What Is The MLM Bubble Brian?
I am so glad you asked. First, I want to state that this article is totally based upon my opinion and experience dealing with MLM companies and quite a few ‘distributors’ over the years.
Let me start with explaining why MLM or Network marketing companies become MLM or Network marketing companies in the first place.
If you notice, many of the big MLM companies are in the health and beauty products business. You know, vitamins, drinks, lotions, potions and make up?
All of these industries are loaded with competition. And I mean huge competition. Companies that spend millions of dollars just on advertising and product placement alone.
Many of these MLM companies were not started by one person waking up one morning and thinking, ‘Hey, I want to start an MLM company and sell vitamins’. What many of these companies do is create a product like some vitamin, special drink, or herb (that is readily available in many forms at any health store) and make it look nice (packaging).
And since they don’t have millions of dollars to spend on advertising, securing shelf space, paying celebrities, and getting product placement on TV and the movies, they know that the only way they can compete and make money – quickly – is by getting other people like you and me to sell it for them.
They call it ‘belly to belly’ marketing. In other words, it doesn’t cost them a dime. As a matter of fact we get the ‘privilege’ of paying them a fee to sell it. And not only that we get to buy the products at terrible prices from them too! Thank you MLM company…
Thank You So Much For Letting Me Pay You To Sell Your Stuff…
MLM and Network marketing companies know that in order to get people to sell their products they have to get them excited. But not excited about the product, no! They want you to get excited about making money with the product or products.
What they will do is go over the benefits of the product, and then really push the commission plan. And their commission plans always sound amazing. They’ll get you excited about making tons of money as a ‘distributor’ with their ‘amazing commission plan’ which usually goes like this: All you have to do is get three people to get three people to become a ‘distributor’ and they will get three people and so on and so on.
So their whole business model is built on the promise that if you keep recruiting and buying their products, and all your friends do the same thing, you’ll makes tons of money!
That’s the bubble part. It’s built on a frail business model and this is why most MLM companies and network marketing companies bomb in the first three years.
But to make things even more upsetting and dooming people to failure is that on top of all that, if you and all these so called ‘dealers’ want to maintain their status as a dealer, each one of you has to buy a certain amount of product every month and recruit a certain number of dealers as well. If you don’t you lose money and eventually you lose your dealership as well.
Like I said, the ‘MLM bubble’ is the promise and the greed that is supporting the company, and they can make it difficult for you to maintain your dealer status because if you leave, they still have a bunch of other people in your ‘downline’ that they can go after and collect their fees and profits from.
That is a very basic version of how many MLM and Network Marketing companies operate. Some have different variations of this sort of commission plan or dealer plan. Some are more lenient when it comes to recruiting and buying product than others.
In a nutshell they reward the dealers who are out there constantly recruiting. And that’s why you see or hear about the ‘meetings’ that they have in your area.
The Psychology Of Selling
See, MLM companies are very good at understanding the psychology of selling. They know that if they can tap into your greed glands they will sell you on becoming a dealer. See for yourself. Go to one of these meetings. The speakers are usually magnificent.
Ultimately most people will fail at MLM or network marketing because they can’t sustain the business model. The fact is, most people are lazy or not good at selling. Maybe 1-100 people will be good at selling and keeping motivated. That means in order to build a successful downline you have to recruit and sell like a mad man. Or, you have to start at the top of the business pyramid.
The following images were taken out of an investigative report by the FTC. You can read it here…
Are Most MLM Companies and Network Marketing Companies Are The Same?
Yes! Except for a few needles in a haystack.
- The MLM litmus test: The only mlm company or network marketing company you should consider is a company that has a product you can sell and make a living selling it on it’s own (or product line). If you can make a living selling JUST the product or products without needing to recruit anyone and without any requirements to recruit anyone then MAYBE it’s something to look into.
However, if you can make a living selling just the product or product line without recruiting anyone, you better make darn sure that a massive company can’t copy the product and sell it at a cheaper price.
This happened to an old friend of mines wife. She found a good semi permanent lip gloss product that she was selling to salons and women’s groups, and was doing quite well. A few months later a huge cosmetics company came out with the same thing and sold it for half the price putting her and I think the company out of business.
Do you want to make a decent income without recruiting your friends (and ruining your friendships), and build a business?
Here’s how: build, or create a killer product or product line that people want, and get it in front of the right people. It’s not easy, but with smart hard work you can do it 🙂 Or, build a part time or full time Amazon business (it’s fun).