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Wednesday, March 16, 2011

Can You Make Money With Multi-Level Marketing | MLM Exposed

During times of economic downturn, many people start looking for ways to make money. You may have been approached by a friend or a new acquaintance about joining a Multi-level Marketing company or MLM. This may be your first time down this path and I'm sure you have many questions. However, the first question in your mind is probably, "Can I make money with a Multi-level Marketing program?"

The answer is, "Yes." But before you fork over your hard earned money and dive into the program, let me share my MLM experiences and observations through the years.

What Is Multi-level Marketing or MLM?

Multi-level Marketing, also known as network marking is a means of distributing a product or service that relies on a network of distributors. A distributor signs up for a fee or is required to purchase a certain amount of product to start, then they recruit other distributors; and those distributors do the same. You make money on wholesale sales of the product or service to the distributors below you - known as your organization. You can also make money selling the product or service retail. Overrides on the sales activities of distributors below you can also be paid.

MLM junkies, those that hop from one organization to the next, are always looking for a better pay plan, coupled with a newer and more exciting product.

In the old days, you had to inventory product to supply your distributors and customers. Now, with the Internet and drop-shipping, you can place orders online and have product shipped to you or directly to your customers. Your distributors can handle their own ordering.

Is It A Pyramid Scheme?

This is an unfair label that gets tacked on MLM programs. It's not true. Pyramid schemes are illegal. In a pyramid scheme the people that make the most money are only at the top. MLM companies pay down a finite number of levels in an organization: example - three levels or five levels or seven levels. There is a misconception that only the people that get in first or get in at the top can make money.

Because the company only pays down a finite number of levels, at some point the person you sponsor may have people below your lowest level, for which you are not paid. The people that have been the most successful with MLM's have not necessarily been people that were at the top or got in early. Success is solely determined by the size and depth of the organization that you build.

Keys To Success

To earn four and five-figure monthly incomes in network marketing, you have to be a relentless recruiter and motivator. Most people want to make extra money or replace their job income and free themselves from the daily grind, but few are willing to put in the effort to make it happen.

MLM success is a numbers game. I remember a tape in the 1970's from an Amway distributor that said in his southern drawl, "Ya jus gotta sign 'em up faster dan day quit." And that remains true today.

If you do sign up some people that are excited and willing to put in the work, you need to be a good motivator and coach them along. The only way you can make a lot of money in MLM is to build depth in your organization. If an organization grows exponentially - two becomes four becomes eight becomes sixteen - you will make the most money from your lower levels - because they contain the most people.

I knew a guy in one company I was in that signed up two and three people a day for two years. He was a maniac. His problem was that his distributors saw how hard he was working and they weren't willing to be a crazed recruiter like him, so they quit after a few weeks. He just kept filling freshly opened seats.

Recruiting has changed through the years. In the days prior to the Internet, we were taught to make a list of all of our friends and family and hit them up first. Then, we were taught the 3-foot Rule - strike up a conversation with anyone that was within three feet of you and try to wiggle the conversation around to making extra money. If they seemed interested, you would invite them to a presentation at a local hotel, your house or their house.

Over time, the dry-erase easel was replaced with VHS video tapes that you could use to make the presentation. Today, the presentations are available online. You're taught, "If you can direct someone to a website, you can make money."

It all sounds so simple. It's designed that way. "It's easy. It's simple. Don't get left behind. You can get in on the ground floor. Momentum is building. Hurry." I've heard them all, and you will too, if you have given your attention to a very excited distributor.

A new trend in MLM is the GPT principle - Get Paid Today. Rather than spending months or years recruiting large organizations to get measly override checks, you only need a few saps to cash in with this method. How it works is the company usually sells a product or information. It costs anywhere from $500 to $2,000. If you get someone to sign up, you get half.

One company, Carbon Copy Pro, has an escalating level of cash that you pay out. You can sign up for around $40, but you won't get anywhere until you buy the Business In A Box - a handful of pamphlets about Internet marketing - for $500. Then, you're urged to get to the next level, which requires you to go to a convention, it costs $2,000. After that, there is a $9,000 or $10,000 level, topped by a $20,000 level. So if you fork over $20,000, you have to find two other suckers to do the same and you're even. Get a third and you make $10,000.

I know of about a dozen people that have made a fortune with Carbon Copy Pro. How they market is through home-made YouTube videos. Go search YouTube for Carbon Copy Pro. There should be about 16,000 videos on there. I bet 99% of those people are just trying to get their money back.

Marketing has also changed with our new technologies. You are told not to bother your friends and relatives and only focus on people that are looking for opportunities. So you create a web page, also known as a Splash Page. You may have seen one of these. They are crowded with giant red type, lots of exclamation points, yellow highlighted text and they're about seventy feet long. It can take you an hour to read the whole thing and go through all the amazing testimonials. You drive traffic to your Splash Page by running Google Ads, which can cost you a small fortune in no time.

The goal of the Splash Page is to get an email address from the visitor. Once you give up your email address, you are given a soft sell on the opportunity on the next page. In the weeks and months ahead, you will get a steady stream of emails that try to be friendly, and they all include offers for other products and services that could potentially help you on your journey to make money via the Internet. This is called building a relationship through a funded proposal. The distributor soft sells a lot of crap so he can make money along the way until you are ready to sign up for the big buck commitment.

It's a smart way to market, but you have to spend money to do it. And if you're computer illiterate, you're screwed.

Considerations

Before you dive in, examine the pay plan. How much do you make on the distributors in your MLM organization? If one company pays 25¢ and another pays $1.00, you might lean toward the buck.

Product or service is key. What is the product? Is it some magic juice that makes people experience explosive diarrhea? Is it a picture phone that is only useful if the person buying it convinces their relatives to buy it? Does the product look like it has longevity?

Avon, Mary Kay Cosmetics and Tupperware have been around for years. They are three of the best run network marketing companies. They have excellent standards, terrific training and products that are in demand. Their organizations are almost exclusively women. Although, I met a few gay guys that sold Tupperware with modest success. Women seem to do well with these business models because they rely a lot on the party plan - hosting a sales party at their home or the home of a distributor or prospective distributor. Women naturally like getting together in groups and socializing. If they happen to sell some cosmetics or sex toys along the way, it's a bonus.

Price point of the product you sell is critical, too. If a month's supply of the miracle vitamins is $250, you are asking a family of four to commit to a $1,000 monthly expense. Most people would rather buy a house or a new car before they spend that much to clean out their colon.

So far, I've been rather kind to Multi-level Marketing. Now, let's get to the ugly side of the business.

Conventions

Most network marketing companies have conventions. They can be held on a monthly, quarterly, semi-annual or annual basis. You are strongly urged to attend as many of the conventions as you can, "To learn the secrets from the leaders."

If you drank the Kool-aid supplied by your new network marketing opportunity and are staying up nights fantasizing about the riches that will soon be yours and quitting your job, then you'll fit in at the conventions. Prepare yourself for lots of rah-rah. Conventions are chock full of ether filled rooms jam packed with distributors. They proudly wear name tags that you can read from space and march around with over-exaggerated smiles that actually hurt their faces. Company founders and top distributors walk on water or float over the crowd to the stage. Everyone is in awe.

If the convention did its job, you should come away with the thought that anyone with a job is insane and is living the life of a worthless rat on a wheel. You can't wait to launch a secondary assault on all the people that blew you off the last time because now you are armed with new information. Yes, you have seen the Holy Grail of wealth building and in your mind everyone needs to know it.

What really happens after the convention is you sign up a few more people the first week and even further alienate your friends and family. Your father will cut you out of his will.

What I forgot to mention is the cost of attending these conventions. Some are free, but others do charge. Add in travel costs, lodging, food and the neon name tag and you can sink $4-500 into one of these trips. That expense severely impacts your bottom line.

Motivational Materials

Selling CD's, DVD's and books to "get your thinking straight" are big business for the network marketing companies. You can't just go to the library and get Napoleon Hill's Think And Grow Rich. You have to buy the latest DVD from Bob Duffus, the nation's leading distributor, who hails from Big Bone Lick, PA. (It's a real town, look it up.) Bob used to be a taxidermist specializing in extinct animals. His life was saved by Miracle Berry. "If only those poor animals had Miracle Berry, they wouldn't have died and I'd still be in business. My DVD is only $39.95 if you buy it now. It's normally a $400 value, but today only, you can get it for less than $40 - plus $40 shipping and handling."

Motivational materials can suck your wallet dry. If you need motivation, we have the thoughts of great minds recorded in books and stored in a special place called the LIBRARY (Shhhhh, it's a secret). You can go there any time and borrow them at no charge.

Organizational Collapse

Think of your distributor organization as if it were a Jenga game being built from the bottom up. Distributors only stick around if they are making money. Most don't. So their days are finite in your organization. A guy that goes out and sponsors twenty people his first week will make some quick cash. He'll order two cases of the company Kool-aid. But if those people that he signed up don't see any money in a month or two, they quit. Start pulling blocks out of the bottom of your Jenga tower.

Think of your organization as a wave. What do waves do? They come in and they go out. Your organization will act the same way. While you have excitement and momentum, the wave will be carrying you to shore. It could take a few months or even a few years, but the wave will stop coming in and it will reverse direction and your organization will be swept out to sea.

The MLM junkies I mentioned earlier know this; so they ride the wave for a bit, then start looking for a new opportunity to convert their organization to. "We're no longer concerned about health and Miracle Berry, now we're selling wholesale cigarettes. Everyone needs to buy ten cartons and start smoking. Follow the cloud to the convention."

Scams

Some Multi-level Marketing companies are just flat out scams. They collect, but they don't pay out. Before you get involved in any company, you MUST DO A GOOGLE SEARCH of the company name and/or the company name with the word "Scam" in the search box. If the company is a scam, you can bet angry victims have posted rants on sites like the Rip-Off Report and other scam buster sites. Read the complaints. Are they just sour grapes or is the company really nefarious?

As full disclosure - I was in a MLM company in the 1980's, which still exists today, and had very quick success. I suddenly had more money in my hands than I was making at my job. I wound up quitting my job. Bad press came out a month or two later and crushed the company. All my distributors quit. I was convinced I should carry on. I did. It was horrible. I think it was a factor in my first wife leaving me. All of those people that had risen to the fancy titles of Diamond or Double-Diamond distributors are gone and doing something else. MLM success is fleeting. You can try and ride the wave, but make other plans for the long haul.

Financial guru, Dave Ramsey said, "I know about six people that have made a lot of money in Multi-level Marketing and I know about 6,000 who have lost money. You decide" He's spot on.

Unless you know in your heart that you are a recruiting maniac or a sales wizard, you will most likely lose money in a network marketing company. If you are successful and you make enough to quit your job, spend some of your free time polishing your resume. In a couple years, you'll need it.

Can you make money with Multi-Level Marketing? Yes. But probably not.

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