To keep you loyal as their downline, the big time MLM distributors flash their fancy Porsche, ten thousand square foot house, and live the seemingly perfect lifestyle. To the general public, they see all this and assume that this big distributors are making most of their money by selling the company's products. Unfortunately there is another side business your upline intentionally keeps a secret from you.
Although a lot of MLM companies are are legit because they have an actual product to sell, there is a dark side to the MLM industry that you will never hear about when attending one of their business opportunity conventions.
This is the secret side business that your overly zealous upline will never tell you about. The big time distributors never mention a second business that may even be more profitable than selling the actual MLM products by itself.
The secret second business in a lot of multi-level-marketing is selling hope and motivation through information products. Information products are products like motivational tapes, CDs, quarterly business seminars, monthly website fees, DVDs, etc.
There have been some well publicized cases in which high level distributors have been found to make up to seventy percent of their income from selling these information products such as tapes, books, seminars, etc., and NOT the vitamins, soap, make-up, etc. itself!
The fact is, you can get much of the same recycled motivational materials for a fraction of the cost at any website. No wonder a lot of these MLM companies absolutely insist that people you recruit must buy these info products in order to increase their chances of success.
I'm sick and tired of these MLM companies being deceptive to their distributors and giving them false hope by brainwashing them to listen to those useless motivational tapes
Although there have been no formal investigations on how much the big MLM distributors make from selling information, we can only estimate their profits by the price of each tape being sold multiplied by thousands of distributors per month.
Selling information is big business. And after being in the information business for about a year now, I realized how much money these big time MLM distributors are ripping us off and profiting BIG by focusing on selling these less-than-worthless tapes and business meetings instead of selling the actual products themselves
So if you you see that your upline is shoving those motivational tapes down your throat insisting that it is absolutely crucial to your success, you may want to take a step back and decide for yourself if they really want you to buy the motivational CDs for your own success, or for your uplines own profits!
Multi-level marketing or MLM is a popular form of business structure. Basically, this type of business is associated with direct selling, but it is actually more than that. Most multi-level marketing activities include recruiting members, selling, and earning commissions on whatever sales the person under you transacts. Also, it follows the concept of franchise companies in the sense that multi-level marketing would pay some kind of a royalty fee to an individual based on the sales he has been able to achieve in his particular area or based on the sales of the group he manages.
Most multi-level marketing companies would not pay based on the amount of people you recruit itself because it would constitute as a pyramid scam. Rather, they pay you based on the amount of sales you had been able to generate and the amount of sales that your recruits had been able to make. That is not to say that you would not receive a bonus when you recruit because you will most likely will but it is very important to discern whether the money you would receive actually came from the company's earning based on its performance or the money they had received from the person you had bought into the company. If it did come from the person in your downline, then the company is most likely illegitimate and it is bound to collapse sooner or later when it is not able to sustain the amount of recruits it needs to remain afloat.
There are some multi-level marketing companies that got around this though and their usual strategy is to lure new recruits into buying products or even services they offer at a high cost but with an opportunity to enter their company attached. When a particular MLM company uses type of operation then it is most likely also illegitimate because the cost they had paid for the products is not sustainable and people outside that company would not be willing to purchase a product at that high price. When this happens then it is safe to arrive at the conclusion that it was a pyramid scheme albeit with some products that was sold.
Multi-level marketing also has varied compensation plans for its members depending on the policy of the particular company you want to enter. One of the most widely used structures is the unilevel plan. This is actually the first type of compensation plan that was introduced and it retains its popularity up to now because it gives a lot of possible income to its members so it is the most attractive type to lure in more distributors of your products.
On the other hand, there is also the matrix plan. In using this particular type of model to give compensation, an MLM company limits the amount of recruits a particular individual can recruit, but that is not to say that a diligent member would not benefit at all from his efforts in promoting the company because there are various ways to get around this and one is called the spillover. Basically, this will allow the diligent members to give up their recruits to other people that is still under them, thus more people will benefit although the diligent individual himself will not get as much commissions as he could have since some of the commissions already went to his previous recruit. But it is really not at all bad because people do get attracted to this type of model as they have the chance to earn commissions through the effort of others.
Both Alan Quan & Daegan Smith are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Alan Quan has sinced written about articles on various topics from Lose Weight, Internet Marketing and Acne Treatment. Fed up with a lot of MLM scams making most of their money from info products and knowing how many people got burned from their former MLM company, Alan Quan from