Friday, December 21, 2012

Are Multilevel Marketing Companies (MLMs) Scam

Short answer: No. They are legitimate models of earning.


Not everyone can profit from MLMs. Studies show that only the top-level marketers (at most top 5%) receives the material promises that MLMs show upon presentation of their company and products.

A person who is looking for an MLM company has to be wary about hidden pressures, cash-outs, and maintenance fees. For instance, one has to cash out 12,999 in one MLM company in the Philippines, in exchange for a bundle of products that one has to be able to sell in order to get back one's investment. This strategy creates a definite captured market, so to speak, and keeps the company afloat. But one has to look at the amount of initial cash outflow versus the rate of inflow. If one wants to move up the ladder of distributorship (which means higher rebates from products purchased), one has to buy more. And more. And more.

Moreover, most MLMs become a way of life much like religion is. One has to build members in order to recruit more people. Recruitment is most observable in binary MLMs where one has to maintain a "left" and a "right" marketer. In other words, one has to have two people working and meeting quotas, hence, a pair. Those two persons would also have to recruit a few more. And if those recruited do not meet quotas, then there's no pairing.

The moral is, if one stops building leaders or "left" and "right" marketers, one would not earn unless left and right matches/reaches the quota. Even if "left" reaches a million dollar sales, if it does not pair with the "right", then basically earning amounts to zero.

These things I have learned from friends who had bad experiences with MLMs; they were pressured to:
1. pay huge distributor fees and maintenance purchases,
2. invest time and effort training "left" and "right" marketers
3. meet quotas 
4 recruit people

The next question would be: Are there other MLMs out there where these four things are not part of the core marketing strategy?

Tupperware, Avon, Sophie, and Human Nature are but just a few MLMs that do not milk their members; the distribution of rewards come proportionately from a) recruitment, b) individual sales, c) group sales, and d) incentives and bonuses. If MLM X has a resource of $100, $90 is channeled to recruitment, the other ways of earning are underused and underappreciated. Essentially, to me, MLM X is more of human trafficking, so to speak, rather than product marketing.

Another company, in addition to those legit already mentioned, which is based in New Zealand (production) and Malaysia (financial arm) is G-Health. The only thing that one needs to do in order to become a member is to purchase a product at distributor's price and that's only P1,800.00 ($42.00). There is no quota that one has to reach because there is no status demotion. There are only incentives.

Every product has an equivalent point value. For instance, our flagship product G-Cell (stem cell repair and revitalization) has 144 point value. In order to get 25% of sales rebates, one has to accumulate 2051 points. These will just accumulate overtime; they don't expire. Now, if one has 25 members in your team and each one purchases G-Cell, you're already assured of a 25% rebate in all purchased items. That's a hefty sum of money already. And this is just one way of earning in Ghealth. We have 9 more ways.

One thing is clear as of the moment: If one has P1,800.00, then one can be a distributor. If one just wants to consume Ghealth products and get them for a distributor's price, then that is fine. What is better is that one still has the option to resell whenever one so decides. Again, there is no pressure, quota, demotion, or huge cash-out.

Why not try Ghealth and prove that not all MLMs are scam-ish?