The FTC’s case against BurnLounge provides an example. BurnLounge argued that its participants bought product packages consisting of sales websites and music-related merchandise because they wanted to use the merchandise. When BurnLounge’s product packages were untied from the business opportunity, however, monthly sales of these packages plummeted by almost 98 percent. At most, actual demand was responsible for only a small minority of package sales, and BurnLounge was found to have an unfair or deceptive compensation structure.
As the owner, you are the face and voice of the product whether you like it or not. Expect to spend an inordinate of your time managing people, their emotions and expectations. The heavy reliance on residual income means that your income stream may dry up suddenly if a salesperson fails to meet his quota. This could easily happen, because in many cases that salesperson must not only be accountable for his sales, but of the sale people he recruits under him. These are people he may not know. Therefore, your earnings potential is limited by the selling ability of others not directly under your control. A MLM business may strain your personal relationships. Lower-tiered salespeople, particularly those within your circle of family and friends, may harbor ill feelings if they fail to advance within the organization.
I love love love this article! I’m a business growth coach who works with small business owners and often leaders from other MLM’s. From time to time I’ll get someone who has been struggling significantly even getting started and I find that it’s sheer absence of knowledge of the numbers. They are still under the impression that if I get three, and they get three then we’re all going to be millionaires. It’s very sad but the truth is not being told. Being in an MLM is hard. But it is very doable. I have had significant success in the past, while I am not in an MLM now. Nor do I want to be, you must be all In to make it work. Thank you for sharing this. I would love to interview you on one of my webinars
Great job on the top 25 MLMs. Really like what you’re doing for the industry as a whole. Your analysis is spot on. However, a closer look at retention rates for each company might give you another perspective on the value proposition of any given company. As a Doterra Wellness Advocate we are told by our corporate execs that we have a 65% retention rate with customers repurchasing the product within 3 months. And that if we based it on the industry standard of 12 months our retention would go up to 85%. I’m told that this is unprecedented in network marketing. So I’m believing that Doterra is succeeding because its selling a product that works and that users and word-of-mouth drive the business in the long run.
And these sales aren’t just to customers. You see, in order to join an MLM you usually need to buy products to sell (often referred to as a starter kit, or similar). And then in order to remain a seller, stylist, supervisor, or whatever term the company uses, you often need to make a minimum number of sales in a given time period (though not always).
We are committed to providing quality prospects for your business at the highest level of reliability and integrity! Customer satisfaction is extremely important to us, which is why you can contact live support either by phone or online, whichever is more convenient to you. We are number one in customer satisfaction because we want you to succeed! It's as simple as that!
The support factor was key. Once the MLM leads were purchased, was there somehow support in case of need? The support should be somehow resolving issues that arise, including bad mlm leads, wrong numbers or emails, and general problems. The MLM Leads companies we found that were the best, had a support system. And some type of guarantee also should be part of the network marketing lead program.
As non-employees, participants are not protected by legal rights of employment law provisions. Instead, salespeople are typically presented by the MLM company as "independent contractors" or "independent business owners". However, participants do not possess a business in the traditional legal sense, as the participants do not hold any tangible business assets or intangible business goodwill able to be sold or purchased in a sale or acquisition of a business. These are the property of the MLM company.
It is almost impossible to stop the industry because of the amount of investors and lobbyists who are profiting from them. “During the Obama administration, the Federal Trade Commission made its biggest-ever effort to curb this industry when last summer it slapped nutritional supplement–seller Herbalife with a $200 million fine and, as part of a settlement with Herbalife, demanded it restructure its business so that it would “start operating legitimately,” as FTC Chairwoman Edith Ramirez put it.” (Slate) The current administration under President Donald Trump will be a completely different story and may very well be a boon for the MLM industry. Let’s start with Trump himself. In 2009, he licensed his name to an MLM, which eventually went bankrupt, along with many of his participants. Many in Trump’s cabinet have strong ties to MLMs as well: Betsey DeVos (whose husband is the president of Amway — by the way, DeVos family has donated $200 million to the Republican party over the years), Ben Carson, Carl Icahn (a billionaire who is also a major investor in Herbalife and holds five board seats at the company), and Charles Herbster.
At the most basic level, the law requires that an MLM pay compensation that is based on actual sales to real customers, rather than based on mere wholesale purchases or other payments by its participants. In evaluating MLM practices, the FTC, in accord with established case law, focuses on how the structure as a whole operates in practice, and considers factors including marketing representations, participant experiences, the compensation plan, and the incentives that the compensation structure creates. The assessment of an MLM’s compensation structure is a fact-specific determination that the FTC makes after careful investigation.
To really understand the beauty of MLM, everyone must understand the fact that as a human being, we all have potentials as well as limitations. No matter how much we’ve reached and used our individual potential, our outcome or whatever result we may be able to produce in a period of 24 hours (if we no longer sleep which is impossible) is still limited based on our individual capability being alone. As they said, “two is always better than one.” Is it “two heads are better that one?” I am not really sure but I know you get my point.
Multi-level marketing (simplified Chinese: 传销; traditional Chinese: 傳銷; pinyin: chuán xiāo) was first introduced to China by American, Taiwanese, and Japanese companies following the Chinese economic reform of 1978. This rise in multi-level marketing's popularity coincided with economic uncertainty and a new shift towards individual consumerism. Multi-level marketing was banned on the mainland by the government in 1998, citing social, economic, and taxation issues. Further regulation "Prohibition of Chuanxiao" (where MLM is a type of Chuanxiao was enacted in 2005, clause 3 of Chapter 2 of the regulation states having downlines is illegal. O'Regan wrote 'With this regulation China makes clear that while Direct Sales is permitted in the mainland, Multi-Level Marketing is not'.