Debunking the Multilevel Marketing Model
“Are you ready to TRANSFORM your life, start your own beauty business, become a #BOSSBABE and look AMAZING while doing it”? While you may cringe, MLM consultants and advisers use this is an overused sales pitches that for recruitment. The recruitment process could be social-media oriented or in the form of a “party”. Multi-level marketing companies have gotten a negative reputation over the past few years though aggressive social selling and shady legal practices. In spite of these, the MLM models aren’t as evil as their negative reputation makes them out to be.
Women are often targeted for Recruitment
Like the majority of social media-oriented and trend-savvy young women out there, I got roped into a recruitment “event” for one of the many multilevel marketing beauty and health companies out there. I was lucky enough to get an insider look into the company, their business model and recruitment process. I could tell just from the faces in the crowd that the majority of consultants were women. Many of the consultants and advisers tend to be stay-at-home moms, military wives, singles moms or families who looking to make a little extra. As a female who grew up in suburbia, I have been invited to my fair share of MLM “parties” – Avon, Pampered Chef, May Kay, It Works, and countless others.
The MLM Sales Model….Somewhat Shady
MLM companies operate on a very different sales model than traditional retail sales. The traditional days of retail sales were often dominated by the brick-and-mortar store, where friendly, trained salespeople approached you with smiles and knowledge. Today’s selling landscape is shaped by the changes in the internet – the rise of social media, social selling, email marketing, viral marketing, video content, blogs and eCommerce.
MLM red flag: when only the top 2% profit
MLMs build their business on recruitment . Typically, distributors earn commissions through their sales and the sales of the people they recruit. The pyramid structure that exists is one of an upline (those that have recruited you) and a downline (the chain of those you have recruited) Social selling and word of mouth I had first heard of Nerium though a LinkedIn connection I had sharing an “amazing opportunity” for me to make “about $1500 a month” just part time, selling Nerium. Most often, people are recruited via social media by friends, family members or acquaintances. This is a method of social selling and direct sales.
When MLM consultants fail and Why
One of the more positive aspects of many MLM companies is that they prepare their consultants for success, providing them with “starter kits” containing inventory and training manuals. Unfortunately these kits usually start at $99 and go up to the thousands. Many people who sign up to become consultants fail to understand that it’s THEIR responsibility to get their return on investment and see a profit. Read the fine print on any MLM company site and they will state that profits vary between consultants. This is the point where MLM piss money away and fail to get their return on investment. Only 1% of the Upper Sector of the Chain of a Multilevel marketing company gain income. All others, on Average Show Net Losses. Altogether, MLMs rake in a whopping $30 billion in revenues each year. With these huge revenues, many victims of these companies must think they’re guaranteed some profit. However, the average distributor only grosses $200 a month. On average 99.92 percent of Herbalife’s participants lose money. Not surprised, with the high price markup of those protein powder drinks they hawk.
Know What You Are Getting Into
Its no surprise that combined with high hopes and a lack of understanding about sales. Consultants are losing money that they spend on their inventory or they are breaking even. Just recently, the popular Multilevel marketing fashion company LulaRoe found themselves in a class-action lawsuit filed against them by consultants who were unable to sell their merchandise or refund it. As stated by the bubble Nerium rep: “worst case scenario, you will end up with a bunch of product inventory that you are going to use anyway.” While that is true, it doesn’t make up for the lose of profit. Personal example: one of my aunt was a Mary Kay consultant who failed to keep up with the demands and time involved the business. When she stopped putting the time into it, she ended up with an excess of inventory she couldn’t return. Guess who got Mary Kay makeup and for Christmas several years in a row? You guessed it. Even to this day there are still 20 unused cleansers under my sink. Go figure.
Not All That Glitters Is Gold
Is it possible to become successful becoming a consultant or adviser for a MLM company? Absolutely. Know however, that sales success is neither guaranteed nor is it going to come easily or quickly. Be wary of your Facebook “friend” who promises that you will be making $1,500 a month on sales. Set realistic goals and don’t buy into the hype of quick financial success. Research various sales tactics and stay up to date on marketing, advertising and business. Sharpen your sales experience and know that the MLM industry this isn’t a 9-5. Be prepared to put in a great amount of work and time, often at the sacrifice of other areas of your life. Don’t forget to do your homework. Use this handy guide from the FTC on how to avoid running into fraudulent MLM companies.
The Faceless Route
Perhaps you’re an ambitious self-starter who is set on growing your own business. Not sure where to start? No problem. Our business experts at Faceless Marketing will walk you through the blueprint of your vision. No MLM or middle man required. Marketing may seem complicated, but it doesn’t have to be. Email info (at) Faceless (dot) us for more details on how to finally be your own boss- the right way.