Is Network Marketing A Pyramid Scheme?

TIRED OF THE LINGERING MISUNDERSTANDING

I have grown tired of hearing people even today refer to Network Marketing, Direct Marketing, and Multi-Level Marketing as a pyramid scheme. I wrote this to describe what a real pyramid is and why the MLM industry is one of the most misunderstood industries to the majority of the population. The structure is pyramidal, but upon closer examination that is all they have in common. What goes on inside each shape the makes the difference.

SO WHAT IS A PYRAMID?

Webster's Online Dictionary gives this definition

pyramid scheme

noun

Definition of pyramid scheme for English Language Learners

: a dishonest and usually illegal business in which many people are persuaded to invest their money and the money of later investors is used to pay the people who invested first

 So why is this illegal? Ther is no product changing hands, there are not real returns on investments. It's stealing.  

Now I know I am going to get a lot of flak for saying this but if you work for a corporation, you are working in a legalized pyramid! No, I am not crazy. Answer this question- What is the probability that you will own that company or rise to the level of CEO? It's not impossible but then answers this question, How Long would it take you? Here is a fact about Corporations, every level in a corporation, has a limited amount of positions that can held by a person. IBM fact a croporation can only assorb a linited numer of people before they start to lose profits. Remember, a business is in business to maximize profits. Now there is nothing wrong with that, that's just business.

IBM network marketing there are no such limits. How is that Possible? Well see the criteria for advancement is different for each, and this difference allows a person that gets in today can actually bypass a person who has been in for a year. You will understand this once you understand why and how that s possible.

Se in order to advance in a corporation there are criteria that must be adhered to in order to be considered among a pool of candidates to qualify to interview for that position.

Educaation

time on the job

experence

skills

who knows you

dress and grooming

etc...

however in Network marketing there is simply one. VOLUME! That's right volume. He who can create volume advances.

Now, remember I asked you how long it would take. Making CEO is not impossible if everything just fell into place but how likely is that to happen?

Four or more years of school

internal certifications

moving up to the next level which can take years.

See if the current CEO is, say 50 and he works til retirement say 70 that's twenty years. Twenty years of your life has passed. And the next CEO is groomed by the current CEO and he's 45. if he stays till retirement say 73 that's 26 years now 48 years of your life has passed and if you don't get it this time you may not be around to try again, you'll have retired.

Now let's look at Network marketing. Remember the criteria for advancement is VOLUME!

If girl a got in today, let;s say she is a member in good standing in her church. Now we have a guy who has been plugging along for over a year and he has created 5,000 dollars in volume and he has advanced a level or two okay. He has helped other people create volume so they advance, the company is grateful for his hard work. Not the girl gets her church to be her customers and her church has 2,000 members and they all buy products with an average price 50 dollars she has created 10,000 dollars in volume. In one month; she has produced twice as much volume as Mr. Plugging! So she actually skips levels and bypasses our one year distributor. Do you see why it is not a pyramid scheme?

Whatever the volume level that will take you to the top of the pay plan once a person hits that mark, they will be paid and hold the position of highest pay.  

Products changed hands

distributors are remunerated for their successful efforts

some companies can be joined for little of nothing or high prices, but the distributor must receive something of value in exchanged for their registration fee.

By law, MLMs are required to have a specific ratio of customers to Distributors or they can meet with trouble and may also be exited out of the company.

So the next time someone tells you it's a pyramid you'll know better.; just tell them their job is a pyramid. And when they balk ask them how long will it take the to make CEO.

Michael Dennis
Certified Mentor
Mentoring For Free