Is MLM A Legitimate Business Model? Does Multi-Level Marketing Work?

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MLM stands for Multi Level Marketing, also known as Network Marketing but the big question is?

Is MLM A Legitimate Business Model?

Yes it is but where it tends to fall flat is, a lot of people that get involved think they will just get all their friends & family to join and that’s all there is too it  Think about this for a moment, how many businesses do you know where one person designs a products, builds it, advertises and markets it and then works at the shop front selling it?  Of course what really happens is a company would be formed.  The business hires different people on different levels, from designers to technicians, perhaps programmers, right down to the shop floor, all with their own individual roles within the company.  With MLM every member is an affiliate with their own virtual shop front building a new team, the larger the team the more sales, which is surely a good thing?

Does Multi-Level Marketing Work?

Absolutely!  There are many people the world over making a successful living from MLM, even Donald Trump has made a lot of his vast wealth using this business model. Whether you agree or disagree with his political stance is irrelevant here, he is very successful financially!

The internet is perfect for MLM because you have the potential to reach out to people from all over the world, the downside of course is, you can’t always trust people. So a solid structure needs to be in place to avoid the potential of scams and fraud.

PyramidIs It Just A Pyramid Scheme?

There are many kinds of Affiliate Marketing systems, used by many large companies the world over.  Amazon has an affiliate system that anyone with a site can join, the only difference being is they only pay on one level, whereas MLM pays commission on multiple levels, this is also a reoccurring commission.  Although a lot of Pyramid Schemes are renowned for using an MLM model, the big difference is the lack of product, it is just a system for moving money, a variation of a Ponzi Scheme.  But if you were to analyze many businesses, they more often than not have a pyramid design to them, it just isn’t that apparent until you step back and look at it objectively.

How Is MLM Different From Other Business Models?

In MLM everybody has access to the same products (if there are no products then yes, it is a scam) So no matter where in the network you are, you have the same opportunity to make a good income.  In traditional business models the real money stays right at the top with the Directors and CEO’s, the people at the bottom tend to be minimum wage workers.  If everyone within an MLM organization approached their business with the mindset of a CEO or Director of a large Cooperation the potential is there for everyone.  MLM3

The Pro’s For Participating In Such A Business Are.

  • Low Overheads – When setting up a business in the real world it can take a lot of investment often going into many thousands.  With an online MLM company the start up can be as little as the cost of a computer and an internet connection. There will usually be a membership fee also, but it still comes in under $100 a month.
  • Work From Home – Which means you save money on commuting, and no spending hours in traffic jams. You also get to spend a lot more time with your family.
  • Work Part Time – This is your business, so you get to choose the hours, although the reality is, you will probably end up working more hours than you would in a regular job, but you DO get to call the shots.
  • Unlimited Earning Potential – The more time you put in and the larger your network grows, the more you make it’s as simple as that. But this takes time and patience.
  • Freedom And Independence – No more having to clock in, if you oversleep, no problem, work an extra hour later.  There’s no Boss to answer too either (always a big bonus).
  • The Social Aspect – You get to meet and work with people all over the world.
  • Training – Any business worth it’s weight will offer quality training for it’s members, this applies to ALL forms of Affiliate Marketing, not just MLM.
  • Helping People – I love helping people and MLM allows you to create marvelous working relationships with people, seeing them grow and becoming successful is very rewarding.

The Cons

  • Due to there being so many scams it can be difficult finding legitimate companies.
  • Unlike a 9 to 5 job, it takes time to generate an income, causing a high drop out rate. It isn’t a get rich scheme and many people fall for this.
  • A lot of people don’t understand the business concept, they join up and pay their fees and then expect the cheques to come rolling in, even though they haven’t actually done any work.
  • Even 6 months is quite short in business terms, it’s common for many businesses to be barely breaking even in the first year, this is another reason for the high drop out rate.  We’re unfortunately living in an era where many people demand instant gratification, long gone are the days where hard work and study pays off, they want it all, and they want it now!
  • Communication can be a major issue, many people are loaners and not team players, if you’re unwilling to respond to emails and communications from other members within your network, how can you truly expect to be successful?

Program Hoppers

These people get a section all too themselves as they really are quite detrimental to not only MLM but any affiliate based business.  These people are usually very excited and enthusiastic about their new business initially. The problem occur when they get out there using advertising sites, traffic exchanges social media sites etc.  You’re going to see lots of other business opportunities and some people simply cannot settle down into one opportunity & give it 100%, so before they know it they are advertising 20 different businesses.

This is really detrimental to their chances of success because it dilutes their advertising efforts, it’s very important in the early days of internet marketing to focus on one main business.  Sure, down the road when you have developed a strong successful team they will be more than happy to follow you into another opportunity. This is commonly known in the business world as diversification, which means you create a new income stream using the same strategy as the last to either expand an existing product or to add a completely new business opportunity to your portfolio.  It can be risky if you’re not familiar with the new product, but if you’ve done it once, you can do it again with some commitment.

Create Multiple Income Streams

There are successful marketers out there that have made themselves a long term full time online income using this technique, but as explained in the previous section, it is of the utmost importance that you do not pursue a second income stream until you have created one solid successful team.

Are There Any Successful MLM Companies?

Here is a brief list of the most successful multi level marketing companies:

I’m Sure you’ve all heard of Avon, Kleeneze, Betterware and Herbalife, there are many others out there and of course they have had their ups and downs, but name me a business that hasn’t?

So to answer my original questions.  Is MLM A Legitimate Business Model? Does Multi-Level Marketing Work?

I’d have to say that is most definitely a yes.

Do You Have Any MLM Stories To Share?  We’d Love To Hear Them, Good Or Bad.

Comments (3)

  1. Greg

    I am always very wary with any MLM company. I also believe that Herbalife is in fact a pyramid, so watch out for these people. Greg

    Reply
  2. Suzette

    Thank you Dominic for this great article. I have always wonder what these MLM companies were all about. This was definitely very informative and helpful to me. I am an affiliate marketer not ready to spread my wings into anything else right now, so this information will come in handy in the future. Keep giving us these great articles!!
    Suzette

    Reply
    1. Jay (Post author)

      Hi Suzette, thanks for taking the time to comment, not sure who Dominic is though lol 😉

      Reply

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