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The Real Problem with Multi Level MarketingViews: 805
Sep 30, 2005 10:17 pmThe Real Problem with Multi Level Marketing#

Garland Coulson
I just read an excellent article by fellow Ryzer, Scott Allen entititled, "The Real Problem with Network Marketing and Multi Level Marketing.


I have many clients and readers who are involved in MLMs who wonder why there is such a backlash against MLMs. Scott hits the nail on the head with this article and does a great job of explaining the problem.

Garland Coulson, "The E-Business Tutor"
Market while you surf!
FREE Traffic and Research Toolbar for FireFox and Internet Explorer
Moderator, Internet Marketing Tools

Private Reply to Garland Coulson

Oct 01, 2005 11:55 amre: The Real Problem with Multi Level Marketing#

Ron Kirkland


You are right, Scott did hit the nail on the head.  When I first saw the title, I thought it was going to be another "bash MLM" article.  I was pleasantly surprised.

I am new to network marketing and am still very much in the learning stages.  For years I did not walk, but ran away, from any opportunity that was mlm/network marketing.  

Unfortunately it is a business model that opens itself up to abuse and neglect.  I would encourage anyone involved with a Network Marketing company to do their homework, take a realistic look at themselves and expectations.  Above all else, learn what they need to learn about running a business, and treat their opportunity like a business, not a "get rich quick" scheme.  Anything worthwhile takes dedicated learning, effort and work. 

Make Every Day a Great Day

Private Reply to Ron Kirkland

Oct 01, 2005 12:38 pmre: re: The Real Problem with Multi Level Marketing#

Gary Mialocq, Ph.D.

Unfortunately, MLM has a built-in problem. In order to pay various levels of participants, the product is almost always woefully overpriced. Perfect example: products like Life Force International's "Body Balance". Probably the best liquid nutrition on the market but at $25 a bottle? Each person needs 3-4 bottles per month.

Unless you can find an MLM that involves an ethical company using direct sales from manufacturer to consumer, your prices will always be over inflated. Fortunately, I have found such a nutritional product but because I can't advertise it here, I'll just suggest that you click on my name and visit my Ryze webpage.

Private Reply to Gary Mialocq, Ph.D.

Oct 01, 2005 1:20 pmre: re: re: The Real Problem with Multi Level Marketing#

Martins Gulbis
Actually, for me, the real problem with Multi Level Marketing is that I cannot ever seen to get a downline that does anything. I can pretty much refer people to most progams, but it seems as soon as they get in my downline, they instantly disappear, never to be heard from again. I have tried everything and am at a loss as to what to do, most of the time they ignore my emails. How can I help those that won't even email me? Just how does one get a downline that is productive.
I think I'll end this with an extreme example of my situation. In the program, Monster Prrlaunch, I am rated as the number 23 top referrer. However when you look at the stats one thing sticks out like a sore thumb. the number of direct referrals I have is 46, while the size of my entire donline is the SAME 46!!! That is what I call a dead downline.


Private Reply to Martins Gulbis

Oct 01, 2005 1:34 pmre: re: re: re: The Real Problem with Multi Level Marketing#

Gary Mialocq, Ph.D.

Not knowing anything about the program you mentioned, I would conclude that it's not the downline that's the problem, it's the product(s). I have experienced the same problem before but not when the product itself generates enthusiasm. These problems usually occur when the signup is free. When people have something invested they seem to become more involved.

Private Reply to Gary Mialocq, Ph.D.

Oct 01, 2005 1:48 pmre: re: re: re: re: The Real Problem with Multi Level Marketing#

Martins Gulbis
Thanks for the response, but I am not to sure it is either the products or free memberships that is the cause. I have been in a couple of programs in which I must have added greatly to my sponsor's check and I figure if I had two or three of my referalls that could duplicate my efforts, I would be a lot better off financially.


Private Reply to Martins Gulbis

Oct 01, 2005 2:29 pmre: re: re: re: The Real Problem with Multi Level Marketing#

Ron Kirkland


To take this in a somewhat different direction, not that Gary may be correct, but let's assume you have a great product and opportunity.  What else could you do to keep your downline motivated?  Where else can you look?

In my humble opinion, the answer is to develop your leadership skills, and the leadership skills of the people in your downline who show the most potential.  Be very selective of the people you choose work with.  You do not want to spend your time trying to develop those with no vision or passion.  

Help people uncover their dreams.  Help them to discover their true "why".  Find the people who are willing to take 100% responsibility.  People who know that the results they will receive are in direct proportion to the effort they put in.

The reason I suggest this, is because this is one of the areas I working on.  My "day job" is as the IT Administrator for a small manufacturing company.  In reality, I am the whole IT department.  In that role I did not develop my leadership and people skills.  So now I study and practice, understanding the long-term benefits.

Here are two books I would like to recommend by John C. Maxwell.  They are "Developing the Leader Within You" and "The 21 Irrefutable Laws of Leadership".  I have read, and thoroughly  enjoyed both.  If you do not choose these, take the time to find the books/authors that appeal to you.

Success in any area of life is an inside-out progression.  We first grow ourselves, then we help others to grow.

Best wishes for your success and happiness.

Make Every Day a Great Day

Private Reply to Ron Kirkland

Oct 01, 2005 2:59 pmre: re: re: re: re: The Real Problem with Multi Level Marketing#

Wolf Halton
Y'all are just awesome!
I am really enjoying this thread. Very positive and upbeat.
I wish I could find the url for these stats, but I read that restaurants have about the same success rates as MLM businesses.
- everybody who knows how to cook has a "can't fail" restaurant idea.
- everybody who knows how to make a referral thinks they can do MLM
You never hear anybody ranting about how much of a scam opening a restaurant is. We were involved recently with launching Leslie Householder's Jackrabbit Factor book. It is a very readable piece that is in my must-read list along with T Harv Ecker's Millionaire Mind for our downline people or for anyone who wants to start their own business, MLM or otherwise.

Wolf Halton

Private Reply to Wolf Halton

Oct 01, 2005 4:46 pmre: The Real Problem with Multi Level Marketing#

Garland Coulson
Hi Martin,

Here are some thoughts to your downline problem. By working through these questions, you may be able to identify the problem and correct it.

1. Is the problem the product? If the product is poor or overpriced, your downline will lose interest when they run into resistance. If the product is the problem, you will need to switch to a better product.

2. Is the problem the offer? Many MLM's have horrible landing pages even when they offer a great product or opportunity. If this is the case, you may be able to alleviate this by creating your own landing pages (and for your downline as well). Or you may need to change to a better offering.

3. Is the problem your downline? Are you attracting the right people? Identify the ideal people you would like to have in your downline. This would include people with good business and sales skills who have a network of relationships with others with similar skills. Also, they should have a good email/mailing list. Work out the profile of the ideal downliner and work on reaching only these kind of people.

4. Is the problem you? Do you have an extensive web of contacts you can work with? Do you have a large email list you've built? 46 people in a downline is not enough to make a long term success at this.

Do you have the sales and business skills to succeed? If the answer is know, you either have to work on developing these skills through workshops, reading, videos, practice, etc. or change to another career.

Garland Coulson, "The E-Business Tutor"
Market while you surf!
FREE Traffic and Research Toolbar for FireFox and Internet Explorer
Moderator, Internet Marketing Tools

Private Reply to Garland Coulson

Oct 01, 2005 5:16 pmre: re: The Real Problem with Multi Level Marketing#

Martins Gulbis
Thanks Garland,

I think the problem is a combination of 1, 2 ,3, and a little of 4 (Of course it can't be me!). I have never thought of being selective as to who I have in my downline. I have never really had what I would call a productive downline, but lately in the program I am currently involved in, I have been getting better responses to my attempts to contact them, and at the same time they have been getting a little more active. I may be very slowly but surely getting out of this situation and now have some ideas on how to speed this process up.


Private Reply to Martins Gulbis

Oct 02, 2005 4:18 pmre: The Real Problem with Multi Level Marketing#

Garland Coulson
Ron has a good point about leadership.

When you are promoting an MLM and you bring people into your downline, you should be a good leader and provide training for them on how to be successful with the MLM.

You can do this through weekly online meetings (Hot Conference http://www.hotconference.com/members/ebusinesstutor/ is great for this), conference calls or by meeting at a local coffee shop or in a board room somewhere.

During the sessions, you can teach people how to identify ideal prospects, how to make better approaches, share marketing ideas and show them how to build stronger business relationships.

Garland Coulson, "The E-Business Tutor"
Market while you surf!
FREE Traffic and Research Toolbar for FireFox and Internet Explorer
Moderator, Internet Marketing Tools

Private Reply to Garland Coulson

Oct 03, 2005 3:51 amre: re: The Real Problem with Multi Level Marketing#

Kurt Schweitzer
I'd like to add one other suggestion - look at the quality of your UPLINE.

Scott's article compares Network Marketing to Franchising, and calls NM "micro-franchising". Yes, it's true that you can usually buy into an NM company for a lot less than you can purchase a franchise.

But look at what you get. When you buy a franchise, you generally get a thick Operations Manual - everything the franchisor cares about how your business is run. It may include things like how to lay out your store, how much inventory to have on hand, instructions for dealing with employees, etc. You will usually get to examine this BEFORE you pay the franchise fee, because they want you to be convinced that you're getting value for the thousands of dollars you're spending.

The franchisor will also insist you spend some time training BEFORE you open your store. You may spend a month or two working at another franchisee's store, or they may have a training facility like McDonald's "Hamburger U" where you'll need to go for classes.

Finally, the fanchisor will typically provide you with marketing materials and cooperative advertising to help you promote your store. Yes, it's your store, but since it's THEIR name over the door, they will work very hard to make sure you succeed (or at least so that THEY don't fail!)

The Network Marketing companies, on the other hand, tend to spend their "big bucks" on selling you "the dream", but next to nothing to set you up or support your operations. They leave that to your upline.

Now when YOU start adding people to your downline, THEY are looking to YOU to provide all that training and support. How can you provide something that you yourself haven't received from YOUR upline? Is it any wonder that NM success is so spotty?

Kurt Schweitzer
Sound and Loving Care (http://soundandlovingcare.com) - Helping family caregivers keep their aging parents happy at home.

Private Reply to Kurt Schweitzer

Oct 04, 2005 4:23 amre: re: re: The Real Problem with Multi Level Marketing#

Lamar Morgan 954-603-7901

The question that needs to be asked here to begin with is why does the company that makes the product or provides the service desire to go the MLM route to begin with? Why have a downline? Why is an MLM structure even being considered? There must be a reason.

I believe there are companies that would not exist today were it not for the MLM structure. Contrary to whaat most MLM's will tell you, it's not because they want you to experience "financial freedom" or have more "quality family time." No, the parent company wants a volunteer salesforce - one that files 1099's rather than W-2's. Yes, with an MLM you can be in business "for yourself but not by yourself." In addition, the MLM company will provide you with all kinds of training and marketing supplies. They will even encourage you to attend conventions. Of course, all this costs money that comes out of your pocket and goes into the coffers of the parent company.

One of the hallmarks of MLM's is recruitment. Some MLM's place more emphasis on recruitment than the actual product or service being sold. The idea here is the larger your organization the more money you will make. I have heard many times that "It is all about providing what nobody has but everybody needs..." Well, I think a great many MLM's are "all about greed." Some MLM's actually pay certain people to do nothing but travel the country giving their personal testimony at "business opportunity" meeting sharing personal testimony regarding the merits of a product or service. These people never really get involved in the actual business like the average sales associate being recruited.

When you work for a regular corporation you get company benefits such as medical and dental coverage, 401-k, life insurance, etc. You get these benefits just for going to work for the company. Not so with most MLM's. Why? Because they do not see you as their obligation. After all, you are NOT their employee. You are an independent contractor. If the business relationship works for you, that is wonderful. If it does not - due to something like those nasty little chargebacks for cancelled services or returned products - the parent company will not mind. You simply leave. Simple. You may have lost money on the business opportunity. You may even have had to file for bankruptcy. So what? It's not the MLM parent company's problem. It was your choice to go into business with them. You chose to purchase the marketing materials they sold you that did not work as you expected. It's all your fault. Remember, you're an independent contractor. But, if you made any money at all during the time you spent associated with the MLM parent company that company probably profited from the relationship quite nicely.

An MLM stucture is designed to entice a volunteer salesforce to both recruit salespeople and sell products or services. But, I personally believe the reason it is promoted is NOT to benefit the individual salesman. Instead, I believe its basic reason for being is to cut costs and maximize profits for the parent company at the expense of innocent, hard-working people who are pursuing dreams of a better life for themselves and their family. I don't think MLM's should be allowed to take unfair advantage of people. What do you think?

Lamar Morgan
Creating a buzz for business in the boardroom

Private Reply to Lamar Morgan 954-603-7901

Oct 04, 2005 12:41 pmre: re: re: re: The Real Problem with Multi Level Marketing#

Gary Mialocq, Ph.D.
For the most part, Lamar, you hit the nail right on the head.

Private Reply to Gary Mialocq, Ph.D.

Oct 04, 2005 3:05 pmre: re: re: re: The Real Problem with Multi Level Marketing#

Napoleon Jones
This issue has been going on long before MLM's being put in the Internet era, I can remember back in the late 60s when the Amway person would come by or the Watkins sales agent would come by. The same skeptism was stated then as now.

It is always 20 percent of the people doing 100 percent of the work or close to it in any type of organization normally. I am sure there are some exceptions.

People being taken advantage of happens in all realms of life. It is also a perception, some will always profit not because of hard work but being at the right place at the right time.

Some of the hardest working people are the poorest.

Private Reply to Napoleon Jones

Oct 10, 2005 4:03 pmre: re: re: re: The Real Problem with Multi Level Marketing#

Pat F.

Great thoughts! Good writing!

Put it all into a book....I'm sure it'll sell well!

Private Reply to Pat F.

Oct 16, 2005 11:37 pmre: re: re: The Real Problem with Multi Level Marketing#

Nicole Bandes
In the company I work with, I have observed that the largest growing groups are those in other countries. In the U.S., the Spanish division is quickly outgrowing the English division. While this may be isolated to this company, I would be willing to bet that it isn't. If a company supports multiple languages/countries, I bet those outside of the US or English speaking regions are far outgrowing the US.

I have evaluated my observations on this previously and this is what I came up with.

Many countries' money is undervalued and US based companies often pay in American money.

Other cultures including the Spanish still believes in hard work and are willing to work 12 to 15 hours each day to be successful.

Other countries/cultures have not yet been given a distorted view of MLM like Americans have. They still see it as a way that simple people can be successful rather than seeing MLM as just another scam.

Spanish people (and perhaps other cultures as well) are pushy. While this can sometimes be negative, it can also be positive when coming to building a business.

So I think that part of the problem with MLM is simply the American mindset and culture. We want something for nothing.

Nicole Bandes

Private Reply to Nicole Bandes

Oct 17, 2005 12:23 amre: re: re: The Real Problem with Multi Level Marketing#

Debbie Fortier-Success Leaves Clues
Excellent posts you all and I love them all.

I want to touch on Gary's "erhical product" and not over priced.

"And then the quitters..and won't do nothings"

The healthcare benefits industry is evolving into a major paradigm shift. The average American family is paying $9,800 per year for benefits with limits and deductibles and do not include on-going conditions.

Then to use these benefits, (many people are hesitant to avoid increases) a co-pay must be submitted for paper work and the deductibles must be met.

Eliminate all the above restrictions and hassles and provide an affordable service at substantially reduced rates, and you have the "niche" market.

With an Alliance with a powerful voice on Capitol Hill, you will find over 28 million Americans currently own these plans ranging from Bank of America to the AARP to your phone companies.

The bottom line is "EveryOne Wins".

Now you may be saying to yourself, "No way I would get this plan." Yet you may have benefits where you work or individually.
Did you know everytime you make a payment to your insurance company your agent gets a cut, the local office gets a cut, the regional office a cut and the headquarters receives the BIGGEST part. A true pyramid scheme as you don't see to many super wealthy insurance agents.

75% of your payment goes to headquarters.

Flip this completely upside down and as I said remove the deductibles and co-pays, the limits and the pre-exams, and you have the "niche" market.

A compensation plan whereas people on your Team have an opportunity to earn more money than you.

Example, Mike is earning over $312,000 a year, yet his sponsor is only earning $200,000 a year but 33% of that $200k comes from Mike and his efforts.

"My downline won't do nothing."

Typical of every business. You cannot push a rope or pull a donkey. Seek out ten more until you pull that ACE from the deck of cards. You are set for life when you do.

"People quit." That's right and that's life, They will quit the next and the next. So what. Some will some won't, move on!

"Obtain commitments from your prospects."

What is their "WHY" for seeking an extra income?

If they aim for nothing they will hit it everytime!

To many people lack the training and support and sign up every breathing body that will sign, That is why you have quitters. We never allow anyone to sign-up on the first contact. We want their review and critique. We want to be honest and inform them of the work required. (time and effort commitment) If they cannot commit to 10-15 hours a week, we leave them with our contact info and move on.

But, in our case, these people are still lacking decent healthcare benefits (72% are) so many enroll just for the savings our benefits provide. 22% upgrade later. 90% are still on the books 5 years later. (Documented Dun & Bradstreet)


For $5.95 the first month for an individual or $9.95 for entire households, related or not, with a 100% Satisfaction guarantee, EveryOne Wins!

No paperwork or claim forms ever! No co-pays.

Did you know many co-pays are higher than the retail cost in itself? (Medco, all pharmacies)

Glad To Contribute,

You All have a Prosperous Week!


Private Reply to Debbie Fortier-Success Leaves Clues

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