Multi-level Marketing (MLM) or Network Marketing is very popular. It is used to sell vitamins, beauty products and many others as well. It generally requires face to face selling but some people use the internet to gain a down line.
Many people are attracted to the possibilities of large dollars to be made. Unfortunately, that is the exception and not the rule. Most people are not good at sales and aren’t aggressive enough and stick with it long enough to build a self sustaining downline. In fact a self sustaining downline is almost a myth because there is so much attrition. Other than a few companies that have been around for decades, most of the companies don’t last that long.
In fact one article claims that only around 50 MLM companies have lasted 10 years or longer. What happens is that when they have found as many suckers (I mean customers) as possible and have saturated the market, a new company gets started. Everyone likes to get in on the ground floor because that is where the money is made. The movers and shaker with big downlines get brought in and they bring as many of their prior downlines as possible and clean up. The people below them make a bit more for a while and them max out. So, on to the next company.
Funky Math
The problem is the math. It is not exactly a Ponzi scheme, but close enough. When you look at the compensation plan and figure out what it would take to make $100,000 per year and then look at the number of people you would need in your down line and how much they would need to buy, it is daunting. But, if you have any integrity, you want the people in your downline to succeed as well. This is where the problem with the math comes in. You discover that to have a number of your downline succeed as well, you start needing the entire population of the United States to sign up. It just isn’t sustainable.
One positive though is the comradery and the positive reinforcement that can help some people get out of a rut and succeed in life even if it isn’t at MLM. On the other hand, there are a lot of garages and basements full of unused product.
In terms of internet marketing, many companies require that you use the websites that they provide for you. You aren’t allowed to set up your own independent site. That makes it very difficult to use the internet effectively.
Sell the Knowledge, Not the Product
One person came up with a different solution which is typical of good internet marketing. Give information away for free to get people hooked and then upsell them. She now sells something called the Renegade Network Marketing System. She started out by putting up a blog with nutritional info. People liked it enough that they told friends and she started signing people up to her nutritional MLM company. But then she found out that people liked the product but couldn’t duplicate her on the business side.
So she decided to teach her system and sell that. She developed a free ebook to get people interested and then sold her system. So now she can sell to people in all the MLM companies. Pretty smart. Kind of like in the California gold rush. Do you know who really became wealthy during that time? It was some of the people with stores that sold jeans and shovels and things like that. They became some of the major corporations in California and a number still exist to this day.