Anyone who was born in the past half-century has at least a friend or a family member involved in MLM before. Chances are, you have also been invited to join this business opportunity, but you are probably unsure if it is the right thing. What does the business plan have to offer? How does it give you that so-called ‘financial freedom’? Here are 6 things you need to know about an MLM company before joining.
Things to Know About MLM Before Joining
(1) What Niche Will You Be Involved In?
The wellness niche is very popular among most MLM companies, followed by beauty products and household ware. Why do they focus so much on health and beauty? Well, these are some of the niches that will never go out of the trend, right?
It is almost as good as a necessity and at some point in your life, whether you are a man or a woman, you’ll need to use either one of them, if not all of them. A big part of MLM business activities will make you eat, sleep and talk about these topics so you want to make sure that you have the passion or at least try to develop one to run a sustainable business.
However, what if you have a passion for something else like pet care, craft-making, or electronic stuff? Chances are, there aren’t many MLM companies selling these kinds of products because they are ‘optional’ rather than a necessity in life. Hence, they have a less profitable sales force in an MLM business structure.
The question to ponder – What type of niche do you like to get involved as an entrepreneur?
(2) Who Are The Sponsors?
To join an MLM business, you’ll need a sponsor. If you don’t have one, the company will assign someone within the same locality to you. A sponsor is responsible to help you – the distributor – kicks start your business, improves on your product understanding, and motivate you to become the next sponsor.
He or she will also act as your main adviser in most of the marketing plan, hence, establishing a good relationship with this person is vital for your success in an MLM business. Under the wings of a sponsor, you’ll get to meet other members within his or her network, rub shoulders with some top achievers, and encouraged to attend meetings/training/talks (which you have to pay sometimes) to help develop the skills of a stellar distributor.
The question to ponder – Networking with new people face-to-face is the core of running an MLM business. Are you a people person?
(3) What Is a Start-Up Kit?
Purchasing an MLM start-up kit is similar to a business start-up cost and the fee varies according to the company that you join. Some kits are of a lower price range (between $20 to $50) while others can be slightly more expensive (between $100 to $200). Some kits come with product samples while others have to be purchased at a separate price.
From the kit, you’ll be able to gauge how serious the MLM company will treat you as their ‘business partner’. An established MLM will provide comprehensive product information, company details, and sometimes even the code of ethics for direct selling. In other words, they are pretty transparent with the company’s background so that they can gain your trust and confidence as a distributor.
A less established company or an illegal one, might not display that much information and if they can’t provide more upon request, that should raise some red flags.
The question to ponder – Look at every aspect of a start-up kit. How do you think it will help you build your business?
(4) How Will You Be Selling Products?
Most MLM products are backed by scientific claims hence giving it an outstanding feature. However, the best way to sell them is to use them yourself because that will help to create more personal testimonials when talking to a prospective customer. If the MLM has plenty of product choices, you may need to buy 2 to 3 items every month to try them out.
As a distributor, you’ll also be ‘taught’ to investigate the troubles/concerns of a customer and then plan on how to promote product A to help solve their problems. If they are happy with the results, then they should also consider buying products B and C for their husbands, children, or parents. The more products you sell, the more profit you make.
Well, if only things were that simple. In reality, you should ask yourself some of these questions before promoting an MLM product;
- How much can I spend on health supplements and beauty products every month? Do I even need them in the first place? Can my prospective customers afford to pay for these products?
- How true is the product claim? Which professional institutions support these statements? Where is the proof?
- If the product is a hoax, wouldn’t it be unethical or harmful to promote it to other people?
Not everyone is a nutritional or a beauty expert, but owning a start-up kit doesn’t automatically make you one either. So do your due diligence before selling products with unknown details to your family and friends.
Questions to ponder – Whether you like it or not, there is going to be a lot of upselling in MLM because that’s how profit is made. Are you comfortable with this kind of marketing tactic?
(5) How Do You Make Money?
Every MLM has its unique payout system. Some are straightforward, but the majority aren’t. The compensation plan is what determines your profit as you reach higher levels of distributorship. In the legal sense, a direct selling income should derive from product sales to the end customers and NOT from recruitment.
However, relying on product sales alone can be a very slow process. Hence, there’s always a tendency for distributors to lean towards more recruitment so that people can buy more products at a cheaper price range. If an MLM is signing up new members for more than offering their product values, then you are most likely involved in a pyramid scheme.
However, unearthing a pyramid within an MLM business structure is not easy as it involves in-depth analysis and understanding of the flow of the compensation structure. Many masks themselves for years before they are exposed in the media, in which by then, many would have lost their hard-earned money.
So always ask your sponsor, what do you have to do to earn money in the MLM. Challenge his or her answers until you are convinced that the company isn’t operating a pyramid scheme behind the scene.
(6) Is There an Online Trend?
MLM is traditionally a face-to-face business. They have very little popularity with the online audience. Most social networks banned the promotion of these companies and some well established MLM even prohibit their members from recruiting through websites. In other words, you depend highly on the cold market for business opportunities without having much access to the hot market which is the internet.
To prove my point, here’s the online trend for ‘MLM business’ worldwide.
Those companies that are trying to penetrate the online market aren’t getting a lot of success either if you look at this trend.
And much less if you try to incorporate MLM into the home-based business trend.
As you can see, these are all DOWNWARD marketing trends as not many people search for them online.
MLM has no doubt made many people rich, but at the same time, it is also one of the most controversial business models that are heavily debated for decades. So make sure you review the company to save yourself time, money, and most importantly, stay out of trouble.
Would you be interested to learn how to create a business around the hot market instead? Then check out my recommended program to see how you can get started.
Do you have an opinion or a question about this topic? Let’s hear about them in the comment area.
I’ve tried several MLM companies and gave it a go for more than a year each. Lots of time and MONEY have been invested and the only reason I stayed with them was because I love the products. I had hoped to be able to make some money doing some selling however, I quickly lose interest because it starts to feel like a job.
One company was for a digital scrapbooking company, another was for an essential oil company. What I learned was, although I loved the products, I had to sell a lot to make anything and I really hated begging friends to get started and then refer their friends.
They were both products that I fully believed in yet, converting that to profit did not work out at all. I’ve since ventured into other legitimate home-based businesses, but not willing to go back to another MLM company for sure.
Marlinda Davis says
What is the difference between MLM and network marketing? People say they are different, but they seem the same to me. I have tried a few network marketing companies but they always make sure to specify they are network marketing. When I read information on both of these, they sound the same so are they?
MLM and network marketing pretty much overlaps one another. One that does purely recruitment is an illegal pyramid scheme, but anything that compensates for recruitment while selling their products can be categorized as both.
Hope this helps, Marlinda.
MLM has always been iffy to me. If a company actually has a product, why not sell that product on the market legitimately? If a product is worth its salt, it will make a lot more money then having rely on random people buying your package and having to promote it.
MLM allows them to keep their costs cheap as hell, because they’ve got other people promoting their products 24/7, but they don’t actually need to pay them anything.
Hey Cathy, I have heard about MLM all over the internet recently and people have been saying that it can make you rich really fast. After reading your review I realized that the MLM strategy is possible, but you have to be careful and skilled to succeed.
This is a huge misconception that I’ve seen – you can’t get rich fast with MLM. Even those people on the top tiers will tell you that it takes hard work and years before you can earn a passive income. What you read on the internet are people who are trying to sell you ‘the dream’ in order to recruit you as a member, buy a starter kit so that they can move up the next level. Anything that promises you ‘fast money’ is a sign of scams.
So, yeah you are right. You really got to be careful with who you trust.
I can’t agree with you more after reading your comment. Of course the first thing to do when you want to join a MLM business is to have a niche and your niche should be related to something that you are very passionate about. But the part that really caught my attention is when you mentioned that the best niches are those that are related to health and beauty because they will never be obsolete.
I am excited about this because I just started an online business and my main niche is health, beauty and wellness. Looks like I am on the right track, except that I am doing affiliate marketing that offers more flexibility.
Good for you Pat. Affiliate marketing lets you leverage trends and search engines to reach out to your targeted audience. There’s no need to do any hard selling because there’s no tier system to follow. As long as you keep creating helpful and educational information, you can find customers from any part of the world. Not to mention, the average cost of starting an online business is way less than a MLM starter kit.
Hari S Nair says
MLM, is something in which someone in our circle must have surely been to, at some point. I was first introduced to it when I was in college and as you have said, only a few niches make actual profit. It was a niche related to health but I choose not to join because the startup kit cost was too high.
It is true that MLM has made so many people rich, but it has also wasted time and money for people who are looking for quick ways to become rich. As mentioned in the post, pyramid scheme is often very complex and they don’t tend to be transparent about it. I had wasted my money in a MLM scam which boasted of pyramid scheme which was hard to understand. Wish I had read your post before. It would have saved me some money. Anyways, I learned my lesson. Thank you so much for this post Cathy. These are essential things to know for people who are thinking about investing on such schemes.
Italian Brave Heart says
MLM’s have always left a bitter taste in my mouth. I have read so much about them over the years and most of it bad, so I was delighted to see that you had recommended another programme and on investigating this a little more it appears that this has a wealth of resource, tools and a very supportive community. Is this your experience?
My experience with the MLM world is short-lived as I was getting a lot of pressure from my up line to produce quick results. I left eventually to look for better opportunities online and that’s how I ended starting my online business with Wealthy Affiliate University.
For me, affiliate marketing has so much more to offer in terms of niche diversity and work flexibility. I learn something new everyday and it’s very exciting to see the transformation in my business and myself so far.
Tennyson Boothe says
Good post here. I started to get into an MLM company a little before WA and I just don’t think it was for me. The meetings at least 3x that are required to make any headway early in the business were draining and difficult to prepare for.
Granted, I probably could have done it with practice. But there were a lot of things I didn’t consider, some of your points being related.
Either way I’m glad I found WA and moved on. I’m still part of that MLM (their products are superior) but I am not selling right now. Maybe I can use what I learned at WA to make an affiliate site for it in the future. 😉
My experience is a similar one too. Went for meetings after work and overdosed myself with a lot of motivation – which eventually made me realize that it’s not the business model that I want to be involved with for long period of time. All the hustling is very tiring and sometimes, frustrating when people, especially friends and families, give you the cold shoulder.
Between the odds, I ended up doing affiliate marketing with Wealthy Affiliate University and I could see that this program offers for value and flexibility for anyone looking to start a legitimate business online.
Thank you very much for your post. I was working for two years in one of the biggest MLM company in the world – in the back office, but still.
You mentioned very important topics, but for me the most crucial is not to get to the program to earn money, but to use their products. If you think that the products you use are better than those in regular shop, you can start showing that to people.
People need to avoid the way of thinking: “Oh wow, I can earn so much? I don’t even need this product, but I get commission of x$ per one item”, and sell items because they are good.
That’s the thing with MLM products – they are perceived as ‘better than those in regular shops’. What makes them better? Price or quality? They are often times more expensive and their quality status can be self-endorsed. Some do engage with reputable non-biased laboratories (like your company), but many don’t or they could just be inflating the data. Who knows, right?
That’s not to say that regular products are any better too. In a world of massive consumerism, we just need to be more watchful with our purchase so that we don’t end up spending more than necessary or worse, consuming something that could do more harm than good to our body.
Great post Cathy. I think you’ve covered the basic things to know or look at before one decides to join a MLM.
I’m not a big fan of most MLM’s because I don’t think they offer much value and most people don’t ever make any money.
Although last year I ran into a health based MLM that seemed pretty decent. So I think it comes down to the quality of products that the MLM offers.
In general, most MLM’s are structured to reward bringing in more people to the program versus selling more products. But I think a great idea would be to incorporate blogging (if your niche coincides with the MLM’s products), ranking your content naturally, then referring readers to MLM products if they provide the user/reader value.
Most MLM’s have sites that you can buy their products directly, so this would be just like affiliate marketing. Otherwise, like you said, you’re going to be selling products person to person.
I think the caveat with most MLMs is that you have to make it to a certain tier in order to make more than you actually spend on their products. To begin with, we know that the products are not cheap and recruiting isn’t always the easiest given their reputation.
If you can partner with a good MLM company and find evidence to support the quality of their products, then by all means do it. But most of these products seems to be self-proclaimed with goodness so I would recommend others to approach them with caution.
Great post – although one thing you never clarified is what actually is MLM?
I’ve heard a lot about the pyramid schemes online and how it’s often impossible to get hold of the people who actually created the systems, since there’re so many layers of people in between – who, consequentially, seem to know just as little as you!! Not a great business plan in my humble opinion!!
I almost got sucked into one myself, but, thankfully got out of it just in time!
MLM or multi-level marketing, is basically a business model that pays a certain commission percentage based on how much volume of products you sell and reward you with level incentives. Getting promoted to higher levels means that you are a bigger sponsor, hence larger earnings.
At the top level is where you enjoy the passive income lifestyle that everyone else is chasing after. From my experience, it is not impossible to reach that stage. It’s following the marketing system that’s challenging as I’ve outlined in my article above. Like anything else, you really have to be very persistent to stay ahead of the game.
MLM is the bane of my industry. Most people buy straight in to it because they hit the emotional trigger. On a personal note, I really can’t stand Herbalife as they somehow have found a loop hole.
I would advice anyone to avoid MLM at all cost. It’s unlikely that you will have financial success or any friends left either from trying to push them in to it.
Hi there Steve,
Some of my friends has stopped talking to me after I subtly promote MLM products to them like two years ago. That was when I didn’t know any better. That’s how bad an impression MLM business model has on people. I know a few who have been very successful, but they started doing it some 20 years ago when the MLM industry wasn’t as tarnished as they are today. Can’t say the same for people my age who are just getting their feet wet with this ‘business opportunity’ in recent years due to all the negative reviews around.
Thanks for such a detailed article! I’ve been searching around for ages to find out about making money online with little success – I’ve always spent far more money than I’ve ever earned!
It’s really important to be careful about which companies you use online. Is there a particular platform or website you would recommend?
Hi there Mark,
There are a lot of bogus companies out there and it’s also best to check if they fit the criteria of a scam site before you spend any money on them.
I have been fortunate to discover Wealthy Affiliate training platform 2 years ago that teaches the legitimate way of building an online business. They have lots of resources, tools and community support to help you get started so I would highly recommend that you check them out.
Thanks for this good article about MLM. Unfortunately, my niche isnâ€™t about beauty or health. What are the best MLM services for other niches and where to find them? Or is there maybe some other alternative to MLM that I can make use of to promote my niche and sell products?
Hi there Vincient,
I don’t think you are going to find many MLMs that deal with non-beauty and non-health products. If your interest is out of this niche, I would recommend that you do affiliate marketing instead. At least, it’s something that you can start out of your own passion.
Wealthy Affiliate is a great place to learn how to build an affiliate business, the right way without spending a fortune. Check out this page if you want to know more about their training program.
Hi Cathy, this is a great post for anyone considering getting into MLM.
I used to be a distributor for a health and beauty MLM company. They were a good and reputable company and my sponsor has been very successful, but for me having to do product launches, weekend, evening markets, stalls and speaking to strangers just wasn’t for me.
I really like that you have encouraged people to ask themselves this. Have you ever been involved with any?
Hi there Vic,
I certainly have been involved with MLM – for a short period of time. A friend pulled me in as I was figuring out how to make more money in life. The company is a reputable one and all the talks gave me a lot to think about.
Just like you, the training were too much for me. Coming home late to my family and buying lots of product to try them out myself made me felt like I was spending too much time and money on something that wasn’t myself.
Few months later, I discovered affiliate marketing and have since build my online business around it. I’ve never looked back.
Thank you for your great post. You explained very well and in detail about the MLM system. I wish I had a chance to read your post before joining one MLM that was a scam. It would save me some money, time and nerves.
I love your advice from which can be learned a lot. For an example about the starter kit; I wasn’t aware that it can help to indicate whether the company is serious or not, but you are right. Thank you for the eye-opening information.
Hi there Tamara,
Yes, the starter kit has some of the most valuable information that you need to know about an MLM company. It’s almost like a product information if you will. It should contain some background check, legal facts and most importantly, contact details.
Having said that, you should also be wary of glossy starter kits. They could be printing a bunch of lies just to win your trust.
Thanks Cathy for this great post. I admit that I don’t quite scrape into having been born in the past half century and I had to google MLM. I have of course heard of Multi-level marketing though and I don’t really like it. My sister got all excited over Herbalife for a while and as you said she was just about talking it up in her sleep.
I’m sure your preferred platform is a much better choice and I like your quote about taking advice from people who are building businesses themselves.
Hi there Deb,
Speaking from experience, many people would become enthusiastic when they got to know about MLM opportunities for the first time. That’s because they allow themselves to believe in the luxurious lifestyle and the dream of earning a passive income.
When you get your feet wet with MLM talks and selling, you will find that it is not easy due to all the limitations that I have mentioned above. In MLM, it’s common and sometimes compulsory to follow the crowd. With an independent online business, you have the freedom and creativity to do whatever you want which I think is an important trait for any budding webpreneur to embrace.
MLM has a very unique business model that has made people tons of money but has left too many in the dust. It is perhaps the most ethical model (although most people disagree) because one’s earnings are strictly a function of effort and performance. I think it is hard to find a product that we are truly passionate about.
Most MLM successes are due to a passion to make money – not the product itself. Surprisingly, online methods have not been wildly successful for MLM marketing? Is Wealthy Affiliate a program that can effectively market MLM using online methods?
Welcome to my blog, Chuck.
As far as I know, using online methods to do MLM business can potentially lead to mass recruitment and that is as close as you can get to creating a pyramid scheme. Besides, the internet is loaded with a ton of negative reviews about MLM companies so it’s really challenging to use the same platform to promote anything good about this business model.
While the training at Wealthy Affiliate can help you build successful business in most niches, it does not advocate spamming among the members and will discourage you from doing so with your online audience.
Over the years I tried several MLMs. They all cost me far more than I made and they caused me to lose some friends. I did learn from my experience, but it was a costly education.
Some people seem to have a personality for face-to-face sales and these are the people who do well with MLM. Sadly, I also think people who have little or no empathy do well in MLM too. If someone is a decent human being the chances of succeeding with MLM are very slight.
In the MLM companies that I joined, it seemed the people who succeeded were people who had influence over very large groups of people before they joined the organization.
With the internet, particularly using your recommended platform, there is no reason to go into MLM. There are easier and more ethical ways to make money. With the proper training, someone can leverage the massive power of the internet to do very well.
That’s quite true, Gary.
There are nice people in MLM, but only if you start doing what they do. Otherwise, it would feel like you are not part of the successful crowd.
I think online marketing is a better way to do business because it allows you to run the show with less restrictions. And because you are targeting active consumers, it’s easier to sell products locally or even globally. The only thing you want to avoid is making your online website looks like a scam site. That’s why it’s important to get proper training from Wealthy Affiliate to learn how to build a trustworthy site that appeals to both new and returning customers.
I want to thank you for breathing some life into the truth about 99% of all MLM’s out there. In the past I was involved in Nu-Skin; World Ventures just to name two that I can recall. They both had the same “Pipe Dreams” and “Emotional Pump Sessions” that in a real business world will rarely yield you anything but lost time, money and heartache for getting duped again!
I really enjoy reading at your site because of the way you lay it on the line. If something is good, you extol its virtues fairly and honestly, but when talking MLM, I only hope many, many folks read and heed your warnings!
Great to hear from you again, Gary.
If there’s one thing I learned from becoming a MLM member is that I didn’t like to push people to doing something that they don’t like. It creates a very bad friction to the relationship and some of my friends are still not talking to me even after my departure from MLM which is almost 2 years now.
A lot of people join MLM thinking that it’s the right opportunity for them – because all those pump sessions make you believe that it is real – but they don’t see that this business model can be very repulsive to those people whom you are trying to sell to. It also takes a long time to redeem yourself after the damage has been done.