Multi-level
Marketing
Bloggers
note: This entry is meant solely for information purposes only and is not a
recommendation of any of the programs listed herein, nor does blogger have any
affiliation with the companies and opportunities listed. Any monetary or
personal investment of time or resources in any multi-level company is the
assumed responsibility of the participating individual.
Multi-level Marketing is the fourth and final segment of the
series, “Internet Marketing, Still a Viable Economic Alternative”.
We’ve all been approached by multi-level markers or MLM at
some point in our lives, who promise you the opportunity to start your own
business, work from home, gain financial independence, quit your day job and
build a legacy for future generations. MLMs didn’t just start with the
internet. Companies like Amway (59), Legal Shield/Pre-Paid Legal (72) and Herbalife (80) have been around well before the advent of the Internet. Many advocates swear by them, however,
they’ve also come under attack from those who were either disappointed with
their personal results or felt somehow taken advantage of by individuals at the
top who, in their minds, raked in all the cash and left the lower level sales
people struggling to get their businesses established. It’s not the intent of
this segment to delve into the many scam allegations that are associated with many
of the top MLMs, although I will address the differences between MLMs and
Pyramid Schemes and Ponzi operations. Also, I will give an overview of top
programs to join, cite who are the top money earners in the industry and
address some keys to consider when choosing and joining a MLM program.
What is
Multi-Level Marketing?
Dominique Xardel, Ph.D., Associate Dean at ESSEC Grad.
School of Business, Paris and author of the landmark book, The Direct Selling Revolution, defines Multi-Level Marketing as “a marketing strategy in which the sales force is
compensated not only for sales they personally generate, but also for the sales
of others they recruit, creating a down-line of distributors and a hierarchy of
multiple levels of compensation.” Although many associate MLMs with pyramid and
Ponzi schemes, Multi-Level Marketing is distinguished between those two
practices in that MLMs legal because they market legitimate products and
salespeople pay a fee to join so to become sales representatives and earn a
commission on the products that they sale in addition to, a certain percentage
of the sales of individuals that they sign into the company. Additionally, MLM
members can earn more income than the individuals who signed them into the
company as well as those in their “up-line”; this is not true with a pyramid
scheme. Pyramid schemes are illegal
because there is no legitimate product or service and therefore the scheme is
unsustainable without an influx of more signees. Company funds flow to upper
leadership while lower membership can only earn income by recruiting new
members who pay a fee to join. The structures of the two entities are very
similar in that there a multiple levels of membership, with those on higher
levels considered up-lines and the newer signees considered down-lines, however,
a MLM business will have products that can be sold at every level of the
business, and a pyramid scheme will not (WikiHow).
Ponzi
Schemes are defined by Ivestopedia as “A fraudulent investing scam
promising high rates of return with little risk to investors. The Ponzi scheme
generates returns for older investors by acquiring new investors. This scam
actually yields the promised returns to earlier investors, as long as there are
more new investors. These schemes usually collapse on themselves when the new
investments stop.” The Ponzi scheme is pyramidal in structure as is both
multi-level marketing and pyramid ventures, but because multi-level marketing
compensation plans rely on members selling product on every level, they are
legal in the United States.
What
are the Top MLMS?
Generally speaking, will get varying opinions about what is
the number one best MLM program to join, although, most list of the best 10 to
25 programs will have AMWAY at the top. Individual preference for what type of
product or service you’d prefer to market would certainly be a factor. Here are
some expert opinions of what are the best programs.
MLM expert Michael Clouse is
considered one of the top 10 network marketing trainers in the world. In
January 2013 he put out a Top 25 listing of the best MLM companies using five
criteria to determine their ranking:
- The company must be a self-described Network Marketing, Multi Level, or MLM company.
- The company must be in business for at least 10 years as of December 31, 2012.*
- The company must have a Google Page Rank - GPR. A scale of 1 to 10 with 10 being best.
- The company must have an Alexa Rank - AR. Here the smaller the number the better.
- The company must show up in Google Trends - GT. All Regions. Last 12 months.**
Here
is the top 15 companies of Clouse’s list: http://www.nexera.com/top25/
In
May of 2013, Infinity MLM Software compiled a list of the top 10 MLM companies which
consisted of several companies not normally associated with internet marketing:
1. Avon Revenue;
US$ 10.717 billion (2012)
2. Amway
Revenue; US$
11.3 billion (2012)
3.
Empower Network Revenue; $1 million in
commissions in a week’s time
4.
Arrix, no statement of revenue given
5.
Organo Gold Revenue US$ 300 million
6.
Herbalife Revenue US$4.072
7. Natura Cosmeticos S.
A. (Brazilian) Revenue US$3.2 billion
8. Vowerk & Co. KG
(German) Revenue 2.368 billion euro(
9. Mary Kay Revenue
US$2.9 billion (2011)
10. Tupperware Brands
Worldwide Revenue 2,300.4 million (US 2.3004 billion)
Top
Income Earners
As stated earlier, a distinguishing feature of MIM companies
is that individual marketers can generate more income than the person who
signed them up to include making more than the company leaders. In April 2014,
Business for Home generated a list of the Top 150 Worldwide Earners in MLM. The
listing included their individual and company name, their monthly and annual
estimated income with a link to their business website. I’ve included the top
10 on that list here:
To make this top 150 list, you must generate a monthly
income of US$5,000 per month, however, holding down spot 150 on the list is
Domingo Herrera of OrganoGold who brings in an estimated US$100,000 per month
and US$1,200,000 annually. Clearly, there is a substantial income being
generated by MLM marketers worldwide.
7 Things
to consider when choosing a Multi-Level Marketing Company
When choosing a MLM, be aware that you are attempting to
start a business. You’re more than likely approach friends and family members
to get your business started and to establish a core marketing base. Whatever
choice you make in selecting a business and exposing that business to people
who trust you should adhere to the highest standards of integrity. The worst
thing is to have people who have trusted you and willingly followed your name
become disenchanted with you as someone that they can trust to look after their
welfare over making a buck.
1.
Choose a company that you believe in, that has a
LEGITIMATE product or service to
promote and is capable of producing products that people desire and a
reasonable cost. The federal standard for outside purchases is 70% in order for
a MLM to be considered legal. Most MLMs earn their product sales from members,
well below the 70% outside purchase guidelines. 10 Lies of Multi-Level Marketing False Profits.
2.
Choose a
company with a rewarding compensation
plan that will allow you to earn a substantial living as quickly as
possible. You should be able to earn something with your first two enrollments
in your down line. Moreover, there should be the possibility of you breaking
away from your immediate up line to establish an independent team of your own
once you reach a certain level of production. The company and compensation plan
should have the potential to continue producing past your physical life once
your team is fully functioning. There should be perks and bonuses that
celebrate exceptional performance to motivate both yourself and your fellow
marketers and down-line. All of the wealth should not be cloistered with the
top end executives and management.
3.
The system
should be user friendly and simple
enough for members to both understand themselves, but to also explain to
potential customers and members. There should be training available and
mentoring encouraged throughout the company levels with 30 days of training and
attention set aside to thoroughly acquaint new enrollees with the products and
or services and how the company wants their products marketed. These are sales
job and you’re promoting a real product, not just selling memberships.
4.
There should be active communication between the up-line and frontline members, Find out
who are the top producers in the company, get their materials, study their
techniques, and emulate the positive aspects of their business practice. Attend
trainings, conference calls and webinars when available.
5.
The company should have the support and
resources to get unique and quality products to your customers at competitive
prices that they can’t just drive to the corner store to purchase
themselves. The company should have the
potential to manage rapid growth. How is customer service, are they amicable
when called or defensive or hostile.
6.
There should be a money back guarantee so that
you can opt out within a certain period. This will give you an opportunity to
determine if the company is a right fit for what your goals are and the
timetable that you have to achieve it. Plus it will give you a time to sense
the atmosphere created by leadership.
7.
Remember that 80% of MLM marketers fail, so with
that in mind, set short-term and long-term goals for what you desire from this
MLM business make sure that you work hard to develop your distribution team,
but also set realistic timetables to achieve financial benchmarks. Determine to
stick with your day job until your business can safely support all of your
financial responsibilities and there is potential for sustained production and
stability into the future.
Additional Links: 7 Tips for Network Marketing Success, How to succeed in Network Marketing, Consider 6 things when choosing... Key Factors to be Considered... 7 Steps to Choose... 5 Key Factors that you need... 5 Keys to Choosing... How to Choose the right company..
