Network Marketing Vs Ponzi Schemes – The Difference
Network Marketing or Multi Level Marketing or MLM has both good and bad sides. If done right, this business model is very powerful and can give you financial success. However, there are many MLM schemes that are designed to look good on the paper but when you implement them, they fall flat and fail completely.
In a layman’s term, MLM is a marketing strategy that is based on the words of mouth. In this marketing model, the MLM companies do not have retail stores like in the traditional brick and mortar business. They have what is known as the stock center where all the legitimate MLM distributors can go and purchase products. If you are not a member or distributor, you cannot walk into the stock center and purchase any product. You can only buy products directly from the MLM distributors.
The distributors will earn commissions when they sell products that are carried by the MLM companies. One of the most powerful features of MLM is its NETWORK (hence the name Network Marketing). You not only can sell products directly to buyers but you can also recruit them as the distributors. If people agree to join as distributors, they will be placed in your network. Now, the power of a network is that it gives you passive income – meaning that when distributors whom you recruit make sales, you are going to enjoy a small portion of the commissions. Hence, the bigger your network, the more money you are going to earn.
Of course, every MLM company has a slighly different compensation plan. How much you earn will depend on the compensation plan. Therefore, if you are thinking of joining a MLM company, make sure you understand its compensation plan inside out.
Besides the compensation plan, other things that you need to analyze thoroughly are the products, training programs and the methodology.
Network Marketing companies are often confused with Ponzi Schemes. These are illegal set-ups where members get paid by recruiting other members but there are really no products or services involved. One reason for the confusion is that Ponzi schemes were actually created by previously unsuccessful network marketers who weren’t able to make money by following the rules. So, they made their own rules.
Although Ponzi schemes were a little more common in the past, the FTC clamps down on them very quickly these days so, if they do spring up, they are usually shut down before they can do much damage. Because of Ponzi schemes, Network Marketing also undergoes VERY strict control by the FTC to insure that an MLM company is not or will not become a Ponzi Scheme.
Stay away from the Ponzi schemes or any companies that claim to make you rich but do not have a line of quality products to sell. If they do not have any good product or product research and development, stay away! Because what drives a successful MLM company is quality product.
It is easy to check out the legitimacy of an MLM company. First, you can check them out in the Better Business Bureau or BBB to see if there is any complaint filed against these companies. Here is the website: www.bbb.org/us/
Also, you should sit down together with the MLM distributor who try to recruit you (only do this if you are interested in joining the company). First, ask him to take you to his or her stock center so that you can see with your own eyes the product lines of the company. All legitimate MLM company will have a large stock center where they can display and showcase all their best products.
While you are there, ask questions and observe what kind of people going in and out the stock center. A good MLM company should have many people walking in and out buying products.
Next, ask the distributors to give you a tour around the company’s training center and meet with some of the successful leaders there. Remember that your success in MLM does not depend only on the products but also the training programs and the support from the leaders.
To sum up, if you are interested in MLM business, check out the legitimacy of the company – it is easy to do! Just follow the tips or guide that I have just outlined above. You will immediately smell the legitimacy of a MLM company when you visit the stock center, training center and talk to their leaders or distributors. If you smell SCAM then STAY AWAY!
Discover a tried and tested income-generating system that will guarantee your financial success: AffiloJetpack Review and The Blueprint Project Black Edition.
Processing your request, Please wait....
