My Beef With Multi-Level Marketing

Last year I had two different, and yet strikingly similar, experiences with Multi-Level Marketing (MLM). For those who don’t know, MLM (also known as Network Marketing) is a business model that combines direct marketing with franchising. In both instances, I chose not to become involved. In this article I would like to explain why.

My first encounter with MLM arose because a close friend invited me to a meeting to get my opinion on a business opportunity. As she later admitted, she was never interested in my “opinion”. Her mind was already made up about the opportunity, and this was just her way to get me to the meeting. Well she did succeed in sparking my curiosity, and since I had nothing else to do I went along. This first MLM opportunity was with a company called ACN and basically involved reselling the services of a telecommunications company.

The second MLM experience I had last year was with a guy who took it upon himself to get to know me. I remember the first time we met, and he started to randomly talk about how these vitamins he was taking made him feel “great”. At the time I didn’t know what to think about this, but on our fourth meeting everything clicked. On this occasion he presented me with an MLM proposition related to Amway (interestingly he never mentioned Amway, although I later discovered that was who the opportunity was with). Basically this opportunity involved selling a range of different products, one of which was vitamins (of course!).

With this background in mind, here are the 2 biggest problems that I saw with Multi-Level Marketing.

1. The Products and Services Do Not Add Value

The meeting I went to for the first opportunity was held in a large movie cinema. There was a flashy movie presentation, and then a procession of people gave us their MLM success stories. After this meeting for newcomers, there was a training session for existing marketers. Since my friend was staying for this meeting and I wanted to better understand this opportunity, I stuck around. It was an eye-opener.

In this training meeting, I came to understand that the opportunity basically involved reselling the services of a telecommunications company. It became obvious that it offered little to no value to the potential customer, as the service was in no way cheaper that simply having a contract with the telecommunications company. The trainers encouraged marketers to divert queries regarding the benefits of the service with phrases such as “you will be doing me a favor by doing this” or “you will be helping my dream of working for myself come true”.

In regards to Amway, I’m sure there is nothing wrong with their products. But is anyone actually buying Amway products because they are the best quality and/ or value? It seems to me that most people purchasing the products are doing so because they are wrapped up in Amway or feel pressured to by someone (yes, I’m sure there are some exceptions). This leads me onto my second problem with MLM.

2. MLM Strains Relationships

Now from what I observed, MLM in many ways has a cult-like following as people get heavily wrapped up in the idea of making “passive residual income”. The income model closely resembles a pyramid, and for this reason success with MLM is heavily dependent on recruiting further people to join. In this sense, everyone you know – friends, family and work colleagues – become potential recruits and sources of income.

As I’m sure you can imagine, someone who becomes too wrapped up in MLM is going to be extremely annoying. In this way, MLM can strain, and can even permanently damage, relationships with the people closest to you. And remember, in many cases it is going to be questionable whether MLM products and services do actually add any value.

Final Thoughts

As should be obvious from this article, these are my opinions only. I am only familiar with the MLM opportunities mentioned, and I happily admit that I did not get involved with them past the first presentation. I am very open-minded, and I’m sure many people have good experiences with MLM. MLM is often linked to personal growth, and I’m sure many people gain confidence and learn valuable networking lessons getting involved. That said, if you are involved in MLM or are presented with an opportunity please consider my points above, try to cut past all the hype that is likely to be associated with the presented opportunity, and use your own mind to decide the value of the opportunity.

Peter Clemens

Peter Clemens is founder of The Change Blog and author of The Possibility of Change books series. Click here to learn more about Peter and his books.

34 Comments

  1. Lea,
    Thanks for sharing your story. I am VERY interested to see the comments regarding this article. I’m sure most people have had a brush with MLM at some stage.

    Reply
  2. Very interesting article. As an aspiring entrepreneur I dabbled in a number of MLM opportunities including Amway. The premise was Amway offered a fabulous set of products at discounted rates. You were to buy all the products you normally use in day to day life from your own Amway business and encourage your family and friends to do the same. My problem with Amway was the quality and price of the products. From soap and shampoo to tooth paste and food bars the prices were double or triple what you might pay for something comparable at Wal Mart. Not to mention inferior in quality.
    The one memory that always sticks with me from my days (months) of dealing with Amway is when my “upline’s” brother moved here to San Diego from Texas. He was pretty skeptical of his brother’s business but tried to be supportive. I got him a job at the mall (where I worked at the time) and on his first day he showed up with white crap all over his lips. As soon as I saw it I knew what it was.
    “Use the Amway toothpaste this morning?” I asked him.
    “Yeah, how did you know that?”
    “Just a guess.”

    Reply
  3. I’ve been through this also. From selling knives, Amway, to a MLM meeting where I have no idea what they were selling except they wanted my $200 to join up. People will do anything to scam your time, money, and contacts, just so they can sit around and reap in the profits.

    Good for you for not falling into the trap.

    Reply
  4. Well it seems I am not the only one with negative feelings toward MLM! Thanks Lenny, Anja and Rudy for your comments.

    Lenny, I’m particularly interested by your comment as I don’t have any firsthand experience with Amway products. It just seems to me that if their products are everything they say they are, there would be a demand for them to be stocked in regular stores such as Walmart.

    Reply
  5. Peter I salute you for giving your opinion on this topic. If more people had the opportunity to read articles like this, they would not fall for some of the manipulative marketing out there.
    @ Lenny – The toothpaste story is hilarious!

    Reply
  6. I’ve had “friends” who were involved with Amway and Mary Kay. As soon as they started pushing their products it was clear they weren’t friends, they were just high-pressure saleswomen who didn’t care about me at all.

    When I was a kid I got suckered in by a company that sold greeting cards. I ended up just buying the cards myself. There was no way I was going to try to take advantage of family and friends. It was a good lesson.

    Reply
  7. Hi Peter – I’m new to your site but am liking what I see!!

    Earlier this year I had my own personal “brush” with an MLM scheme – in fact my business mentor at the time recommended it (I have since lost a lot of respect for her). It was during a time when our income was challenged (my husband had just been laid off) and so of course the allure of the money was the key. But I found the following problems with the whole thing:

    1) Whilst the product was ok and at the time really quite innovative (it was video email/messaging) – the customer service was shocking and as we’ve seen this year, there are now free (and better) services out there.

    2) The skepticism I encountered from friends and family was a major barrier to them wanting to sign up – even though the product would have been a great way to stay in touch with everyone (my husband and I travel the world permanently).

    MLM is, in reality, not that much different in structure to many other corporations out there (the fat cats at the top make most of the money, with tiered employees sitting below them, doing the selling and earning an income for doing so) – it has just got such negative connotations that it stops people from even considering the products involved. That’s why I think people involved in MLM have to resort to the more devious ways of introducing their products first before mentioning MLM.

    Whilst I have no doubts that it works for some people, I didn’t have a great experience with it and am probably not alone.

    Reply
  8. I’m in ACN and I don’t see a problem with asking a favor. Why not use service you already use, but help a friend by doing it? That’s the one thing about ACN that I find is valuable, that you cannot find in most other MLM’s.

    This will sound like a pitch, but I’m explaining so everyone understands this. At least with ACN, ACN is offering you a service you are already using. All an ACN rep is asking you to do is support them in whatever reason they are doing ACN (to better their financial situation, spend more time with the family, etc.) and just pay the telecomm bill to ACN, instead of Qwest, Verizon, AT&T, Vonage, etc. That’s all.

    There is nothing wrong with asking people to see it, so they know what your opinion is. If people tell you this and they have an ulterior motive, is that the ACN’s fault? No. Your friend in ACN cannot read your mind and know if you will or will not like ACN, without you seeing the presentation.

    Reply
    • It sounds like ACN would be asking me to keep using my current service, but pay a little extra so they can make money. In other words; if a friend or family member came to me with this proposal it would be the same thing if they said, keep paying your current bills, just give me $x a month too. This does not sound like anything resembling a valuable service/system. The reason someone want’s you to pay for a service shouldn’t matter, the service should matter. Paying extra money just to add a new layer of payment (and possibly error if the ACN rep doesn’t pay the bill on time) sounds like a very bad idea to me.

      Reply
      • I lost my best friend at work because of ACN.. I told him i’ll go to the meeting but I’m not going to promise anything because I already know what Network Marketing is..

        Me – “John, I’m just here to support you at this briefing ok. Pls, no pressure from your ppl”

        John – “ok, no problem”

        the very next week. we were not friends anymore.

        Reply
  9. As with anything, there are “right” ways to do things, and “really really bad” ways to do things. Most MLM’ers are taught the “really really bad” way. It stems from really wanting to help people out because you think the products are great, but then when you realize you aren’t selling enough to make your mortgage payment, the pressure comes on to “sell more – promote the business more” – at which point the marketer loses perspective and becomes the annoying relative everyone wants to avoid.

    There’s even a name for this in the industry – you’ve joined the NFL. “No Friends Left”

    Glad to see you avoided joining that club. ;)

    There are better, less obtrusive, ways to make a living online. And you even get to keep your friends.

    Reply
  10. Hi Peter
    I agree with you. And a lot of innocent people get caught up in the lure of making all of this huge amount of money which doesn’t ever actually transpire.

    Reply
  11. They used to be quite popular. But the MLM wave seemed to have died off here.. I guess at the end of the day, those who stayed behind where those still up the triangle.. if you know what I mean. :D

    Cheers,
    Ellesse

    Reply
  12. For the MLM business model, I mostly agree with your second point. However, the product not adding value is really the company’s fault–they could’ve sold something else or sold it another way.

    I’ve had run-in’s with MLM’s. And came to 2 similar conclusions:
    1-direct selling strains personal relationships. There was no internet when Herbalife and Amway were founded so you sold to people you knew. This is why affiliate marketing is so much better, while it’s effectively the same model with less cultish motivation.

    2-If you sign up for an MLM you’re basically married to that company. Whereas online you can sign up for everybody and make far more money.

    Reply
  13. My personal experience with MLM is that my “mentor” was more interested (and aggressive) in signing up users, rather than focusing on their “quality” products.

    It’s like going to Future Shop. The salesperson spends 5 minutes on selling how great the item is, and when you buy it, they spend 15 minutes telling you how crap it is, to sell you the 3 year Extended Warranty. The profit margin is huge on EW as there is no cost, no labour, no inventory.

    Reply
  14. Shipes!!! Not what you would call a “warm market” here. I dropped out of college after one year and started my first business. I’ve learned this: The government makes the money. Entrepreneurs earn money. Good entrepreneurs create money with good ideas. I love freedom. That’s why I started a business. I had an mlm experience two years into business. I went to some events. I started to read books and my world exploded (exploded!!!!! in the mlm sense) My business generated over two million dollars the fifth year. Largely due to the information I gained from these events and books I read (hundreds). I was visualising and taking risks and thinking big. I would have done better, if I had read more on being profitable. Revenues are Crap, Cash Is King. I look at life as a puzzle and mlm has contributed much, just not money. Then again neither did college. My college friends are teachers and corporate employees now. Into logistics and medical equipment, ones a doctor. They all have condos or town houses and 2005 or newer car. Turns out 70k or 80k isn’t all that much money anymore. I traveled and did whatever I wanted (kinda) for the last ten years. I have to think a lot and plan. They just go to work. I think mlm’s will become more popular. Because my friend have to make more money. They might have kids. They will need to go to college. The Business to be in today is providing people who bought a college degree a way to earn an extra 5ok per year. You do that. And Your Set, So are my friends. Add Value.

    Reply
  15. Just to clarify peter, the thing I got from mlm, was inspiration to think big, read books, don’t compare myself with others, don’t follow, lead, set goals with pictures, stuff like that. I did not use the mlm business model to earn money, I own a commercial construction company, this is where that 2 million in revenue came from. Peter I come from a small town and people just don’t do big stuff here. When I was exposed to this “event” It blew my mind. I went for it.
    It was magic. I used the information in my construction business, where I had belief. As for your two points, your right.

    1. Products: every product I’ve seen in mlm is over priced when you discount the packaging of hope that is sold with it.
    2. Strain relationships: I agree. Mlm leadership talks integrity but then encourage you to play games and act out of integrity (with your fiends no less)

    People who gain amazing amounts of wealth (money and time freedom) interest me.
    Its like a pretty girl I just can’t help but look.

    Reply
  16. Another tragedy. Yeah it is about another multi level scam which is still on going. I realy dont understand why people fall for it.
    The blog is about us and how we suffered. Read it and be careful.
    http://goldquesttragedy.blogspot.com/

    Reply
  17. Yes Peter:
    the MLM structure causes people to act in inauthentic ways. They have no regard for your humanity but only see you as another prospect. but that is the problem with a lot of selling not just MLM. Often if people would really take time to get to know you they would see that their product is not right for you.
    I just wrote a gently tirade at http://eloquentwebsites.com/articles
    I almost expect them to start passing around the coo laid at some of these presentations! though I have found some good products I do not like the million tier system and all the crazy recruiting techniques.

    Reply
  18. Hi Peter,

    Sorry that you had a bad experience with MLM.But there are good companies out there with products which gives value.I am with AGEL for the past one year.I paid just the sign up money,i am not forced to buy anything.Totally,we are following internet marketing apart from recommendations from preferred customers.
    I learned a lot about personal growth,positive thinking,leadership.I started to read lot of books to help myself.My entire thinking shifted in a positive way.I am going to retire earlier than the conventional age.These are the benefits i see with MLM.
    In any filed,there are good and bad.Do your research,believe in your self,anyone can do it.

    Best wishes,
    kannan viswagandhi
    http://www.truemlmrockstar.com
    http://www.growing-self.blogspot.com

    Reply
  19. workathomejoe– I take issue with some of your comments but especially this one:

    “My college friends are teachers and corporate employees now. Into logistics and medical equipment, ones a doctor. They all have condos or town houses and 2005 or newer car. Turns out 70k or 80k isn’t all that much money anymore. I traveled and did whatever I wanted (kinda) for the last ten years. I have to think a lot and plan. They just go to work.”

    You think your doctor and teacher friends don’t have to “think a lot” and plan?!

    You may be making money but your aspirations aren’t doing your vocabulary and writing abilities any favours. I’d rather have great linguistic ability than money.

    I’m VERY familiar with Amway. And many other MLM companies. I get the genius of it all. But I finally decided what it was that was always holding me back from joining:

    THE SYSTEM LACKS INTEGRITY.

    The people who get in early are the ones who make the most. Not necessarily because of their hard work or intelligence. Mainly because of luck and opportunity. MLM companies will always tell you that there’s no danger of saturation. But if you were one of the people to hear about Amway when it first began, before it started to piss people off, before everyone and their dog would roll their eyes at even the mention of the name, don’t you think you had it easier than someone joining today? So much easier, in fact, that Amway started focusing their efforts on Quixtar! Amway saturated the market.

    The people who get in later work their butts off and as the possibility of recruiting gets smaller and smaller, these last people do all the unglamourous accosting of prospects– a terrifying concept for some people and undesireable at best– buying up product from the company while making next to nothing, while the people at the top benefit substantially from all their hard work. Sure the big wigs work too: Giving talks to desperate hopefuls about how rich they are in order to inspire them. They also coach people who are already interested in the opportunity. Talking to people who want to hear you? Not very labour intensive or intimidating.

    I have so much more respect for my husband who works for the government prosecuting criminals. He’s excellent at what he does and provides a necessary service to all of society. No matter how hard or well he works he will only increase his income if the government decides to give him a raise. He has to get the job done no matter what it takes and there’s no charging for hours like a defense lawyer.

    He may never be rich. But he oozes intelligence, accomplishment , value and most of all, INTEGRITY.

    I’ve known people in MLM companies who like to think they’re smarter than the average Joe just because they found a way to legally make a bunch of money without a lot of work. They may be be clever and gutsy. What they aren’t is WISE. They fail to see the value in hard work. They talk about working hard now so they can be available to spend oodles of time with their kids later, taking them travelling, yadda yadda. They fail to see how crucially important it is for our kids to see us work. And not just volunteer efforts here and there because you want to volunteer. But to work hard out of a sense of need, of urgency, commitment and honour.

    I think that any time someone is getting more than the effort he puts in to get it, something in his soul shrinks. He is missing an opportunity to grow his endurance, his commitment, his talent, his humanity.

    Life isn’t about leisure and pleasure. Life IS about work and charity.

    There’s a reason why MLM followers are not the kind of people most of us want to be around and it’s NOT because they annoy us with their selling. It’s because they are shallow in their souls.

    (Disclaimer: I am not referring to direct sales companies such as Usborne, Arbonne and the like who sell valuable products at respectable prices. I’m referring to crap like Amway and United Pro Media.)

    Reply
  20. The problem is not mlm. The problem is that the distributor was not targeting the right people with there message. Everyone is not a prospect for every product. Here is an example: If you are a real estate agent trying to market a million dollar home are you going to advertise to or speak with people that you know can’t afford it? of course you wouldn’t. You would probably send your advertising pieces to zipcodes where you know people could afford such a house. In mlm people need to really understand who there target market is and focus on the people that have already demonstrated that they are prospects because they have purchased similar products in the past.

    Reply
  21. I have got almost daily calls from KW asking to talk to me. I went and listened to what they had to say. I absorbed everything including the pyramid concept and decided to stay where I am at weichert. Weichert is the most professional organization that I have ever encountered and it is a pleasure to work here. I guess in the long run it is a gut feeling. We all have to follow our heart and follow what we believe.

    Reply
  22. Yeah, I have been there. I joined an MLM company several years ago and some of my friends still run when they see me coming!

    Make a list and sell, sell, sell. Not my idea of a good time, but now we have the internet and attraction marketing can be applied on a massive scale.

    So yes I am now involved in mlm online, the only difference now, I pester no one and simply leave my marketing message online, if anyone’s interested they contact me.

    The old way of mlm is painful and wrong.

    Stevie

    Reply
  23. I used to be a rep for ACN but quit because of how hard it is to make money. I agree that the products do not add value and it does strain relationships. To expand on that more, I’ll say that the one product they sell, the videophone, does not work well at all. Even the most die hard ACN reps think the videophone is a joke and only put the minimum amount of time into promoting it, as it is a product that not many people would stand behind if they had their choice. But ACN reps don’t have a choice. I also agree that it strains relationships. My mom told me she would report me if I kept “hassling” her about it, and my friend said he just wanted to be my friend and didn’t want to feel pressured about this ACN thing. He hasn’t called me since. Most others I know started ducking me once they knew I was involved in ACN. People act even dumber than normal when they know you are in ACN or MLMs. It brings out the worst in people for some reason. Everyone wants to be the person to say “Oh, your doing THAT pyramid scheme! hahaha!” If you know a bunch of people who believe in you AND have money to blow, then you might be right for MLM. If not, then don’t bother joining. You WILL lose money and probably contribute to others losing money too.

    Reply
  24. The more I read and the more I am involved in the MLM industry I find that both would work under the right circumstances. Skills are very important but also very important is the fact that you must be willing to have a mindset that will convey you to success. Getting five people is not a real answer to success but getting two or three good people is.

    Reply
  25. Great post here. There are always two sides to a coin. MLM is neither good nor bad (as I see it). Many folks have earned substantial incomes in the industry. Yes, many folks have failed too. But, it’s a proven fact that most businesses fail.

    What gives the industry a bad rapp is the way people promote it. Pressuring friends and family is the WRONG way to go. If you truly love someone, or respect them, you won’t force your business or product down their throats.

    The key to success is to find a good company with a quality product at an affordable price and then learn MARKETING. Marketing is the lifeblood of every business.

    I’m sorry to hear so many folks on this blog past had such a bad experience in MLM.

    Great post, thought.

    Reply
  26. Hey Peter,

    I also like your title and agree with the points you are making. I am a network marketer and have to admit that I have upset some people as well when I gave products away for testing. Even though this lady I gave products to help her heal the wounds she had, has sacked me haha. I tried to help the woman, if she got offended or maybe jealous because I was trying to make an extra income, sorry I will never let people like that control me :-)

    It was a bad experience but I don’t feel sorry for it because I have grown so much,honestly I never thought I will be the person I am today. Usually even when you start a restaurant or a beauty shop,there will always be comments: is it not risky? are you sure you gonna succeed and not loose money? is the restaurant in location A or B? This is how it is. MLM has bad reputation but is this a good enough reason to quit or run away from it? My mindset is that I want to help this industry and my job is to become successful and give away all I have learnt in my journey.

    MLM is great because it expands your horizons and pushes through your own limitations . Because of MLM I have discovered personal development,internet marketing,affiliate marketing, I have learnt many things about myself and truly I have become someone that I am proud of. I have learnt about humanity,leadership, coaching and millionaire mindset. I’ve had two jobs so far and hated them. Don’t like working for someone else. The thing I love about network marketing is personal development and building relationships with people,teaching them how to succeed and better themselves at talking with people, being more confident, ambitious. It does changes your mindset and is great. I think we only fail at things in life because you are not yet the best of what we do.

    This is the problem with MLM. How many people fail in school? how many times did someone fail at ballet or singing? Many times. So what? It is normal to fail, is the only way to train your brain muscles until you are ready for success.It is a long process and if people don’t have stamina then they should go back to their vicious circle- jump from one job to another. It is only them to be blamed, not their parents or someone else.

    About the negative side of it, I think you have to learn the skills of commercial talk and don’t be too pushy. In my case with the lady, I was desperate to sell the products and therefore I was pushy,so she didn’t like that.

    If people don’t like what I do(what the heck am I doing? building up a life that I want? making my dreams come true? at least I have dreams:-) in my opinion those people are not true friends or not worth your attention . There are lots of things people do on a regular basis and doesn’t mean I will stop being their friend. I take people as they are and that’s it. No comment

    My belief is I am living my life to achieve my dreams and leave a legacy behind,this is one of my biggest dreams. There will always be people who don’t like this,who get offended…who has time for them anyway?

    Reply
  27. Hi Peter,

    A quick note. I wanted to read this article “key reasons for bypassing MLM” and the link doesn’t work.

    Have a brilliant day !

    Reply
  28. Hey Peter,
    Enjoyed the post. I’d have to agree with you on this in general. I have found that there are a couple of mlm’s that provide decent products and are more product driven than pyramid driven :) It is tough though. I still get a little ancy when friends or family have a “great opportunity” to tell us about. I do think that there’s a lot of value in the personal development focus that often comes with it. I know a couple of people who have mentioned this – and I would say the same thing from my experience as a previous mlm member. This is definitely more of a take the good, throw out the bad kind of experience.

    Reply
  29. I joined a MLM by accident. I just wanted the product at wholesale price. I am not pushed to get others to join nor do I sell. I have had such wonderful results with the product that I had to share with others. I was not trying to convince anyone to join anything. Shared with family and friends because I wanted to help them. I am not a salesperson. I gave them from my personal purchases. The ones that could afford wanted more so they wanted to join. Those that cannot afford I continue to share mine. In the beginning, I would not allow my friends to join under me. I did not want to make off of my friends. I soon learned I had made a mistake in not letting them join under me. I was sharing my supply and spending much time sharing what I had learned with others. I now let others join under me. I have made a small amount which has helped some to pay for my purchases. This has allowed me to continue to give to those who could not afford to buy. I still do not like the idea of MLM but so far it has not been a bad experience. . My goal is not in making big money from this product. I am realistic. I do not see that happening. However, I am passionate about this product for myself and my family/friends. Vee

    Reply
  30. Workathomejoe,

    Thanks for taking the time to share your story. What can I say? It sounds like you have had a great experience with MLM.

    I guess what I would take you up on, though, is that you didn’t specifically address my 2 mains concerns with MLM. I have no doubt that some people are making a lot of money and living a very good life because of MLM. If anything, your story is the one I would expect from someone at the top of the pyramid.

    Also, I notice on your site is that you distance yourself from MLM by stating that you are in the business of Direct Selling. I think there is potentially a big difference between the two. In my mind, direct selling is more likely to have a product that adds value.

    Reply
  31. Workathomejoe,

    Thanks for clarifying!

    In my article, the guy who presented the second MLM opportunity was only a young guy, say early twenties. Although I wasn’t interested in the opportunity, he certainly impressed me with some of his networking skills. Even if MLM didn’t work out for him, I’m sure he has gone onto good things.

    Also, part of the reason I wasn’t so impressed was that passive/ alternate sources of income were ideas I was introduced to some years ago. But come to think of it, the first time I read about these ideas I was extremely excited. I think that is the point you are making – MLM showed you that there was so many opportunities available in the world beside the traditional career path.

    “People who gain amazing amounts of wealth (money and time freedom) interest me.” – totally agree! You have certainly sparked my curiosity :)

    Peter

    Reply
  32. Sucked in by the title? Excellent… my plan worked! Haha :)

    Thanks for sharing your story. I’m sure there any many good people out there involved in MLM. I just think there are better ways to earn money.

    I’m curious, has being involved in MLM affected any of your relationships?

    Reply

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