Multilevel-marketing company pitches scrutinized

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Posted 20 March 2021

A management consulting firm has characterized multilevel marketing (MLM) companies as using “fraud, deceit, and outright lies in a flawed business model.” The firm refutes an MLM promoter’s twelve reasons that people should pursue direct-sales opportunities in MLM companies. It characterizes each of those reasons as a false promise.

The twelve false promises are:

  • “You can work from anywhere!”
  • “You decide how much effort you put in.”
  • “It rewards those who work hard.”
  • “You get to be your own boss!”
  • “The hours are flexible.”
  • “Startup costs are lower than for other businesses.”
  • “It provides you with extra income.”
  • “You will save money on childcare expenses.”
  • “It gives you goals to work toward.”
  • “You’ll feel supported and make lifelong friends.”
  • “You can buy high-quality products at a discount.”
  • “MLMs are fun!”

An superb article on the MLM market.

Quotes:

“The average MLM rep earns around $400 per year in sales, not counting expenses. One study reveals that 80% of representatives earned no income at all (Best Company). Another shows that the average seller actually spends more than they generate (MLM Statistics).”

“Worst of all, MLM companies do not limit the territory where their sales reps can sell and recruit. This means that everyone who joins your team will actually become a direct competitor. A legitimate company would never design a situation where their sales team are punished for doing their job well. Yet that is exactly how Multi-Level Marketing companies operate: with an unsustainable model of growth that only rewards the few at the top of the pyramid-shaped structure.”

“Owners of MLM corporations are really smart. They recruit thousands of reps as their sales team — on whom is placed the difficult task of influencing others to buy products. This means that the MLM owners pass on the responsibility for salary, benefits, and sales costs on a contractor workforce. Each Independent Contractor signs and agreement to follow the MLM company’s rules about how to promote and sell the products, while taking on all the risk if they aren’t able to sell.”

12 false promises MLM companies often make.
LaConte Consulting, July 3, 2020

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