The Pros and Cons of Multi-Level Marketing Programs

25 December 2010

In some business circles, multi-level marketing (MLM) programs are avoided like the plague. Why? It has to do with the shocking resemblance they bear to those pyramid programs of old. In essence, most MLM programs are just dressed-up pyramid programs that are always hit-or-miss in terms of effectiveness.

Since pyramid programs are now illegal, MLM programs cant operate the exact same. However, many do bring similar elements into the fold and leave you at the top having to build your business through customer sign-ups, and their sign-ups, and their sign-ups.

MLM programs can be lucrative if you're a smart businessperson and conduct business the right way. They can also be traps, too, reeling you in and forcing you to spend a lot of money for little to no return.

Lets go over the pros and cons in a non-biased way.

Pros:

MLM has endless potential. You start by attracting new customers/clients and getting them to either A) purchase products from you, and/or B) having them sign up as part of your network and then recruiting more sign-ups for your network.

There are many ways to earn here, and small commissions could conceivably turn into big paychecks.

Its relatively easy to find a MLM program out there with reputable, low-priced products that people actually want.

If operated like a website business and with the proper trafficking techniques, MLM programs can be a lot easier to operate than other programs out there.

There's always the possibility that you'll be recruited into a network that's already successful, thus making it easier to sell products/registrations than if you're the first signee.

Cons:

Its always easy to be sucked into a trap where you're shelling out money for products, hosting parties, advertising, etc. Thus MLM programs can potentially be huge investments with no guarantee that they'll ever pay off.

Recruiting people and selling products is how you'll make your money, obviously, but some MLM programs aren't offering high enough commission fees to cover everything unless your network is large.

There's always the possibility that your MLM product or brand will take a hit in reputation. Its out of your hands to control this. You may be left with an unsellable product and an investment made that can never be recouped.

Recruiting is all on you. You must recruit people to your product and also find business-minded people who will recruit people of their own into the network. Essentially, you're trying to sell the same program to others that you bought into.

Lastly, most people wanting to start a business steer clear of MLM programs. This means that a lot of people you entertain will inevitably show up for freebies but will not be interested in joining your team or purchasing any products.

Just remember that thorough market research and having a solid business plan is a must regardless of which direction you go in. No MLM plan is going to sell itself, no matter what you hear about it.