Multi-Level Marketing is not for everyone. Critics often suggest it is not for anyone. So what is it that people love and hate about the MLM business model?
Companies choose MLM because it reduces their overhead expenses. They can generally avoid having to pay for employee benefits and depend on their sales teams to handle most of the marketing expenses.
Successful network marketers stand behind MLM as a flexible and lucrative earning opportunity. While some report overnight success, more often those who have risen through the ranks to become top earners insist that hard work and dedication are essential, just as with any other kind of job. Adapting to market conditions and persevering through the highs and lows are also characteristics that they view as necessary for someone involved in MLM.
Those who fail at network marketing may choose to blame themselves, their sponsors, or the marketing structure in general. If they see the fault as theirs, they may attribute their lack of success to choosing the wrong product, or not having a personality that enjoys selling. They may feel uncomfortable approaching people to sell their product, afraid that they have to resort to manipulative tactics to get people to buy things they perhaps cannot afford.
In many cases, people cite unscrupulous directors as the cause of their failure and exit from MLM. The ethical lapses may be limited to the individual sponsor, who cares only for their own financial gain and is not at all interested in helping the people under him or her to do well. Sometimes the issues seem to be originating further up the chain of leadership, putting pressure on everyone down the line to recruit or buy inventory no matter what the affects are on the people below them.
Finally, you have those who view the commission structure as the problem, where only the top few will ever reach the level of success that those who enter the system are desperately hoping to achieve. This view of MLM sees the hierarchy as inherently flawed, with the bottom level doing all the hard work and absorbing the cost of failure, while those who climb higher do so at others' expense. The harshest critics would say that regardless of the prestige of the company, honest, unsuspecting people are being exploited by the business structure. Whether they are buying the overpriced product or risking financial loss as a distributor, the marketing method is working against them and is unfair.
It is often difficult to discern what constitutes a network marketing scam. Is it when the company is deceptive in its claims, or when most people lose more money than they invest? The Federal Trade Commission has advice on how to sort out which MLM opportunities are likely to be legitimate and which may not be. Looking at criteria such as how realistic their claims about income potential are can help you judge the legitimacy of an MLM program.
You will have to decide for yourself your level of skepticism and thus which camp you fall into when it comes to Multi-Level Marketing. If you are interested in trying it, make sure you research companies and products and your sponsor to improve your odds of legitimate financial success.