Multi-level Marketing: A misinterpreted business opportunities

As an ordinary citizen who is currently working as an employee for a big company, finding an additional source of income is very helpful and can greatly lessen the burden of the monthly bills. Everyone dreams to have a financial freedom but we all want the easy way or we look for a faster way to reach it.  That is why we explore opportunities posted on the internet without questioning its credibility.

The most common and attracted models are the so-called “Multi-Level Marketing” (MLM).  It is a marketing model where the goal is not only to increase the profit of each member but to also increase their member size. It is a fascinating model where you don’t need to employ people by yourself but let the members below you find more for you. There is lots of information regarding MLM on the internet and there are websites like Kyani that consolidate news regarding legit companies that will help those interested in understanding them.

Kyani

The MLM industry in the Philippines

Here in the Philippines, fraudulent MLM business companies are spread and wide. Hence, most of the Filipinos interpreted the MLM model as a form of scam or locally known as “Pyramiding Scheme”. The main reason it is called “Pyramiding”, is that the concept of the business model is to recruit more people in joining the team and forming a triangular scheme.

To fully visualize, imagine a scenario where you have recruited a left-hand man and a right-hand man, and therefore forming a triangle between the three of you where you are the one above. The formation goes on with both of them until they form their own triangles. Therefore, it is a repetitive formation of a network of triangles, until you composed a large pyramid. At which for every connected person under you, you will be awarded a referral amount and it becomes a passive income as long the members under you keep recruiting.

The fake form of the Pyramid

Like the structural concept of the pyramid, those who are above are more likely to gain more while those who are below are the grunt workers.   Same model with the some fraudulent MLM companies but what makes the difference is the mindset and means of profiting.

The mindset of the members of a fraudulent MLM companies is they do not care about the product to be sold; they’re only after the referral award from recruiting. They will do everything from tantalizing their target audience with testimonials from their successful members with pictures of luxurious cars and home. They are performing a brainwashing that if you join their company, you will be successful like those members in no time. Also, their product is not that well established or well marketed, hence, you cannot effectively sell it against commercially available brands.

 The Misconception of the MLM strategy

Because of people taking advantages through recruiting without securing their means of profiting, it will make a chain reaction where the recruits will also do anything to gain referral award instead of distributing the product. Hence, the new recruits are limited to their means of gaining their return of investment for the membership cost and the product is just for show.

Legit MLM, on the other hand, focuses on the product. Members are compensated by training and marketing modules to help them sell the product and how to become an effective distributor. The product is well established already. It is currently being advertised in social media and even in local TV networks which greatly help the new distributors. The product is also reliable since it passed the accreditation of local governing agencies like Food and Drug Administration. Even so, they also have a referral program but it is only a bonus.

The difference of approaches between a legit and a fraudulent MLM matters the most. The legitimate one is making you sell a product with provided training, printed marketing materials and referral as a bonus. But the bogus one is making you recruit people and to profit in the referral program even without selling a single product.

I’m Abigail Joseph, an experienced blogger, and journalist, who writes for both print as well as online media. I’m a storyteller and a travel writer at blackoutsabbath.org. I write about luxury spa travel. Prior to this, I worked as the editor of a travel website and books.

Abigail Joseph – who has written posts on The Insider’s Guide.