Multi-Level Mess

How network marketing really works


Look in a mirror and bite into a lemon, and you'll probably see a more pleasant facial expression than you would when someone tells you about this great network marketing opportunity they just heard about.

Network marketing, or multi-level marketing, gets a bad rap just about everywhere. Basically, some product or service is offered (it runs the gamut from makeup to cooking supplies to nutrition supplements to telecommunications and beyond) and you sign up to offer or sell this product/service. It's common to pay money upfront for training or supplies.

You also are taught to recruit people to do the same thing, and you get a cut of their action whenever they make a sale. The more people you bring in, the more money you make. These are commonly known as pyramid schemes because if you draw it on a board (you with three people branching out under you, and people branching out under them, and so on), it looks like a pyramid.

Many people buy into the idea because they think that once they get their network built up, they can just sit back and watch the money roll in. Maybe work a few hours a week and spend the rest living like royalty. Not the case.

As Dave says, what you are is a full-time recruiter and trainer. There's nothing illegal or unethical about the business, but you have to be a good salesperson to convince others to buy into it and stick with it. That's the challenge, and that's where it usually falls apart. Not only is it a chore to get people in, but there is a high burnout rate, so replacing them is common.

Hear Dave break down how multi-level marketing works.

On top of that–and you can probably see this one coming–people tend to avoid you when they see you because they think a pitch is on the way. You can lose friends if you are too ambitious about your "opportunity." We are right around the corner from Thanksgiving, so a big family get-together can become awkward if someone starts bragging about their big money-making scheme.

You can't work three hours a week and bring home six figures. That doesn't happen. Elvis Presley can lie around all day and make big money, but we can't. Don't look at a network marketing scheme as a ticket to easy money. If you choose to try it, be ready to work.

Reader Comments (12)

My wife works for an mlm company. Its hard work. On top of being a full time recruiter and trainer I would also add human resource! She deals with some difficult personalities, but she also deals with some amazing people. The great thing about mlm is that it has a low barrier to entry. The bad thing about mlm is that it has a low barrier to entry =)
Member at 9:29 AM, November 13 2012
The other thing about these so-called "pyramid schemes" is most individuals are under educated to the concept. If you look at your every day JOB (just over broke), it's a pyramid scheme, your boss will always make more money than you will, period, end of sentence. If you are a good recruiter/trainer or "inviter" as we in network marketing like to say, you can become independent of your job and have more time to enjoy time with your family. I have meet many folks that have done very well in network marketing. They have even done better than the person whom recruited/sponsored/invited them. I haven't had the greatest of luck in the industry, but I like the concept and have meet alot of great people over the years. Personal development is always pushed and should be, your boss at your job rather push you down than bring you up in alot of instances. Just my 2 cents, thanks for reading.
Member at 6:19 PM, November 13 2012
I get the mlm idea and it always sounds so fun and great! But most of these companies are selling overpriced items that you don't really "need". If you did actually need it you would have already bought it at TJMaxx or Marshalls for a really great price! Encouraging others to buy expensive "stuff" that after purchase will diminish so greatly in value, be rarely used, and ultimately find its way to the closest good will donation drop off just doesn't sit right ... so I just keep plugging along as a nurse at my JOB (which is actually fun and rewarding as well). At least I don't feel guilty watching others hesitantly spend their hard earned cash on some expensive mlm merchandise just because I'm telling them how great it is and how much they "need" it.
Member at 5:40 AM, November 14 2012
One the best things about MLM is the positive people, thinking and books you get exposure too. That is what I took away from my experience.
Member at 11:59 AM, November 14 2012
I agree that most MLMs are overpriced and unnecessary. We actually just signed up with a new cell phone provider that offers unlimited data, talk and text for $49/month. Compared to the industry, I don't think that's overpriced and most people use a cell phone. I would love to share it with anyone who is interested. And yes, by referring people you earn money, BUT don't refer anyone and you still have a great service at a low price.
Member at 3:37 PM, November 14 2012
I started an Amsoil dealership 15 years ago to get ready for life after mandatory retirement from airline flying. Smartest thing I've done. Amsoil's plan works - as long as I do.
Member at 7:14 PM, November 14 2012
I find that the products in legitimate network marketing companies are top-notch. They often have guarantees the exceed those you may buy in a store. There are products I enjoy that I would only purchase through direct sales companies because of the quality of the products, the guarantees and the customer service.
Member at 8:35 AM, November 15 2012
I personally couldn't be in an mlm company. I am not a good salesperson. But I do love my makeup/facial products that I use. True they are a little spendier but they keep my skin clear. Plus with the company I use I can try a product for however long and if I am not liking it I can exchange it for something else. I feel it is worth the money :) Great article!
Member at 9:19 AM, November 15 2012
"Spendier" is not a word.
Member at 9:59 AM, November 17 2012
Who cares if "Spendier: is not a word. We are here to get out of debt not sit through an English lesson
Member at 6:25 AM, November 19 2012
LadyMcKermit said "One the best things about MLM is the positive people, thinking and books you get exposure too. That is what I took away from my experience." I finally realized that I was not suited for the constant recruiting and training. However, I did take away the same exposure to positive thinking and books. I still have and reference many of those books. One book in particular, The Credit Diet by John Fuhrman, was included because the leadership stressed learning how to handle your personal finances first so that you can handle your business finances later. My sponsor, months later, invited me to a Dave Ramsey seminar at his church. I've been a TMMO member ever since (4+ yrs).
Member at 1:54 PM, November 19 2012
I have avoided MLM/ network marketing companies like the plague since losing a couple hundred with Mary Kay in college. As another comment mentioned, most sell overpriced gadgets and products I don't need and certainly don't want to pay full retail price to get. Recently, I had the privilege to meet someone who has made a small fortune in networking marketing with a company he believes in and products he is passionate about. In a couple hours of conversation, he changed my perspective about MLM when it is DONE RIGHT. Done right, it should enhance relationships, help others and build a viable business for its consultants. Consultants should be passionate about the niche and believe in and use the products. Network marketing makes sense for companies that want to start without a huge a budget for marketing and advertising, who want to get the word about their products out through ordinary people who are paid on commission, just like salespeople. I have found a great fit with a wonderful, debt free company that sells products I use in a niche I am passionate about (emergency preparedness and home food storage). My husband and I are beginning to build our business and feel we're on the ground floor of a great opportunity. If anyone want to know more, please PM me or email me: You can read more about us at my blog:
Member at 10:12 AM, November 22 2012