Is Multi-level Marketing A Pyramid Scheme?


Multi-level network marketing is a type of business whereby both the sales and new recruits are compensated. In mlm network marketing opportunities, a person may have a certain product to sell. This person then recruits sales representatives to sell the product. These sales representative then have two duties, to sell the product as well as recruit new sales people. They get compensated for these two activities, selling products and getting new recruits. This cycle goes on and on. 

mlm network marketing opportunities

Is multilevel network marketing legitimate?

The simple answer to this question is, yes it is. This is one of the most efficient marketing strategies and has lasted for a long time. Great products are easily sold using this method. The big question however, is, is this marketing strategy just masquerading as a pyramid scheme? How can a person avoid being duped into getting into a non-profitable scheme?All the above are legitimate questions, and each one has legitimate answers. 

What is MLM, and is it a scam?

In the world today, there are numerous MLM network marketing opportunities. The straight answer is an emphatic no. Some of these opportunities are legitimate while others are just scams to steal innocent people’s money. For one to truly benefits from these opportunities, one needs to be aware that there is a world of difference between a good multilevel network strategy and a pyramid scheme. 

Many owners of pyramid schemes wear the cap of multilevel marketers. For this reason, it becomes difficult to differentiate the two, and great sales people end up getting duped. This in many cases leads to these great sales people giving up on their life dreams and a potential primary source of income. 

How to differentiate between a legitimate mlm network market and a pyramid scheme

1. The first and probably most important fact is that mlm networks work through distributing products and services rather than through their member’s contributions. Some legitimate multilevel marketing strategies mat have an initial member contribution, but nothing more than that. 
When a sales person says that the only way to grow is by recruiting other members, then this is a pyramid scheme. One should run away fast. An mlm grows by selling products and not by only recruiting new sales people.

2. Company structures should enable one make an informed decision. Normally, in multilevel marketing, there are those sales people who are very zealous. Do not discount them as people promoting pyramid schemes. Be aware that multilevel companies use this as a good and affordable marketing scheme. 
A multilevel company always has profit margins for not only the executive, but also for the downline recruits. Not only do they have these profits, they also have an appropriate working structure for each member. Beginning from the executives to the new downline recruits. Structure here is a more solid compared to pyramid schemes.

3. Thirdly, ask around about the company before joining. Check for their information on the internet. Search for their reviews, adding key words like ‘scam’ or ‘reputation’. This will guide one on whether the company is a legitimate mlm or a pyramid scheme.

4. Another great point to consider is how old a company is. Most legitimate mlm network marketing companies have been in existence for not less than ten years. Some have even stayed in the market for twenty or more years. 

This is not to mean that new companies cannot qualify to be legitimate mlm network marketing companies. In such cases, one needs to have their antenna on. Investigate these new ones as much as possible because most of them are likely pyramid schemes. 

5. Find out how a sales person gets their promotion. As earlier stated, most mlm network marketing opportunities grow by sale of product. Pyramid schemes grow by only recruiting new members. If you, as a sales person is pleased with the way these promotions are done, then, they can join. For legitimate mlm network marketing opportunities, promotions occur through an official appointment. For a pyramid scheme, one can even promote themselves without a question.

6. While searching for information about the company one should also get to know their refund policy. Ensure that you agree with the terms and conditions of product refunds. Many pyramid schemes send one to sell some products which could be difficult to sell, then later on refer to their no return company policy. This may leave a sales person broken. You do not want this happening.

7. The other obvious thing is, the products they are promoting. Find out if these products are legitimate. The selling method matters little, as for many years, mlm marketing products have been sold from door to door successfully. 

Be vigilant

The best way to protect oneself from these unscrupulous dealers, is by being vigilant. Long time executives in pyramid schemes know their whereabouts in such shady businesses. They may say anything to hook someone up with their scam. They have a great deal of experience, and will readily hoodwink any unsuspecting candidate. For one not to fall into their trap, the above tips should help. 

Anything that one is told about, that they don’t understand, they should ask. Be straight forward on any issue that is unclear, and strive to get legitimate references from your sales person. Resist the pressure to join a company there and then, no matter how sweet the deal seems to be at the time. Take your time and go through the above guidelines concerning what is being talked to you about. 

Another great aspect to consider is if sales and marketing truly aligns with your life’s goals and ambitions. In sales, one needs to invest a good chunk of their time and hard earned money to make it grow. This is the case with any business opportunity. 

Before one ventures into mlm network marketing opportunities, it is important to take into consideration that this may be a great chance for one to grow as a person. Multilevel networking has earned people a great income over the past years, and this can also be you. One just needs a great deals of precaution, and dedication of time and resources. One also needs to be a good convincer of people, so that they can buy the products and services, and also join the sales team. Anyone who believes they can work with these conditions, they should know that they are on their way to the top.