Multi-Level Marketing: Business Opportunity or Scam

I have been involved in several multi-level marketing (MLM) operations over the years, including the granddaddy of them all, AMWAY. I never did well at them, and I tend to be dismissive toward things I'm not good at.

The whole MLM premise is that if you have a great product, you can not only profit from selling it, you can share in the profits of others whom you recruit to sell it. You also get a return from those whom the others recruit, and so on. These folks are called your downline.

Thus, if you recruit three people, and they each recruit three people, you have twelve people in your downline. Each generation of recruits [theoretically] increases geometrically.

The operational word here is theoretically. Of course, if everyone succeeded at recruiting, you'd soon run out of people. But that aspect does not bother me as much as another.

The fact is that most people will not recruit anyone. And those who do seem to need regular doses of hype to keep them motivated. In order to succeed, they must surrender their lives and personalities to the program.

Those who aspire to MLM success must eat, sleep & breathe their company line. There may be exceptions, but most MLM programs encourage -- indeed, require -- total immersion in the program's culture to attain success.

You can find one of tne of the reasons for this in the product's pricing. MLM products are, on the whole, more expensive than comparable products in the marketplace. They have to be, in order to pay commissions all the way up the line.

Does this mean that multi-level marketing is inherently bad? More on that in my next post.