Is Multi Level Marketing (MLM) A Legitimate Business Opportunity Or Not?

I will preface the following by stating that I am not an MLM’er but many of my colleagues are, and in the current climate of financial uncertainty it is an option many are looking at.

I have tried to give a simple unbiased opinion of the pro’s and cons of the industry so that you can draw your own conclusions.

Is MLM legitimate?

The recent global recession has not coincidentally corresponded to resurgence in some previously uncool forms of marketing, such as Multi-Level Marketing, Party Plan and Home Based Internet Marketing. Companies such as Amway, Tupperware, Mary Kay Cosmetics and such like are having significant successes in their recent recruitment drives.

Multi-Level Marketing has a stigma attached to it for decades, with polarizing attitudes that have contributed to family tensions and damaged friendships. Some people would be more supportive if you announced that you had joined a new age cult. The legitimacy or otherwise of these direct selling organizations is an issue of both legal and moral standing.

What exactly is Multi-Level Marketing? (MLM)

It is a marketing strategy to sell goods or services through a network of independent distributors.
Income is derived from the sales derived from the network of personally recruited members, usually as a result of personal sales and over-rides on the teams’ volume.

Legal Legitimacy.

Countries have individual laws that define the legality of sales and marketing techniques. There is a Grey area that many companies need to navigate which is regarding the issue of definition.

The biggest compliance issue is that concerning pyramid selling, which is usually considered illegal. Most contemporary MLM companies are able to comply and adhere to local legislation, but often walk a fine line, as interpretations can vary.

Moral Legitimacy.

Prior to the Internet, recruitment was conducted with an almost evangelical zeal, with many organizations using huge motivational rallies and sales techniques that were frowned upon by many non-believers.

Some criticism and stigma has come from the perception that many of the bigger organizations inculcate members by indoctrination. Mass direct marketing to friends relatives and anyone with a pulse, many of whom have no interest in joining often alienates and causes relationship fractures and residual bitterness.

In recent years there has been a quite a shift in credibility and professionalism. Well-respected authors and entrepreneurs have started to endorse MLM. Robert Kiyosaki and Donald Trump are two that come to mind. Internet marketing allows members to strategically attract like-minded people into their network. Training is more streamlined and success is less dependent on the cult of charisma, and perhaps more equitable

Financial Legitimacy.

The compensation plans vary from company to company, and are a tool for soliciting new recruits. The power of compounding numbers can suggest that massive incomes can be earned simply from sponsoring a few people who do the same ad infinitum. Pick a number and double it ten times over and then imagine that number represented your network of distributors, who all sell and consume the companies’ lotions and potions. The lure of over-ride commissions for very little work can attract many naive members, who subsequently depart disillusioned, weeks, months or years later.
Conclusion.

As a vehicle to create passive income there are many benefits to investing the time, energy and money to create a solid passive income. Like most things in life however, there is rarely a free lunch, and those that succeed will be those that combine ambition with a verifiable action plan and under the umbrella of a stable and trustworthy organization.