Oh No! Not Another MLM Business!
Why do businesses which operate solely on the idea of rewarding those who share product information with friends and loved ones have such a bad wrap, when anyone in marketing agrees that word-of-mouth advertising is the most powerful advertising out there?
Well, interestingly there are some who have been in the industry for a good twenty years or so, including myself, who have seen a trend that just may be the cause, or at least a good share of it, to this bad reputation.
I call it DEFAULT.
We’ve all experienced it. You get a program and fine tune it to your needs. What a joy it is. The sun is shining, the birds are singing. The blossoms are filling the air with fragrance. Then one day something happens and returns all your settings to DEFAULT. And there is no way to retrieve your former settings except by starting at the beginning again. Dark clouds gather. Hours are lost, appointments missed, decisions delayed, emotions run high, and many other things go wrong. All because of DEFAULT.
Almost all businesses run on the pyramid plan-not just MLM types. At the top is the CEO, the president, the great leader. He or she has a few trusted associates who help run the show. These operate at the second level of operation, and usually receive a slightly lower pay. They, in turn, have others who report to them. And on it goes until at the very bottom, and at the lowest pay scale, rests the largest group, the factory workers, laborers, cleaner-uppers. To get from the bottom to the top of the pyramid is very rare in conventional business. But everyone knows that this is just the way businesses are run.
So then a network marketing business starts up and changes how things workso it’s advertised.
“We will show you a better way to do business, one where you don’t have to remain at the bottom all your life. You too can enjoy the lifestyle of the CEO, vacation when you want, travel where you want (and in style), have time with your family…” and on and on they croon. Then they draw circles and explain how it all works (on paper).
Everything works like they sayfor a little while. Suddenly you awake though and find that your American Dream, the one you’ve set all up and gotten organized just right has reverted back to DEFAULT. Once again you’re down at the bottom of the pyramid, looking up wishing for more just like in normal businesses.
What people don’t know about most MLM plans is that they are designed to DEFAULT to the conventional pyramid business style, with few at the top enjoying high incomes and those on the bottom groveling, trying to make the system work. This is done by various methods. We’ll mention only four. They may be called by different names, but I think you’ll recognize them.
1. Jump-start: knowing that many will never get beyond their initial “buy-in”, they push you to “tell everyone” you can about the opportunity. This gives the company free advertising and some quick profits from the “introduction package” you just bought.
2. Breakage: if you don’t meet your monthly quota then you’ve to forfeit your “bonuses” or “points” and then the company keeps the money.
3. Break Away: when you “graduate” to a new level, some of your earnings that you worked hard to get is left behind. The company gets to keep that money
4. Exhaustion: by requiring constant enrolling of new people the company knows that eventually you’ll tire and give up. They know the average recruit will enroll only 2-3 people, so they keep the recruiting stipulation high. The company now keeps what you worked so hard to build.
This is a short description of some of the ways network marketing companies make the massive profits. They are designed to cause your own businesses that had lots of earning potential to DEFAULT back to you being the little guy on the bottom of the conventional business pyramid.
The best news however is that not all network marketing opportunities do this. Find one that really specializes in helping the tiny guy rather than trying to make them fail.
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