I was pitched Amway about 15 years ago, and was told it was a really good opportunity. I asked to see the small print and read through all of it. I did not join because the company had a lot of weird restrictions on what people could or could not do with the products. Also, it focused on recruiting, going to pep rallies, buying expensive training materials than selling product. My question is this - why all the recruiting? Would it be easier to sell the product rather than recruiting others? I ask this because I am having a very difficult time finding any studies or statistics that show the fail/success rates. I see plenty of hype. From both sides. The pro side saying how great the model is, and obviously the anti model saying how evil it all is. I would guess seeing real risk models would be better, because a lot of companies imply arbitrage. It cannot be that easy right?
I think that the only way a company can show credibility is by showing what the independent people make, my company does. Recruiting for MLM is the only way to make significant money. If you have 50 customers that buy $100/month and you get 5%, thats only $250. But if you have 10 people you recruited and you make 5% of their 50 customers that buy $100/mo thats $1250 - significant difference. Plus those 10 people will buy inventory to make goals, so you get $ off their inventory purchase too, even if no one actually uses it. I love that I dont have to deal with anything like that. The company I'm partnered with sees the craziness of most (not all) MLM and doesn't do any of those things.
I found a document on the FTC web site. https://www.ftc.gov/sites/default/f...ortunities-ftc.r511993-00008 /00008-57281.pdf I guess that is something to avoid.
The company I am with were selling their products first in stores like GNC, etc but were having a hard time moving enough of it fast enough. Their choices for marketing it was to spend millions on TV ads, or... use network marketing. They decided to go with NM and pulled everything from the shelves... got a great commission structure together and with word of mouth are able to move more product than any TV ads could move for them. That's the pro of using mlm method of marketing from the company owners standpoint, I think....but it's not that much different than the way some realtors' networks of commissions work, for example. It's each to his own. MLM isn't for everyone - but for those that see the value of helping others succeed financially, it's a great way to help others find hope and freedom that are caught in a dead end job with no hope of ever getting anywhere else. We really do live in a land of opportunity!
After reading the documentation of several MLM's and that document, it appears to be the exact opposite of helping people. If it's something others want to do, and somehow can escape a geometric series, more power to them.
Proletariat, Good question "My question is this - why all the recruiting? Would it be easier to sell the product rather than recruiting others?" Yes, it is. Which is why some Network Marketers forget that building a business and not just a downline is one of the solutions to the attrition issue of which you mentioned "...fail/success rates." It is not failure, it is dropouts. Huge difference. Focusing on just building a downline is not a good strategy. In fact, Robert Kiyosaki made the statement in his short interview with Eric Worre about his understanding for the business model, "We see it as business development." So, just focusing on the downline (building a team of business partners..btw... they are not paid for "recruiting' they are paid when they become customers themselves) and not finding other ways to create a cash flow by way of monetization strategies (building your customer base), alone is not treating it as building a business. Exactly why, if you take a closer look at all the top earners from any Network Marketing company without exception, does not focus 100% just on just building their business opportunity. They have other profit centers that focuses on building their customer base. They have their own memberships, their own live events, create their own products, services, coaching programs, their own affiliate programs,etc. In reality, majority of their profit revenues comes from their customers through such that I just mentioned along with their company's products and services. Why? Because Network Marketing business model does not work? No, because, as any legal business, it takes a good 3-5 yrs to build their primary business opportunity because it takes time to "sift and sort" (qualifying people). Which is why they have these other profit centers in place while their business opportunity grows. I do want to add that: a. Not many understand that one of the major part of succeeding in Network Marketing is "sifting and sorting" in order to have a healthy team of people who want to be business builders. You don't want everybody, so you have to learn how to qualify people. And it is not done by leading with a company or their products or services. It is done by leading with the team's leadership vision and purpose along with that of the team of business builders. Because people join people. Never forget the word "Network," which is building relationships. That is a skill to develop. b. In Network Marketing, you want people to be able to take actions that anyone can duplicate. It has to be easy enough for anyone to implement fast. A simple system to use. Because you are entering into the world of sales and marketing which not many have the skill sets or developed as an entrepreneur just yet. So it's important to have a simple system that anyone can implement it easily and fast in place while they are developing marketing skill sets. c. Invest in yourself. Third, a person has to treat it serious enough that they are willing and open to invest in themselves in their tuition by going to events, training products, reading, webinars, etc. How is that any different from going to college or a university when a student wants to learn and develop the necessary skill sets for a specific profession? In fact, it cost more to go to college or university. Loans and interests? Network Marketing is a profession so it has to be treated as one as well. d. In response to the document that you mentioned, Rod Cook from MLMWatchdotcom tackled that in front of the FTC panel in Washington D.C. with DSA, DRA and WatchDog surveys:... "proven statistic that 70% of the people that join an MLM - Network Marketing company DROP OUT - and that is different from failing." "So if we subtract the 70% voluntary dropouts from the touted lie of "95% MLM - Network Marketing failure rate," that drops the statistic to 25% failure rate."
That leads to more questions, and from how things are structured, appears to be a very poor business model. Assuming for a moment the document on the FTC web site is wrong- and it can be - I am not a market guru or mathematician. Alright. Let me clarify: I never said anywhere money is made from recruiting. I am not that smart, but I know that much. I simply asked why the hyper-focus on the recruiting. It seems rather odd to me why would anybody would want to create unnecessary competition in such a small space. Maybe I do not "get it". That's OK. Maybe I do not. So, from what you say, if I am understanding this correctly, the recruiting of team members eventually stops and only products and services are being sold? If that's the case, how are those at the bottom of the food chain going to benefit, simply selling the product or service? Which goes back to the original question. Would it be easier just to sell the product or service and leave out all the other stuff? Oh, and do you have a link to the FTC panel hearing? I would love to read it in its entirety. That would be very helpful. Thank you in advance.
Hi Proletariat, It was just for clarification sake that I mentioned that in the Network Marketing business model, no one gets payed for "recruiting." Best term to use for understanding sake is to be part of a "network of business builders" since it's not a military branch to be recruited. Let me clarify myself as well. The term used in the business world is called prospecting. It's a marketing term. In the Network Marketing business model, the distributor does two things: 1. Prospecting for potential business builders to be part of the team of other business builders, regardless of what company.... 2. Prospecting for customers and clients. I did mentioned that in the previous post. That is why I do not understand where you read about me ever mentioning anything about a Network Marketer to stop suddenly prospecting for business builders? Can a Network Marketer earn income with just building their customer base? Of course, because the products and services is open to the general public not just to the business builders. As mentioned before in my previous post....the business builders are customers themselves too since they also purchase the products and services. Either way...both are customers. The difference is that there are customers who decided that they also want to be build a business of the company of their choice of the products and services for several reasons which can vary since each person is different as to why they want to be part of it. Not every customer wants to be an entrepreneur which is why I typed in my previous post: "....it takes a good 3-5 yrs to build their primary business opportunity because it takes time to "sift and sort" (qualifying people). Which is why they have these other profit centers in place while their business opportunity grow." Top earners are doing what I typed above mentioned along side the company's products and services. That's what Network Marketers ought to be doing and training their team in order to keep other business builders from dropping while building the business opportunity. I am part of an affiliate company that helps Network Marketers to do just that without them having to create their own. What I would recommend for further detail to understand the business model are the following: 1. The Business Of The 21st Century by Robert Kiyosaki. 2. Website by Kevin Thompson an MLM attorney. 3. Wave 4: Network Marketing In The 21st Century by Richard Poe. As far as the FTC panel....I already gave you the information.. you just have to click the link to redirect you to the website and you can always request that info from the webmaster. Victor
That still does not answer the question on why creating unnecessary competition will help anybody. Would the market over-saturate very quickly? Again, I guess I do not "get it". That's OK. Maybe others do, and that's why they are making millions and millions and I am not. Again, more power to them. It seems rather odd to me and still appears to be a very poor business model as the counter-arguments grow. I would like the link to the FTC hearing. I clicked the link. The FTC transcript or video was not there. Maybe I missed it? I am not going to contact and ask for something that should be readily available. A date of the hearing would be fine, too. I'll look into the materials you suggested. Maybe then, I will become a true believer. Oh, and your condescending tone is not appreciated. I am not a child.
You have to ask the webmaster, David Cook for that info which is what I just told you. You stopped short of that . I hope you do follow up on the recommended materials if you really meant what you just said about wanting to learn about it and I pretty much answered your questions. I just think that, as you also previously mentioned on the earlier post, your not understanding the business model which is why I gave you enough information to be educated about it. If you do follow up on the materials let me know how it goes. Hope the best Victor
I stopped short of what? I am also not asking you to convince me. I wanted to know how it all worked. Again, your condescending tone is not appreciated. I am not an enemy. I am skeptical.
Stopped short of asking the webmaster which is what I typed previously. I am confused how a tone can be detected in a writing. But, I apologize if you took it as "condescending" that. In reality, I was responding to the "skepticism" which you did admit. And that's fine to have a healthy skepticism. Nothing wrong with that as far as investigating before making a decision. Let me clarify further,...what I meant is that all we can do from our part is share the information and that the convincing part as to come from the person themselves. Again, I hope the materials will clear up any misunderstandings and shed some light on the subject. Victor
I do not need things in bold and underlined. I can read. I hope that cleared any confusion. Again, I am not going to jump through extra hoops to get information that should be readily available in one click. Never mind. I'll Google FTC hearings and that guy's name. If it is not there, I will assume it does not exist. I should not have to E-Mail somebody for public information. I was going to ask more questions because a lot of this is still not clear and still looks to be a very poor business model. Even after re-reading all the explanations posted. I will post more links to any data I find for others to read, in case others walk in here and read this exchange. Update: A search on FTC's web site did not return any results on any FTC hearing. I did find letters from Rod Cook opposing certain parts of bills. Which is good. Everybody should have a say in how government should work. Perhaps it was not him who was present at the hearing, so I went to C-Span, which archives hearings since 1987. Since no date was given on when the hearing was conducted, either it was conducted before 1987 (and have to dig more) or does not exist because search terms related to multi-level marketing came up empty. I'll keep digging and see what I find.
I cannot find the edit button, so I will do a follow-up in a new reply. Apologies to the moderators. I looked for direct contact information for Rod Cook on his web site. I did not find any easily accessible link. His site map is not working. I searched for FTC hearing information on the same web site, and while some information was present, there were no documents to back it up. Perhaps I missed them in the poor web site design. Lastly, his web site is heavily biased. That is also evident from the lobbying letters to the FTC. See, that is like me providing links from Robert Fitzpatrick's web site. I am not interested in partisan blather. I need reliable, accessible, and easily referenced materials. Independent sources is usually the best. I am going to assume the hearing does not exist. With that said, I did search around for hearings and other panel discussions on multi level marketing. Amazingly enough, very little is said about it from what I am seeing so far. In my opinion, it would be a very good idea for committees and subcommittees to conduct a formal hearing on the subject.
