The company’s that everyone knows are MLM trash (HerbaLife, JuicePlus, ect). When I was looking for a job I naively joined a seminar discussing CutCo Knives. Come to find out these dud muffin companies have been around since my mom was growing up, and are somehow still operational? Wouldn’t the BBB or whatever business bureau operates in the US (FTC?) have these scams shut down by now? I understand that new ones are popping up all the time but im referring to the ones that have been around forever now.
In: Economics
Multilevel marketing is a sales and marketing tactic and process. MLMs are generally not pyramid schemes. However, pyramid schemes can often rely on the MLM process. MLM forgoes the traditional retail sales process in favor of a direct-to-consumer, multi-level sales organization.
CutCo, Mary Kay, Herbalife, Amway, etc. are examples of companies that sell their products via MLM. To be viable, the products must be sold at extremely high prices to support all of the “levels” that get a piece of the commission. That’s why they rely on the hard and urgent sale. If a sales person doesn’t close the sale on the first meeting, the sale most likely won’t happen because upon reflection, the consumer will realize how overpriced the product is.
For example, there is nothing wrong with CutCo knives per se, except the price. They offer good stainless steel knives with a lifetime warranty and a very strong sales training program. No one makes good money selling CutCo products unless they have sales people working for them. Turnover is very high, so they go through salespeople very quickly.
MLMs survive because “there is a sucker born every minute” as the old adage goes. And that goes for both the sales person as well as the buyer.
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