Why I hate MLM and Direct Sales

Image courtesy of FreeDigitalPhotos.net and David Castillo Dominici

Dear WAHFAQ,

How on earth can you sing the praises of MLM and Direct Sales companies? They’re nothing but scams! I have lost so much money with them it isn’t funny. What is wrong with you?

How I love fan mail 🙂

It’s true that I love MLM and Direct Sales. Moreso the opportunity itself than any one particular business. But I do believe someone should evaluate an opportunity before signing up. There are many good aspects to the industry, but, there is a lot about it that I don’t like. So, let me give a bit of balance to my article: Why I love MLM and Direct Sales, with what I find loathesome about the industry:

Cheesy Hotel Seminars

If you haven’t been to one yet, just wait. You’ll be ushered into a ballroom at the local Hilton, met with heart-pumping music (like Right Now by Van Halen, which I used to love before hearing it a thousand times at these events) and a disco-ball light show as people start clapping and yelling waiting for the leads of the company to take the stage.

They’ll bring up various success stories: people who had nothing, were bankrupt, only had a 4th grade education or whatever, to tell you how easy it is to make $1,000,000,000,000 per week in the business. Everyone is excited. Everyone is giddy. Everyone, it seems, is drinking the kool-aid.

They’ll have slide-shows of huge mansions, and fancy cars. They’ll talk about all the trips they take in far-off locations and brag about how their office is on the beach…or at the ski chalet. They’ll make blatant appeals to materialism and greed, and tell you that your investment in the business is an investment in your life.

They’ll tell you how quickly they’re expanding. How they’ve added 1,000 new reps in this region or that region, and how they’re positioned to have massive growth. Which leads to…

The “You Gotta Get in NOW!” Mentality

This is where the people who brought you to the cheesy hotel seminar, or the online conference call, or the “party” at a friend’s house, will turn to their upline (the people who got them in the business) and try to get you in the business. They’ll create a feeling of urgency…a feeling of lack…making you think that if only you put your money into this business (and recruited a few of your friends) you’ll have financial security forever.

Confusing Compensation Plans

If the compensation plan can’t be explained in 30 seconds or less, don’t bother. I’ve seen Direct Sales companies that make people jump through a thousand hoops, on one foot, while juggling sticks on fire, blindfolded in order to get paid. I’m not sure why a company has to be so convoluted with its compensation. One company that I really liked had at $10/month fee for me to use the product, and I would earn $1 per month for each referral that I had. See? Pure and simple 🙂

Lack of Training and Support

Chances are you’ll be dragged into a MLM/Direct Sales company by a family member or friend. They don’t know what they’re doing, so you won’t get much training from them. Many companies may require you to purchase training materials. Even if “motivational” books and podcasts costs $10 a pop, that can add up over time. Additionally, it’s not like your upline is going to sit down with you when you first start, (or before you sign up!) and help you write up a fully functioning business plan. You paid your fees, they got their commission. So, you have served your purpose and they have moved on to the next recruit.

Selling to Friends and Family

Many MLM/Direct Sales companies say that there is “no selling required!”…not really clarifying that they expect you to start with your friends and family. Or, as they’re called in the industry, your “warm leads.” If a business can’t exist outside of your Aunt’s guilt to buy stuff from you, then it’s not really a business, is it?

Hidden Costs

There are always hidden costs in running a business. But, you should be able to figure those out before you get into it. That’s why you create a business plan! Another frustrating aspect to MLM/Direct Sales companies is that some don’t really mention all of the associated costs to starting the business…or the costs to keep it going.

Minimum Buys

This is one of the most annoying things to me. The fact that as a rep, you may have your own quotas, (“PV” or “Personal Volume”) each month to make…either in addition, or as a part of your monthly requirement. If you don’t make that goal, you’re out of the business…and then have to pay all the start up fees again!

MLM “Hoppers”

There are those in the industry who jump from company to company, bringing their huge following with them. Some will start up a new company, make lots of money, and then just let the company fall…moving on to the next shiny object that catches their attention. That’s why I say that if you’re going to go into a company, make sure the COMPANY has been around at least 3-5 years. Even if the leaders have been in various companies for 20+ years, they may be trying to just cash in with their own, huge, network.

 

Even with all these issues, I do still think that MLM/Direct Sales can be a good opportunity for those who look at it objectively like a business. You can trust, but always verify!

 

Think about all the extra money you could make by being a mystery shopper, starting your own business, or working from home for a legitimate company. Take control of your income and check out our LEARN page for a list of classes, books, and more!

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