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.
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.
Photo by Mark Ramsay