We’ve all come across the situation where a family member or close friend messages us about an opportunity. They tell us that we have a chance to become financially independent and earn serious amounts of money with minimal effort. The offer is always enticing, and all you need to do is get others to join the bandwagon.
Companies such as Amway, Vestige, and Herbalife all follow the Multilevel Marketing model also known as network marketing or pyramid schemes. But what is so elusive about these companies where all you hear are stories of success. Is there really a way to triple your income without any special qualifications, or is it just too good to be true? This article will discuss how the Multilevel marketing system operates, and why it is actually a predatory scheme that is meant to exploit the lowest level of earners in society.
What is Multilevel Marketing?
The premise of multilevel marketing is very simple. You have one person who is affiliated with the company. This agent is tasked with recruiting more members into the company and promoting its products. Sure, that is basically how word of mouth operates, but multilevel marketing takes it one step further. Every person you recruit is also tasked with fulfilling a quota to recruit their own set of loyal followers of the brand. In the end, the series of promotions and recruitments spread out across multiple levels, resembling a pyramid, with people at the top spreading the word, and the bottom levels getting exponentially wider.
How Do MLM Companies Make Money?
All of this sounds great on paper, but the real question is if the parent company is giving away millions of dollars to its employees to buy cars and go on vacations, where is it making its money from. The answer is that it makes a profit off of its own employees. This is done in two ways. Firstly, every time a new recruit joins the company, they are asked to pay a certain sum of money to buy a starter kit of the company’s products, in order to prove their loyalty.
The company mandates it as a necessary investment for a bright future. This subscription fee is their first source of revenue. Secondly, the company makes its members sell their brand’s proprietary products. However, these products are often extremely overpriced. What is difficult is that the company imposes a sales quota on the workers that they must fulfill. Now due to this stress of selling products and recruiting new members, most people end up leaving the job before they ever attain the dreams that are sold to them.
Tactics of MLM Companies
In order to attract more and more people to their cult, Multi-Level marketing companies employ a whole host of tactics. Firstly, they spend a huge amount of money on large-scale events and seminars where people come and talk about their positive experiences of working with the company and how they’ve changed their lives by doing so. These events also function on utilizing the grandeur and spectacle to sell you on their brand and make you believe that you too can be a big earner by working for them.
Secondly, because you are approached with the offer of joining, not by some advertisement video or unknown stranger as a salesman, you’re less likely to ignore it. If it comes directly from your family and loved ones, the proximity bias ends up convincing you to join as well.
Lastly, in order to dodge any criticisms, network marketing companies often shift the burden of being unsuccessful onto the poor workers themselves. They don’t reveal their own shortcomings or the system’s exploitation, but rather blame their agents that they weren’t working hard enough to fulfill their quotas. This way, no one ends up questioning the efficiency of the company itself, and the workers take the blame for it all.
The reason why pyramid schemes are so popular is that they play on the aspirations of the working class. By telling tall tales that they’ll be earning six-figure incomes in no time, and that it is minimal effort, ends up making a lot of economically challenged people think about it.
Young unemployed college students, housewives, and the elderly are all prone to this trap as well because they cannot access conventional jobs one way or another. The working class and employment are tired of their stressful daily office lives so a comfortable money-making job entices them too.
MLMs also develop a sense of no questioning in their members. It becomes a cult because any and every form of insult or dissent, both internal or external is disagreed upon. The members are brainwashed to believe that in the age of big data and targeted digital marketing, network marketing is still an actually useful tool for marketers. They are made blind to the fact that the company’s survival is dependent on their own exploitation.
Should You Avoid Multi-Level Marketing?
In conclusion, yes it is possible for some people to make big money from network marketing. However, such instances are very rare, and these people are only able to do so because of their own networking and communication skills. This too means that they would have succeeded even if they entered another field. MLM companies operate on the lie that anyone can make it big, but if you still need time, effort, and skill, then how is it different from any other job? Also, considering it as a small business investment is also harmful. You have much better chances of investing that money into other businesses or trading in finance.
Lastly, there is the problem of saturation. After a point in time, most of the local members have to fight and compete amongst themselves because the pool of people they can sell to or hire is limited and all belong to the same area. Thus the market becomes saturated and cannot even absorb all these people. Hence we believe that network marketing is not the ideal choice for most people reading this article! #KhabarLive #hydnews
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