Create your own MLM in ten easy steps
Hundreds of thousands of Americans get sucked into Multi-Level Marketing (MLM) companies each year. From Mary Kay to Amway to Herbalife to PrePaid Legal, the list is seemingly endless. Each offers its own special spin on the products it sells, but the main focus of an MLM is on recruiting new members.
MLMs live and die by the recruitment of new members, who make the bulk of the product purchases from the company. Little of the product is resold to an actual end user, but the MLM company doesn’t care. The sale has been made to the distributor (or associate or representative or member or consultant or whatever term you like).
It’s widely knows that those in MLMs make little money. In fact, almost everyone in the pyramid loses money. The real money makers in the scheme are those who own the MLM company. So in the spirit of giving, I’m offering you ten simple steps toward creating your very own MLM. Start yours now and cash in on all those people who are dying to hear about your “opportunity”!
A summary of the steps (read the whole article at WalletPop for all the details):
1. Come up with a product or service that you can make sound revolutionary. Funky berry juice, groundbreaking face cream, or unusual financial services will be fine…
2. Create a commission structure (also called pay plan, incentives, or rebates) that is difficult to understand, and that pays about 8 to 10 people in an upline as soon as an associate buys something from the company…
3. Commissions must be paid as soon as the associate makes a purchase from the company. You don’t care if the associate ever resells your product or not….
4. Avoid any talk of being a pyramid scheme or multi-level marketing company. Although those terms are accurate, they carry negative connotations and should be avoided at all costs…
5. Create credibility for your business. This means getting endorsements from people who sound important…
6. Give your product or service a high price….
7. Set up strict requirements for “moving up” in your company. The requirements must include a certain number of new recruits plus a minimum amount of product purchases by the distributors in a downline…
8. Find “early adopters” who will recruit like crazy so you will have some “success stories” to promote to potential distributors…
9. Create “tools” to help distributors become successful. Almost everyone fails in MLMs, but the longer you can keep them believing that they could succeed, the more money you can get out of them…
10. Hold periodic events that get people excited and recommitted to the MLM. Since almost everyone fails, this could begin to be somewhat of a downer…
Above all else, make sure that those who join your MLM are always dreaming of financial freedom. That hope of one day making the big money will be your key to success as the owner of the MLM. Dreamers will keep putting money into your company and that means success for you!
II. MULTI-LEVEL AND PYRAMID SALES ORGANIZATIONS
Confusingly similar terminology is being used by some multi-level, “network marketing” or pyramid companies, who sell
directly to consumers in the home. In the course of your Mary Kay business, you will no doubt be confronted with
questions from customers or potential recruits concerning the Mary Kay marketing plan. It is important to clarify that
Mary Kay is not a multi-level or “pyramid” company. The following points concerning the Mary Kay marketing plan are
of particular importance in distinguishing it from these other organizations:
A. There is one wholesale sale (Company to Independent Beauty Consultant) and one retail sale (from Beauty
Consultant to customer) of Mary Kay® products. There are no levels of wholesalers between the Company
and the consumer through which products pass at varying discounts before sales. Thus everyone, whether
Independent Beauty Consultant or Independent Sales Director (unit Director of Beauty Consultants), purchases
all cosmetic products directly from the Company at the same published wholesale prices for resale to
consumers of their choice. Everyone has the opportunity to buy at the same discount irrespective of their level
within the independent sales force career path.
B. Everyone recruited as an Independent Beauty Consultant is recruited to sell products at retail. Independent
Beauty Consultants do not recruit others to buy products from them. All Independent Beauty Consultants are
thus aware that all products purchased by them are for sale at retail to ultimate consumers (or may be returned
to the Company for repurchase).
C. Everyone begins as an Independent Beauty Consultant with the purchase of a starter kit. No compensation is
earned by anyone on this starter kit purchase, i.e., “for introducing” a new Independent Beauty Consultant. No
“investment” is required and no level within the independent sales force career path may be purchased by the
payment of fees or by the purchase of a given quantity of products from the Company or anyone else. There are
thus no “sales” of “levels,” “positions,” “distributorships,” or “franchises” by the Company or any of its’
Independent Beauty Consultants.
D. Elevation from Independent Beauty Consultant to Independent Sales Director does not involve the payment of
any fee, rebate, premium or hidden discount of any kind to either the Company or anyone else. Elevation, at the
election of any Independent Beauty Consultant, is based strictly upon proven recruiting and sales ability.
E. Any Independent Mary Kay Beauty Consultant who terminates her contractual relationship with the Company
may return unsold products in resalable condition, and these will be repurchased by the Company per the terms
of the Independent Beauty Consultant Agreement at 90 percent of her original net cost.
F. The Company pays all commissions directly to Independent Beauty Consultants and Independent Sales
Directors. The commissions are paid based upon monthly purchases and recorded on computer reports
furnished with the commission payments. The entire marketing structure is based on and intended to foster
retail sales to ultimate consumers. Commissions paid on any products returned by a terminating Independent
Beauty Consultant for repurchase by the Company, pursuant to Item E above (i.e., products not sold at retail),
are charged back to the commission recipient
Hi Karen – This is propaganda from Mary Kay Inc. to try to “prove” that they’re not an MLM and a pyramid scheme. But they are. They don’t stop being a pyramid scheme just because they say they aren’t. The company relies on recruiting and frontloading, and very little actual selling of product occurs. That’s a pyramid scheme, like it or not.
“F. The Company pays all commissions directly to Independent Beauty Consultants and independent Sales Directors. The commissions are paid based upon monthly purchases and recorded on computer reports furnished with the commission payments.”
Well, I think this ONE sentence says it all!
Pyramid scam “à la carte”
Commissions based on PURCHASES, nor actual SALES. No computer records on the Sales. No way to know if there are ANY sales. Complete disregard to the model and values of “DIRECT SELLING”.
Nice Going, Karen! Keep’em coming!
—-
Briliant Post, Tracy, and funny as well.
Regards from Portugal,
Pedro
What I notice about the many varied but similar schemes masquerading as legitimate business opportunities is that they basically survive like a parasite feeding upon the body of their supposed business partner host. What really allows this host/parasite relationship to happen is that the host doesn’t accurately perceive what is really going on. The host’s first mistake is forming a relationship with the parasite, and the second most tragic mistake is allowing the parasite to “teach” the host how the relationship should work. The host may become very uncomfortable with the parasite, but the parasite keeps the host dreaming about the glorious days when the parasite is going to be so grateful for the host’s blood sacrifice that the parasite is going to pay the host back handsomely and they will live happily ever after as in a fairy tale.
We know that parasite/host relationships do not work this way in the physical real world, and neither does it work that way in the real world of these scam business “opportunities!” (Which are truly never an opportunity.)
What allows parasitic relationships to exist under this guise of a business relationship is that the host is not truly knowledgeable in the way and means of business, and this ignorance allows the parasite to take control of the host partner. The host could easily break the relationship by casting the parasite off, but the parasite convinces (cons) the host into a false belief set. As long as the host remains deceived and deluded, the parasite succeeds, suckles and grows fat. At some time into the future, the host–badly weak from being sucked dry–casts the parasite off. The parasite then goes off fat and happy looking for another “business challenged” person (host) to suck up to.
The best and only real defense against MLM pyramid scams and schemes is true business knowledge, common sense and wisdom. These “dream merchants” prey upon people who do not understand core fundamental business concepts necessary to avoid the pitfalls and deceit of the hard sell. They are taken in by imperfections of their own character and lack of knowledge.