It is said that every advantage has an equal and opposite disadvantage. Well, that was really aimed at ‘action’, but it can be applied to the world of business too. At least I think it can. I discovered this when I initially tried my hand at MLM (Multi Level Marketing). I must admit that I was hooked for life to a system that showed more promise than my otherwise other, more frowned upon plan of fixing the state lottery.
I admit that I had my share of get rich quick schemes, however, a few MLM programs caught my fancy and while I realized that there was no way one could get rich without a great deal of effort put in, I also realized that the law of levers could be applied to make the work easier. MLM was my lever to make my work easier. In the same vein I found out that the advantage of using MLM to make money had a disadvantage; I started to lose a lot of friends.
Being a newbie in the MLM business I was depending on all my friends and colleagues to sign up in my down line. In the beginning they humored me to a great extent and some of them even signed up for the small fee, but soon they began to avoid me and my long line of friends vanished into the blue yonder and my hopes of building a great down line went with them. This is just one of the disadvantages of MLM.
I did, however, manage to grasp success in my MLM campaigns. But then I realized to my horror in many cases that there had to be some loser in the down line. Not every one can succeed in an MLM. This was changed by some gurus in the field by giving away a product and a few add-ons for the price of joining an MLM. This was the take-away of the MLM program. If someone gets something in return for a fee to join an MLM it is not a loss – at least not totally.
On more disadvantage of an MLM is the absolute requirement of a down line in order to succeed. Not everyone can create one. If you are good at creating a down line and there are a few weak links in your line your MLM tree will be very weak. You will need to manage your tree by placing people in places where the gaps appear to maintain consistency in the uniformity of the growth of the line.
Every MLM has a life and it is imperative to get in at the top if one wants to make considerable gains. The problem here is that we never know which part of the down line we are a part of.
There is a lot of confusion prevailing in the world of MLM and the marketing industry about MLM being a form of direct selling. While the promoters of MLM and the lobbying arm ; the Direct Selling Association have put in a lot of effort to convince law makers and tax strategists that MLM is a form of direct selling because they have much to gain. However, people with a lot of experience in the field of marketing beg to differ. They are of the opinion that MLM is nothing but a pyramid scheme and is not a true form of direct selling.
People are mostly arguing that MLM is not selling any product, this one fact that has deemed many MLM programs illegal. The law requires a marketing program to sell some physical product or some service in exchange for legally adequate compensation. If there is no product and people are buying in to a program in the hope of recruiting others and making a profit from their contribution to the kitty, the program is doomed right from the beginning. People who enter the program at the fag end of the deal are only destined to lose their investment. There are, however, people who disagree.
The law makers call MLM ‘recruiting MLM’ which requires a person to recruit many people in his down line in order to generate a reasonable income. They do agree though, that selling is a part of recruiting people in the process of building that much required down line.
Direct sales is being able to take your product out in the market and selling it to people without the need of them to further sell it to others. While MLM requires people to further sell the product in order for the company to continue to make a profit every time someone sells the product. In direct sales once a product is sold the company closes the sale. In MLM once the product is sold, the company waits for the customer to sell it again in order to make another profit. This process continues every time a new customer buys the product.
A legislator once created a commotion with the comment that MLM is no more a process of direct selling than a pig is a horse. He argued that whenever someone approaches you with a product he wants you to buy and in the same breath mentions that it would be a great business opportunity for you to join – that is nothing but MLM, though direct selling is involved too if the prospective customer just buys and never joins the ‘good business opportunity’.
The controversy whether MLM is actually direct selling or a pyramid scheme will continue for eternity. Nevertheless, as long as people are able to make an honest living there should be no interference from vested political interests.