Multi-level marketing is inherently a form of network marketing, or referral marketing; which primarily relies on recruiting more distributors to sell products for the main company. In most cases, the arrangement involves the primary company, which hires distributors to sell their products. These distributors go ahead to recruit other distributors, commonly known as the downline, who will sell more and more products to people out there so that they can earn some money. However, the products of MLM businesses are often expensive compared to products in online stores and those in the streets.
Essentially, distributors who are just below the main company or at the second level of the pyramid for that matter, gain money from recruiting rather than commissions from selling the products. If you spot the following in a MLM business, avoid like Ebola!
Overpriced and Products of Low Quality
In many cases, businesses that engage in Multi-level marketing offer products that are of high prices. Most of these products sell at relatively lower prices in online stores, and also amongst other vendors who can be found locally on the streets.
What’s more, the quality of these products does not surpass those products offered by these online stores or street vendors.
The vast majority of products offered by MLM businesses are not that great, and those businesses that provide such kinds of products could be engaging in active Multi-Level marketing operations.
Mass Recruitment Is the Mainstay of MLM Businesses
Unlike other businesses that rely on the sale of products and services to generate revenues and profits, companies that engage in Multi-Level Marketing focus on recruiting people to sell their products. People who engage in MLM businesses are often required to buy a bunch of products to sell them. Major distributors who joined the company at an earlier stage and are at the ‘top’ of the business or the company rely on recruiting new distributors, who are often referred to as a downline, to earn a commission or other forms of earnings by recruiting them.
Pushy Sales Tactics
Most businesses that engage in Multi-Level marketing adopt pushy sales techniques, in which they persistently ask new members and even existing members to buy commodities that they even do not clearly understand. These businesses ask their members to take up their products, or even coerce them to subscribe for other membership forms that are associated with high sums of money but high levels of access and status within the company.
Businesses that dwell too much on membership are also businesses that could be engaging in Multi-Level marketing practices. Such businesses often reiterate the need for new members to subscribe for membership with the organization, and in some cases, these memberships usually involve an amount of money. Further, even after subscribing for membership, you will still find that there are avenues where existing members can upgrade their memberships by paying an extra amount of money.
Businesses that actively engage in these practices are in the Multi-Level Marketing scene, and they rely on these tactics to maneuver.
Too Amazing to Be True
Some enterprises claim to offer impressive financial returns and results within short periods. Often, these companies explain how they have made vast sums of funds for their members within short time frames, but these are usually made up stories to entice you in signing up.
These businesses give promises about good returns, which, in most cases; turn to be empty promises. Some of the investment strategies that they claim to pursue are not viable or realistic, which raises more questions about their legitimacy and ethics.
Poor Communication
Businesses that do not have elaborate or coherent communication channels often make people raise a lot of questions about their modus operandi, or business model for that matter. When you attend a meeting of such businesses, the chances are high that they have an individual who is guiding or leading the ceremony through different sessions. A hallmark of businesses that engage in Multi-Level marketing practices is that they communicate poorly and that they do not have credible information to pass to the audience.
In summary, the operations of multi-level marketing companies and businesses could be legitimate in some cases, but working for or with these companies could be complicated. Since the dominant strategy here relies on recruiting more distributors to earn commissions and other forms of monetary compensation, it could be difficult to get individuals who are willing to sell the products, let alone get a ready and constant market for those products.