Scott Free Thinking

Many people remember Amway, the original major multi-level marketing company that has gone through dozens of lawsuits over the past several years. Multi-level marketing itself, in pairing with network marketing, is often looked upon as a giant pyramid scheme, or scam. For those unfamiliar with the term, pyramid scheme, Wikipedia does a great job of explaining the concept here. Essentially the concept of network marketing and multi level marketing is that you will have yourself, plus the people below you, plus several levels of the people below those people, hence the term, “multi-level” and there will essentially be multiple levels of commission coming from those people’s sales.

The Problems
There are a few problems with multi-level marketing. For one thing, multi-level marketing by itself is illegal almost everywhere now and truly is a bad situation for all people involved, because after the market becomes saturated the entire system has no choice but to collapse and break down upon itself. When you pair network marketing with multi level marketing, however, you have a different situation. Network marketing will probably be around forever. Companies like Avon are network marketing companies, and who has not heard of Avon? A company I recently got involved with, Prepaid Legal, is both network and multi-level. Most of the time, organizations like the Better Business Bureau, as well as general local and federal government agencies warn against getting involved with companies that are similar in nature because the majority of the people who get involved do not make any money. This is accurate - most people who get involved in network marketing will fail.

The Reputations
Some would like to point fingers at these companies and label them as scams, but the truth is that they’re not. And the other bizarre truth of all of it is that if you can get past the challenges that you are presented with upon joining, they have powerful potential behind them. The reason that more than half of the people who enter such schemes fail is that they do not persist, or do not have the resources necessary to carry out their goals. Another reason people will often fail is that at times, because of the multi level system, you will be dealing with an expensive product that just does not have a powerful enough level of quality to hold its own while also carrying with itself the high price.

For any company, using network/MLM(multi-level marketing) can be a powerful tool to get a product to spread itself nationwide. Essentially what can be said about this entire system is that it will help you greatly to get into the right company at the right time. Where you really start running into trouble is when you’re dealing with a company that has already saturated the market fully with either their product or their recruiting process, or when you are dealing with a company that has a bad track record, or both. Amway is one such company that is highly documented to have had countless different lawsuits filed against it during the course of its life, and the leaders of the company itself have been involved before in suspicious sorts of activities.

The Systems

I think another major reason that people who enter multi-level marketing will often fail is that some people are delivered the wrong idea by the selling system of either the product or the recruiting process. What is common for these companies to do is to amp up your excitement, fill everything they’re saying with a lot of hype, and toss loads of positivity your way. The thing is, there is nothing wrong at all with the positivity, but there is something wrong with the way they’re misrepresenting the challenges of both the activities and the market itself. It is not easy to get out there and really start connecting with people on a personal level to the point where you can make effective sales. Cold approaches and cold calling are virtually 100% ineffective. And no matter what MLM/network marketing company you choose, you are going to run into a lot of crossfire in the area of time. Residual income can happen with this system, but it takes time, and for many of the financially desperate people that enter such schemes, that is time they can’t afford to wait on. And depending on whatever marketing systems you’re using to sell or recruit - you could run into problems with the system you’re being told to use.

Often times these companies will discourage their associates from thinking outside the box or “reinventing the wheel.” There are a number of primary reasons they use this language. For one thing, the systems they’ll have you plug people into, for instance, the selling systems, have a proven rate of effectiveness that was measured for the start of any organization in its past. Often times these systems of selling and/or recruiting are very simple, because it is always important to create a duplicable system that others can easily mirror and follow. But think about this aspect of these businesses - as times change, so must the systems you use to adapt to that evolution. No business has ever survived being 100% the same all the time.

The Future

While I’m doing the best I can to maintain a healthy sense of optimism about MLM, it is a solid, documented fact that the majority of people who try it fail. This is something that I cannot deny. In my goal to achieve financial independence by May of this year, I cannot say with full certainty that MLM is going to be the method to get me to a state of subsistence, or better still - a state of earning $100,000 per year. But what I can say is that MLM has the potential to do such a thing. I will continue to document my successes and failures using this, and also give a fair view of multiple different perspectives on the matter as time goes on.

The inevitable, and possibly sad, fact about MLM is that one day it is doomed to fail. Why? Because the times are changing, and the market system of the economy as a whole is evolving. With the introduction of eCommerce, more people will be going online to shop for things they normally would have went out of their home to purchase. In the case of products like insurance, or in my case, prepaid legal services, people will probably turn to simply going online for such things to see all details of a particular plan or service without the need to meet with others in person. This is not to say that there will be no possibility at all for those wanted to get involved in selling such things, but the opening for the opportunity will be far less for all the different MLM companies as the market continues to change and technology continues to expand and grow.