The Problem with the MLM (Network Marketing) Industry Today

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There are tens of thousands of MLM companies in the world today. Every single one of them has one major flaw in their mission statement and how they portray the best growth for their company. It pretty much comes down to one thing, either you have growth in sales through products all you have growth in recruiting consultants by building large teams. For some reason or another MLM companies or network marketing companies always seem to push on their reps to develop large downlines.

An MLM company is just like any other business or corporation. When you start a business, be it a large corporation or just a one-man show, you start with the intentions to provide either a product or a service to the public. With this product or service that you provide you anticipate to earn a revenue. With the money earned you roll that back into the company to expand and grow. This is the basic business model of any company.

Nobody incorporates or start a business anticipating to hire a bunch of employees that never sell your product or provide your service. You can have 1000 people in your organization but if nobody’s making you any money, you’re going out of business.

This problem of hiring employees with no sales is exactly what’s going on in the MLM industry. When you join a network marketing company, your product is your product and your downline is your employees. Corporate always instructs new sponsors and reps to build huge downlines. They tell you to recruit, recruit and when you finish recruiting recruit some more. They say that in the end it will all work out. This is the farthest thing from the truth. Without any sales of the product the company has no revenue coming in and will be forced to close its doors leaving you high and dry with a huge downline you built from nothing.

The true wealth in this industry and ability to sustain substantial income is through the power of residual income. That simply translates to if your company has a good product people keep buying it, or even better if the company has a product that people can’t live without people are forced to keep buying it. Personally I prefer the latter. I can understand why a MLM company has to have recruitment bonuses because of the fact that they can’t maintain sales. Now if nobody maintains their auto ships on the product then essentially all you have created for yourself is a job recruiting reps.

The ideal is to have a product that everybody has to use, something you’re familiar with, and something that’s free. With this formula is easy to generate sales and allow the company to generate revenue enabling corporate to remain in business and keep paying you those monthly or weekly checks.

Electricity has got to be one of the only products, besides oxygen, that I can think of that is a guaranteed that everybody you cross uses. Electricity is one of the first bills that everybody pays first because they can’t live without it. AMA Nation allows you to capitalize on the deregulation of energy. Essentially earning you an override on every customers electric bill that they pay every month. Their product is free for the customer to join, even better AMA nation pays them to join.

Comments

  1. Emergencyfoodsecurity says:

    Claude – One more vital product is FOOD! To achieve Food Security and Financial Independence

    1. Anonymous says:

      the problem is that people can grow food its not something they HAVE to buy. same with financial independence, people want it but they dont NEED it

  2. Hi Claude,

    Great post but I wouldn’t agree that your downline are your employees, you can’t fire your downline can you?

    You are right you do need a unique product that people need and that nobody else is selling. That will get you to stand out from the crowd.

    Thanks for sharing.

    Tristram Lodge

    1. Anonymous says:

      Hey Tristram,

      Maybe my wording was a little confusing but i was not trying to say our downline are employes but simply. comparing employes to a traditional business and team to an MLM

      you would never have a business full of employes just standing around just as you never want a huge downline sitting around doing nothing.

  3. Jeffrey Kang says:

    Well, I’ll have to disagree with everyone. The product doesn’t need to be unique per se. It really just needs to work. That’s actually one of the reasons why Amway is still around, because all of their products that they use to run the business actually works. It is the reason why people see that it’s possible to make a business off of the products they started out using because they needed a vitamin supplement, for example.

    1. I understand your point and basically agree that the product does just needs work. As long as you have a good entry or route to market with some well planned out campaigns you will definitely have success. I think uniqueness comes into play by intriguing the interest of the consumer. If you have a unique solution to an old problem people will always be interested

 

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