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Multi-Level Marketing: Sound Marketing?

By: Kyle Elliott

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I am convinced it is true that MLMs are based on solid business thoery. The idea that it is more lucrative for a company to distribute products through a group of continually growing "warm contacts" then through usual marketing channels makes a lot of sense to me. The budget generally set aside for interruption advertising is usually large - at least it would be for any corporation that is able to utilize a MLM business model to begin with - and to roll that into incentives for sales and recruiting can be prove to be quite effective.

I have been involved with a couple different MLMs over the years (my parents were heavily involved with a popular MLM for a few years back in the 80's) so I do have knowledge with the model. I am also a marketing consultant so I recognize the differences between this sort of business model as it relates to the individual as opposed to conventional small business marketing plans.

I have consulted with the leaders of considerable sized teams on how to successfully communicate with their teams, as a major portion of the challenges associated to implementing a MLM business model involves the geographical restraints that come with having a sales force spread out all over the place.

The main concern that I have discovered with most MLMs is the same thing that gives them life – often it's all about the hype. Seldom does a network marketing opportunity revolve around a solid, easy-to-duplicate turn key business.

The majority of the people that I had the pleasure of meeting during my time involved with MLMs had several things in common:
1. They were generally frustrated with their lives as they were - they didn't like their work, they didn't like their way of life, etc.
2. They were looking for a way to make an income outside of the "normal job rut"
3. They felt like they belonged to something bigger than themselves when part of "The Business"
4. 95% of them tend to walk out when the hype wears off - before they achieved the goals that they put before themselves at the first "meeting" (the goal list never changes - it just forwards to the next MLM that appeals)
5. If they are honest, they probably would tell you that "this isn't the first MLM I have been involved with..."
Now don't get me wrong - I don't think that there is anything particularly bad about any of the things listed here. I am familiar with every point I have mentioned perosnally!

What is too bad is that most MLM leaders don't truly care about this 95% of the associates that are recruited into their company.
It is kind of like strip mining - the top leadership of most MLMs craft hyped-out recruiting programs to work through as much basic material (recruit prospects) as possible to find the 5% of ones who will truly replicate the model. Along the way they come across and cultivate out of that 5% motivational speakers, real sales people, event organizers etc. etc. that generate the foundations of their actual business - which ultimately is to sell product.

I don't consider that there is anything necessarily wrong with this system - you have to find the individuals that fit somehow.
What I have noticed, nevertheless, that I find especially troubling is the fact that many of the business models I have seen are in fact indoctrinating their sales force into a market. Many MLMs sell a majority of their products directly to their sales force! Their key market is the same persons they attract with dreams of freedom and wealth, when in fact they are being sold soap and a book of the month. And what a dependable market they make! Back every month to buy the next book or another roll of toilet paper... at least until the hype wears off... hmmm...could this be one of the main reasons for the hype? Good question I think.

As far as marketing planning goes in my modest belief, a MLM business model could be the ultimate distribution force for practically any product - if the leadership could actually get beyond the great potential to enhance their own wealth, provide solid sales training and incentives for their team members to support sales outside of the company and be cautious of the long term affects of too much hype.

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