Multi-level Marketing (“MLM”) has a bad name among large segments of the population. Some of it is for good reason. Some of it is flat out wrong. I’m sure you have heard positive and negative biases for many businesses, politicians, entertainers, etc. Let's put the topic of MLM on the table and address what is justified and what is not.
I have been the target of MANY pitches to join multi-level marketing and network marketing businesses because I have multiple independent small businesses that are profitable, legal and ethical. In fact, any business that does not meet ALL three criteria of profitable, legal and ethical, cannot be anything I would consider for even a moment.
When you have a proven track record of success in small business, every MLM participant wants you in their “downline.” I have been pitched MLM in the usual fields from health and nutritional supplements to less common MLM's such as selling satellite TV and even “investment grade insurance” for which I would have needed to get a license. Satellite TV was the first one for which I attended recruiting presentations in large meeting rooms in our local town of Mount Laurel, NJ in 1996.
Regardless of whether you call it Multi-Level Marketing, Network Marketing, Direct Selling or Relationship Marketing, when done legally, they all involve selling a product or service directly to customers and they all involve developing a sales force (“downline”) that also sells product or service directly to customers. As far as I can tell, the differences between MLM and the other creative terms are primarily semantic. I’m sure I’ll get E-mails that will attempt to explain the difference, mostly from people who call themselves network marketers because they fear the stigma of the term MLM. I’m sure I’ll also get Email from people who will say that all MLM’s are illegal. The 1st Amendment protects their right to say that and believe that. The 1st Amendment also protects my right to think and analyze as a rational human being, then communicate the basis for my thought process. That's what I'm doing in this article.
My Objections to MLM for 21 Years
Before I tell you why I finally did join a specific category of MLM business, I will tell you why I was so fiercely resistant to it for more than two decades. Following are my objections that had to ALL be overcome for me to join.
Need: I never want to sell something that people (or companies) don’t absolutely NEED.
Benefit: I never want to sell any product or service that has any question whatsoever about its benefit(s). Very preferably, the undeniable benefits of the product or service are so obvious that all you have to do is mention the name of the product or service and the end customer already knows its undeniable benefits without any sales pitch.
Value: I never want to sell anything unless the cost to achieve the undeniable benefit is well justified without any doubt.
Personal Credibility: I never want to trade my very high credibility, reputation or relationship to make a sale.
Sales Ethics: I never want to pressure anyone into buying anything, even if they absolutely need it. I certainly never want to sell anything people don’t know they want (let alone NEED) using hard sell techniques such as “there are two types of people in the world…there are people who have soft smooth skin who maintain their youth forever by using our product every single day decade after decade and then there are the people whose faces are wrinkling as we speak!” Shaming is revolting in society and it is revolting in sales.
Recruiting Ethics: I never want to recruit a downline associate (salesperson) into an MLM who is ever required to put at risk more than a few hundred dollars when joining the MLM or to maintain her/his status and that includes money to buy the MLM's product or service for resale. Note that recruiting private equity from accredited investors is a very different category of investment activity.
Source of Income: I never want to be in a business in which the personal purchases by the downline are a significant portion of the income of the upline. In other words, THE OVERWHELMING MAJORITY OF THE INCOME OF THE UPLINE MUST BE BASED ON PAYMENT FOR THE UNDENIABLE VALUE TO THE END CUSTOMERS WHO ARE NOT PART OF THE DONWLINE.
Getting Stuck: I never want to have to buy product that I must then resell with the potential of accumulating unsold product in my basement or garage.