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Should You Participate In Multi-Level-Marketing (MLM)?

28 September 2009 2 Comments

It’s funny how many times I’ve been approached to participate in multi-level marketing program.  Being someone who tends to jump at income opportunities, I always consider them, but have never really bought into these programs.  Now, I completely understand it is possible to make money with these programs; I know people who make good money, but as I’ll explain, I don’t have much interest in these programs.

What is MLM?

Multi-level marketing is a strategy to use people on the ground to market and sell a product.  Rather than a centralized corporate marketing strategy, a company can choose to compensate individuals for selling the products, and as you’ll see, for signing up additional “sales people”.

What are Some Examples?

Probably one of the biggest MLM programs out there today is MonaVie.  Some of the more established programs are Amway and Pampered Chef.  There have also been many programs that have come and gone in terms of popularity over the years.  One of the biggest that came and went was Burn Lounge.

What’s the Problem With MLM?

From my perspective, there are two major problems with MLM.  One deals with sustainability and one deals with the sales strategy.  I’ll address both:

Sustainability

Most MLM programs fail because they aren’t sustainable.  These programs aren’t sustainable because they rely too much on new member fees as opposed to sales revenue from the actual product being sold.  Some of these programs will explode and generate a ton of revenue from membership growth, but the problems come when they hit a phase where membership doesn’t grow much, and they have to rely on product sales.  With regards to Burn Lounge, who the heck was really going to buy music from your friend’s “music site”?  De-centralized online sales platforms don’t work in my opinion, we’d rather go straight to a trusted source such as Amazon or iTunes.

Sales Strategy

MLM programs rely on your relationships.  I have a huge problem with this.  If I join MonaVie and start to sell, who are the first people I will approach to either become a sales person or to buy the product?  My friends and family.  THis immediately puts a stress on my personal relationships that is not beneficial to the relationship.  Now, I’m trying to get something out of these relationships instead of simply enjoying the relationships for what they are.  This is not a formula for quality relationships, and in my opinion, it’s not worth it.

Is It For You?

Only you can answer this, if you have a large network, have the time to pursue the particular program, and feel comfortable selling to people you know, maybe it’s a good opportunity.  Some people do very well with it.  If you don’t feel comfortable selling and asking people for money, I’d stay away, I don’t believe you’ll be very successful.  Find another avenue that matches your strengths better.

Opportunity For 20-Somethings?

20-somethings may have more time to focus on a program like this since many 20-somethings don’t have families or other obligations.  If you have the freedom, perhaps, check it out.

If you read my blog, I definitely encourage all 20-somethings to pursue additional income streams outside their primary career.  MLM might be that opportunity for you.  For me, it’s not what I want and it doesn’t necessarily line up with my strengths.  Pursuing online income streams is more the direction that I’m pursuing.

Do you participate in MLM?  What program and how well do you?  Leave your comments and join the discussion!

2 Comments »

  • Mandy said:

    i have been approached by multiple MLM programs here in Fort Myers and your article hit it right on the mark. Every time I go to one of these "pyramid schemes" I know what I am walking into, I know it is not for me, but I only participate in the meeting for the support of my friend who is hosting. As a 20-something, myself, I feel that it is more effective for my caraeer to be stable and secure without pulling in friends and family. It is not fair on both ends to be so dependent on thoes MLM events.

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