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
I work in ad agencies, last year I was part of a project that is basically the biggest event to introduce new selling strategies and new products in Mary Kay.
Mary Kay is almost like a cult. The event is ginormous and MK have the money and yet they still demanded women to pay a hefty price to get in, which is essentially just a MK big ad. And people paid.
There’s even a big ceremony to celebrate the biggest sellers, with a throne, scepter, crown for the queens and princesses and what not.
While I was making all the layout to be put on the wall, I have to read to make sure there wasn’t any big grammatical mistakes and mah gawd, if you want to be a MK seller, as a starter, you have to buy at least 20 MK prime base. All MK’s goals are so fucking farfetched if you try doing it alone, it’s crazy.
They do give a lot of small gifts to keep the person going though. And stupid badges. If you sell X products you literally earn a star (pink one).
The big ceremony with the winners is cringey, VERY pink and gaudy. All the women eat it up because it’s very “fairy tale”-esque style. Most winners are actually rather rich women who have employees to sell MK stuff. However, MK marketing team specifically choose ONE woman with “humble origins but rose to the top” story to sell the dream “you can be that woman if you make a lot of effort!”
The biggest prizes is an all-inclusive trip, some cute necklace, a pink car.
I’m still gobsmacked that you have to pay to be part of the event.
Here’s one I haven’t seen yet:
IN POLITICS, some people would rather **be** wrong, than **admit** they were wrong.
SAME HERE, some people would rather **be** fools, than **admit** they were fools.
(*There* may *be some overlap here…*)
Further, like those who hang onto a losing stock too long rather than taking their loss and licking their wounds … some people probably think that they’re ***this close*** to breaking even / getting their money back, so if they can hang on ***just a little longer***, maybe they can get out with their egos intact, compared to admitting they’d been had and “realizing their losses”.
The psychology is stronger than the math.
Basically because they aren’t illegal, and until the end of time there are always going to be people who are either desperate or very easy to con to get involved in them.
Because as long as you can find new suckers to bring in, the people who are already in are making money. It only stops working when you can’t find enough new suckers so that there isn’t new money coming in to pay the people already there.
As for their legality, they skirt the law as best they can. And grease palms and line pockets when they can’t.
Is Rodan and Fields an MLM?
Roulette is not a good way to make money either, but people still try it. Simply being a poor financial decision does not make something illegal.
Because actual MLM isn’t a pyramid scheme, it’s just a shit deal. But from the FTC’s regulatory perspective, if you sell stuff and get paid for the stuff you sell, it’s not a pyramid scheme. A pyramid scheme distributes payment based on recruiting new members and is defrauding said members by pretending there is some other revenue stream than money paid in by new members. That also doesn’t mean an MLM can’t be doing enough bad things to be illegal for other reasons.
That’s oversimplified, but this is ELI5
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.
Something for me at last! I am from a shithole country, my fellow countrymen and women join pyramid schemes knowingly.. In a country where nothing works, one hopes to join such schemes early on before collapse. Everyone hopes they are at least one rung above collapse.Heads you win, tails you join the next scheme, hoping for better luck.
Some are good products and very well known. Like Tupperware, pampered chef, or Mary Kay. They are ones that really stand through the test of time and are even sold elsewhere too.
But in the end, they are the same mlm as other things. So really in the end, people just still pay for and like the product no matter how scam it seems.
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