Odds of Succeeding in Multi Level Marketing

I was in the hallway waiting for my class to begin, when I overheard two classmates of mine talking about a Network Marketing company. Of course this piqued my interest because I have been researching MLM recently. “Tom” was explaining to “Jim” how his uncle recently signed up for a scam company (I will not disclose the name of the company they were talking about, but it is a long standing MLM Company). Tom told Jim how his uncle was trying to scam him and his parents into becoming sales associates for the company.

What Jim said to Tom next really got me thinking. Jim told Tom that his sister used to work for one of “those types of pyramid scheme companies”. Jim went on to say that “the odds of making money with those scams are less than winning the lottery.” He then advised Tom to stay as far away from the MLM Company as possible.

Something about Jim’s statement to Tom didn’t seem right to me, but I could not put my finger on it at that time. I thought about whether or not I wanted to chime into their conversation or not, and decided it was best to not say anything until I looked more into the Network Marketing company Tom claimed his uncle was scamming them into.

When I got home that night I looked over my notes from the conversation I had with Alex about YOR Health over the summer. Alex had mentioned that Network Marketing is probably the most fair business model in the world. His reasoning was that MLM companies like YOR Health pay sales associates based on performance or what he called production standards. This basically means that you earn a paycheck when you meet the qualifications to earn a paycheck, and does not pay anyone more for having a college degree, having a fancy certification, being at a company longer than someone else, or being a friend of the owner, etc… You get paid for the sales performance of your organization.

Once I read over my notes with Alex, I realized why Jim’s statement to Tom was out of context. Jim implied that making money in Network Marketing is based on odds or chance, and that is false according to what I know about MLM from Alex. This is because legit MLM companies pay based on performance, therefore odds have nothing to do with it. I did some digging online about the subject of odds in MLM and realized that this is a common reason why people decide to not do Direct Sales or Network Marketing. BUT ODDS HAVE NOTHING TO DO WITH SUCCESS IN MLM.

Two days later I approached Tom and started small talk with him. I let him know I over heard him and Jim talking about a MLM Company that his uncle worked for. Tom simply replied “yeah that guy is a loser.” I said to Tom that I was interested in Network Marketing and I have been researching it in my spare time. He laughed at me and said, why waste your time you wont make any money with it. I explained to him that a lot of people out there have no idea what network marketing is, and how it works.

I gave the example of what Jim had said to Tom just the other day. Jim convinced you that you had little odds at succeeding in MLM, when actually odds have nothing to do with whether you fail or succeed. Tom seemed confused, so I gave him an example I came across online that explained it pretty well to me. I told him to think of it like this.

Whenever performance is involved then it is incorrect to claim the odds of something. For Example, Imagine you decided that you want into lose weight. And then I asked you, “What are the odds that you are actually going to lose weight? One in six? One in twenty?” Truthfully, odds have nothing to do with whether or not you will exercise and do what is needed to get your body into good physical shape, because getting your body into shape is based on your individual performance.

I explained to Tom that like losing weight, building an MLM business is the same. It requires performance. So if an MLM company is selling a product or service that you enjoy, chances are with the right performance you can be successful.

Tom seemed to understand what I was saying, but his eyes were a little bit glazed over at this point, and he replied, “I think that I will stick to traditional business. I talked to my parents about it, and it is not worth the risk.”

At this point I realized that explaining MLM to people is not so simple. I know that if I ever plan on becoming a sales distributor for a Network Marketing company these are things I will need to learn how to overcome to be successful.

Tom’s response alone brought up another issue I plan on looking into. What is the Risk associated with doing MLM? I will probably make that my next article.

What I learned this week:   Don’t use “odds” to gauge the success of something that involves performance.

- Shawn