Most of us are able to identify a multi level marketing business model from a mile away, and we all have our preconceived opinions about it. However, how many people really know what a multi level marketing business model is and who benefits from it the most? Some would stand to say that few people actually care about all of that as long as they get rich from it. Not all multi level marketing business are bad, or unethical . Just because joining a multi level marketing business has a potential to earn you loads of cash, does not mean that it will earn you loads of cash, or even a good amount for that matter.
Putting The MLM Business Model In Perspective
The first thing that multi level marketing business don’t want their prospective representatives to know is the basic knowledge of how the MLM business model works. Many popular MLM business models are widely known only for their aggressive practices and not for their products such as the business model of doTERRA. The products start by going to a large group of distributors who have made their earnings partly based on the product they sell and partly based on the products that the individuals they recruit end up selling. At first glance it seems like a good idea, but just because the earnings are split up between sales and sales from recruits does not mean that they are split up evenly by any means. While the focus of a new recruit starts off with selling as much product as possible, it eventually switches over to recruiting others underneath them to sell more product because they stand to make more money that way.
The picture that quickly comes to mind here, is that the actual recruits that pay the sign up fee and attempt to resell the products and recruit are actually the MLM’s best customers. New recruits are forced to buy the product as a ‘joining fee’, in order to resell the product, and then cannot return the merchandise for a refund if they are unable to sell it. At that point, the recruit is actually the consumer themselves because they have paid money in exchange for the product, regardless of the context. Once joining an MLM business, you are actually selling the product under the guise of a great money earning business opportunity. Often times, only a small percentage of product is actually sold to individuals who are not and do not intend to participate as a contractor themselves.
Will You Get Out What You Put In?
Even with the understanding that recruiting is a large element of making money through a multi level marketing business, some individuals do make a good amount of money from it. Some people live in a geographical area that has not been saturated by that particular MLM company just yet, and some focus their efforts strictly on genuinely selling product instead of recruiting others to do so. MLM companies don’t always force their contractors to recruit, as in it is not a requirement to sell their product. However, they strongly encourage it and demonstrate through numbers that are easily confusing is to how doing so will result in more profit than just selling product. Most who try it will chalk it up to only spending x amount on the sign up fee, and worst case scenario they end up only losing that x amount of money and are left with excess quality products.
This is where it gets tricky. So what, you lose your initial investment of $200 and your left with a product that you probably will use but maybe wouldn’t have purchased otherwise. However, most people who get involved in MLM business opportunities do not take into consideration how much of their time, mental energy, and personal relationships the opportunity will end up consuming. Every single social interaction with friends, family, and strangers will become an elusive opportunity to sell product and or recruit others to sell it. The truth is, this mentality will annoy people all the way to the moon and back who are not interested at all, but still want to maintain that personal relationship. Many reps find that their friends begin to avoid them because if they have not heard the pitch yet, they are afraid that it’s the reps only intention for spending time around them.
The Main Takeaway
While it may not be the contractors intention to vacuum all their friends and family into it, those people likely won’t see it that way and the business participation will stale out and end many relationships. It all chalks up to the answer of one question after all considerations. Will the profits of joining an MLM based business cover or exceed the financial, mental, and personal costs of it? If someone is driven enough to stay on a sales oriented path and resistant to efforts of the recruiting element of it, they stand a chance to make some extra spending cash on genuine product sales.