Criticisms of Multilevel Marketing

Despite the enormous potential of MLM, there has been a lot of controversy and criticism surrounding the legitimacy of this unique method of marketing. Like all industries, there has been a few dishonest company owners who structured their compensation structure to that of a pyramid. This has been ruled illegal by the Federal Trade Commission since it is an unfair compensation structure where the guy at the top earns the highest income. Due to such incidences many potential entrepreneurs think of all MLM companies as a ‘pyramid scheme’ and shy away from the opportunity. It is true that the compensation structure looks like a pyramid but with one notable difference that sets it apart. The distributor (business owner) who has the greatest number of recruits and depth makes more money than the guy who recruits him or her. He ends up earning higher since he has more individual recruits compared to his upline. Since the guy at the bottom makes more than the guy at the top, this clearly proves that MLM structures are not a ‘pyramid scheme’. The compensation structure varies across companies nevertheless. Usually, the variations are like how many distributors have to be recruited and sales has to be reached before a certain amount of income is attained. Competition in the MLM industry is intense, so many MLM try to attract prospects by offering a lucrative compensation plan.

Despite all the hype about the Wellness Revolution, the number of business owners who has made it to the top has been limited. The current industry success rate is below 10% and 99% of the owners fail to break even in the business due to mounting expenses of recruiting members and stocking up on products, a practice that is prohibited. So why is this the case? The problem does not lie in MLM itself. But it is a basic problem of how MLM is marketed. Business owners take MLM as a home based business and forget to apply the marketing principles of a regular business. The current marketing methods include group meetings, bringing prospective members to presentation, hyped up events and promotion of books and CDs that are supposed to teach new business owners how to succeed. What happens is that the new members end up spending on these so called ‘self education’ material getting no return on their investment. Making a profit becomes an uphill battle.

But there are a number of tech savvy entrepreneurs who have seen the potential in MLM and set themselves apart from the crowd by using the right and advanced marketing strategies harnessing the networking capability of the internet. The sad truth is that few business owners know how to use the internet to promote their business to multiple customers, a term known as ‘remote selling’. They are still stuck in the traditional method of pitching the benefits of their products to one person at a time hoping they get lucky and make a sale. Much can be achieved in this profitable industry if the proper marketing strategies are know. One person who has taken the initiative to teach struggling business owner how to really get off the ground is Ann Sieg. As a struggling distributor herself, she has learned things the hard way and made it to the top. Find out the proper way to market MLM using the networking capabilities of the internet, the greatest networking tool of all time.