that and stumble from one scheme to another in the hope of finding 'the right one'.

Christine's right, it's the downline that is the key to making money in MLM. A full and active downline also happens to be the thing that is the hardest to achieve.

I would forget about the product and concentrate on whether a huge downline is actually feasible, and then even if it was, how are they all going to sell to a saturated market?

It never adds up to success - despite the promises.

[Walk The Line]

The only way to make money in these things is to establish an extensive downline and sell them stuff. Unfortunately, many recruits know this already, and are buying into the idea that if they stick with it, it will soon be "their turn."

Pardon my ignorance, but what is downline? From your usage of the word, it sounds like it is people you've recruited who you then sell goods to. But, I could be wrong.

[Rasmus]

Pardon my ignorance, but what is downline? From your usage of the word, it sounds like it is people you've recruited who you then sell goods to. But, I could be wrong.

You're almost right. (or I might be wrong ...)

It's the people that you have recruited, and the peolpe that those peolpe have recruited, and the people ...

whenever anyone of all these peolpe makes a sell, you get a percentage off of that sale. (And your upline is all those peolpe that get money everytime you make a sale yourself.)

I am not certain, but I don't think you usually sell to your downline - other than initially when you are recruiting them.

[rjh01]

In short if you want to make money from MLM, forget about selling stuff, just recruit lots of people to do the selling. Everyone else gets that idea and then the market is flooded by people like me who cannot recruit anyone because everyone has been recruited.

If I ever come to that conclusion about a company then lots of red flags go up.

[ChristineR]

Sorry, I could have been clearer. Rasmus is correct in his explanation of downline. However, rjh01 is also correct. The market for these goods is always saturated, no matter the recruiters tell you. If the MLM really does have a good product, then it will be more expensive than the equivalent you buy at a regular store. If the MLM truly has something so one of a kind that it is worth the extra bucks AND cannot be copied AND has a large potential market, then the product would be sold in stores.

The reality of MLMs is that the distributors themselves consume (or throw away) most of the overpriced product. They also push these onto their family and friends. This is portrayed as "growing your business." So if you get a large downline, you will be getting your sales commissions from the downline (and people trying to help a friend in your downline) itself, not from normal consumers. Amway in particular is notorius for ordering its distributors to buy everything possible from Amway, and Amway sells all sorts of overpriced goods that most of us do not associate with Amway or soap.

The other way that money is made is by selling "educational" and "inspirational" material to your downline. This is far more profitable than selling actual product. The distributors are told that buying a cheap cassette tape of someone rambling on for an hour about how wonderful the program is shows that you are "commited" and "serious." If you just borrowed the same cassette from someone else, you would not value the precious message quite so much. If a distributor ever gets successful enough so that he/she can start a inspirational material business, then he/she may indeed get very rich.

The problem is that by that time it's a pure pyramid scheme, with no actual product (short of a $.50 cassette) justifying the exchange of money. This is the real holy grail for most serious MLM people--the chance to rip others off. It's a truly strange mindset...when I hear of classic pyramid schemes I usually get the impression that the recruits do not realize the whole thing is a scam. For many of these MLMers the hope is to be scammed enough so that you can become a scammer.

[Project86]

1st post here, hi everyone.

Roughly 7 years ago, when I was a senior in high school, several of my classmates got involved in MLM. It was a very interesting thing to watch. This company called 2by2.net (claimed to be an ISP selling dialup, but you paid $420 to become a rep) got them all worked up about the huge amounts of money they would be raking in. There were a few people around town, young guys just out of high school, who had nice cars like Acura NSX and Mercedes SL500... they had giant 2by2.net graphics all over them. The theory was that they had made a bunch of money with the company and could afford these cars (we later found out that they were salvage titles and partially funded by the founders of the company). Anyways, these otherwise intelligent people went nuts for this company. It was all they talked about. They drove away friends and even family members by trying to sell to them, and having a "with me or against me" attitude.

I just did some searching the other day and found that 2by2.net scammed a ton of people in CA, then slowly moved east through the country and kept doing the same thing. They mostly got young college age kids to join, mostly ethnic kids and kids who had no knowledge of the internet. Eventually enough people knew about them that their reputation was very bad, making it hard to find new people to scam. So they changed the name to IXP.net (internet Xtreme!) and kept on going. They also have another spinoff called yor.net, which seems to be exactly the same. I don't know how they are doing now, but at one point they had something like 50,000 reps (at $420 per person) although I assume most of those just paid the fee once and then gave up shortly thereafter. Very little actual internet access was ever sold.

I know this is mostly just interesting to me since I knew some of the people involved, but... if you google for 2by2.net, or ixp.net, or Dennis Wong (founder), you will get all kinds of interesting stories. Mostly about people who are mad because they got scammed, but also some old posts about people defending the system. The logic here is almost non-existant... it's like listening to someone who thinks 9/11 was a conspiracy. But just like that topic, reading these can be interesting as a character study.

Bottom line is this: there IS money to be made in MLM, just like any other scam. Some of the top (top of the pyramid) people in 2by2.net had Lambos and Ferraris. Many of them have since gone to jail or had large lawsuits to deal with. Others have gotten away with it and have moved on to other scams like selling travel or herbal junk. To succeed you are gonna have to lose all your friends, piss off your family, and general be a sleaze ball. If that's what you are willing to do, go for it....

[Walk The Line]

1st post here, hi everyone.




Welcome to the forum and good post!

[Ipecac]

The idea of selling things gives me the heeby-jeebies (just not in my personality), but the idea of selling things to my friends and family and counting on them to support my sales just chills me to the bone. What a horrible thing to inflict upon them.

[Curnir]

Yeah it's kinda scary.

My boss is a "rep" for a MLM called ACN, goes to conventions and training seminars...

And since I am in charge of the office I often get to hear him 'pitch' and talk to his upline...
A year ago he went around bragging that he would be netting 5 Million by the end of the year, due to him singing an entire 'rental complex' as phone customers... Of course that was not the case, they had said that they would sign with him he could offer 10/10 MB internet access. A service that ACN doesn't offer in sweden. In fact they don't offer internet services, not even dial-up.

So far he has not tried to "recruit" me, mainly because I told him that
1. I'm not interested
2. My friends wouldn't be interested
3. I never use the phone.
4. I trust folks just as far as I can throw them... and I'm not that strong.

Oh wait... when I told him that I would be going on the amazing cruise, he mentioned that to one of ACN's founders (hard to find info on those dudes on the internet, but they seem to be motivational consultants), and that guy said that it would be a great place to recruit people...

I had a good laugh when I heard that...:D
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If it sounds too good to be true...it probably is.