I’ve searched it up but my small monkey brain can’t handle all the economic terms.
In: Economics
I’ve been doing mlm for 3 and a half years and only just signed up to recruit, which is going nowhere. I only buy what people order and I make money, it’s not a lot but its paid for camping trips and Xmas presents. Depends which company though, some are better than others.
Multiple-Level Marketing is a type of business where independent contractors earn from their sales, and also a fraction of the sales of new folks that they bring into the business. Some very dubious promises are often used to convince people to spend large amounts on “inventory”, which they will never be able to sell. While not technically a scam, they also have a lot of scammy participants.
A pyramid scheme, but legal.
Basically the idea is that you “join” the organization for a fee, then pay whoever recruited you to buy products that you then sell, and you go on to recruit more people
It is impossible to ever make any real money selling the products. The money comes from recruiting more people and getting fees from them.
Multi Level Marketing. It’s a type of business where you make money by both selling a product, and recruiting new people to start selling that product, having them pay you a fee to get started.
But the new people who get recruited often find that it’s very difficult to sell the product, and the money they spent to get started in the business has been wasted, as the people who recruited them already got all the local folks to buy whatever that product was.
It’s similar to a Pyramid Scheme, but legal, because you could in theory sell the product and make money that way. But the real way they encourage you to make money is by recruiting more and more people to join, as you get money for everyone you recruit.
It’s supposed to be confusing!
A multi-level-marketing scheme is a business based around having just enough of the structure of a pyramid scheme to encourage blanket positivity and denial of problems (because if other people stop participating your income goes down, so everyone wants to keep it rolling). And also to help concentrate wealth for the founders and to create a few aspirational examples. But you also want enough actual business that you don’t get closed down by regulators, and allow the people who have been roped in to rationalise their participation.
Complexity in reward schemes and business structure allows people to hide exactly how much of a pyramid scheme it is, and forms the infrastructure on top of which a motivational “empowerment” message can be laid.
Multi-level-marketing really is an apt term, because it forms an environment where your marketing team is constantly selling your product to “themselves”, trying to convince people further down the chain that it is actually valuable, and so the whole structure is based on marketing and forced positivity. It’s marketing all the way up and down.
This means that it’s pretty hard to trust people in these structures, as everyone in it is incentivised to lie to you and themselves, in order to continue making money, especially if they’ve already made lots of public endorsements of the product.
The key elements to watch out for is people getting some kind of commissions on commissions, and people trying to invite you to seminars of unclear length, where they can show you how much money you can make.
Latest Answers