What’s Wrong with Multi-Level Marketing? The problem with the MLM ”income opportunity” model is that the product (the “unlimited” income opportunity) is bogus. It does not exist. And, “unlimited” expansion, the foundational principle of MLM, is impossible. The promise offered to consumers is illusory. The pyramid model in which each person recruits more “below” must always place the vast majority in the lower ranks where a recruitment-based income – by design – can’t be possible. For a very few to be profitable, nearly all others cannot be. As the limits of the falsely advertised “unlimited” expansion are reached, those in the bottom lose their investments. They quit the schemes in large numbers usually within a year and then are replaced with new hopefuls. The “business” continues as long as the schemes can find new recruits (investors). Bad economic times produce many new potential recruits. Bad times for products are good times for sellers of hopes and dreams and purveyors of “independence, be-your-own-boss, can’t-get-fired, 20-hours-a-week-for-financial-security, anyone-can-do-it” income schemes. In reality, adding salespeople during a Recession only harms the members of the existing sales force who are struggling to build a sustainable retail customer base in a shrinking market. The company’s constant recruiting of more salespeople only adds more competition. The real estate market, for example, could not be expanded or improved by merely signing up more realtors. But this is precisely what MLM companies do. The MLM model can enrich the company as it churns through thousands of “failing” sales people every year. In fact, data show that 99% of all MLM salespeople do not earn a net profit. Whereas true direct selling depends on sales revenue, the MLM model demands an annual infusion of new capital investments (product purchases, fees, salesperson-financed marketing and recruiting expenditures) from the salespeople. With 99% of them losing money, the salespeople “churn” (quit) at a rate of 50%-80% annually. Most of the sales force/investors, therefore, must be replaced every year. Without relentless recruitment of new salespeople, the MLM company would collapse quickly for lack of capital, the salespeople being the source of that capital. The “profit” of the company and of those recruiters at the top of the sales pyramid depends upon the lost investments of those below, hundreds of thousands of “failed” salespeople. pyramidschemealert.org/has-mlm-corrupted-avon/
Posted on: Thu, 06 Mar 2014 15:56:18 +0000
Trending Topics
Recently Viewed Topics
© 2015