Thursday, November 1, 2012

10 Things They Don't Tell You About Network Marketing (

Market Watch put out a list of 10 things they don't tell you about Network Marketing:

Here's a summary: 

1. You'd do better slinging French Fries

That's right, VAST MAJORITY of people in MLM earn VERY LITTLE PER YEAR, a few hundred ANNUAL income is the rule. 

2. We may put you into debt

That's right, VAST MAJORITY of people in MLM actually OWE money, since the "income" above does NOT cover expenses like meetings, printing brochures, and other necessary expenses. After you deduct all that, the NET income even less. 

3. Selling ain't easy

It never was. Only personality and practice will help. 

4. Recruiting ain't in your best interest

When you recruit your best friends and family into the MLM, they become your COMPETITORS. 

5. Success is fleeting

Your first few sales are easy because you can use social capital (i.e. promote to people who'll buy from you because they know you), but soon that runs out. 

6. This stuff might not sell in stores. 

That's right, what sounds exciting in a seminar is much less exciting when YOU try to sell it, and in the modern age, people comparison shop. Your product is NOT unique (despite claims) and it WILL be compared to something, and high pressure sales tactics (BUY NOW!!!) turns people off. 

7. Prepare to alienate your friends 

Some people avoid network marketers like the plague. They are often right, as most network marketers come across as pushy, way too confident (faking it), and such. 

8. This product won't really cure cancer

Feds, esp. FDA are always watching for outrageous claims, esp. nutritional supplements. FTC is always watching for pyramid scheme, and SEC is on the beat for the foolish companies pretending they are not investment. 

9. You are not necessary

Some companies makes it easy for customers to buy stuff from them directly, bypassing the sales force (that's you) and their commissions. 

EDITOR'S NOTE: This one is rather iffy, as the commission is often assigned to the most recent rep. You can't really order from Amway's website unless you know the affiliate ID, for example. 

10. "Amen"

MLM is very cult-like, and use a lot of cult-tactics. 

The article is by Kelli B. Grant, and it is very much in line of the problems I explained MLM has before. 

A while back, I wrote "The Five Fatal Flaws of MLM"

And the flaws line up with pretty much what was mentioned here:

The five flaws are:
  • Creating your own competitors   (#4)
  • Conflict of Passive vs. Active Income  (#4)
  • Questionable profitability of product  (#1, #2, #5 and #6)
  • Similarity to Pyramid Schemes  (#7)
  • Cult-like indoctrination of members and prospective members  (#10)
And there are two problems that's NOT MLM, but related
  • Pseudo-MLM scams
  • Late Government Intervention

The problem is endemic in the system. And you really need to be aware of them BEFORE you join a MLM, rather than listening to the flowery prose of a sales person trying to recruit you. 

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