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The Social Impact of Multi-Level Marketing

Meet GoalGetter's blogger Kelsey

Today’s guest post is from Kelsey of the GoalGetter blog. She consistently offers tips on living a goal-oriented life, and I highly recommend the blog. Here are her thoughts on multi-level marketing, including what works, what doesn’t, and suggestions for improvement.

Multi-Level Marketing (MLMs) companies are all the rage these days. So, what exactly is “Multi-Level Marketing” or “direct sales”?

Here’s a quote from Investopedia that sums it up quite well:

“Multi-Level marketing is a strategy that some direct sales companies use to encourage their existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales’.”

Most likely, you’ve had a run-in with an MLM company in the past. Companies like Mary Kay, Avon, and Pampered Chef made this business model famous.

Obviously, they’ve been a thing for a long time. Lately, though, it seems like they are the new favorite past-time of middle-aged mothers everywhere.

So what’s my beef with MLMs?

Well, I could go into how MLMs can be a danger and detriment to society, but that’s already been said. (If you want to learn more about that, just watch this hilarious, eye-opening video from John Oliver’s “Last Week Tonight” show.)

Instead, I’m going to talk more about the detriment that participating in an MLM could create on our social relationships.

MLMs aren’t inherently bad

Don’t get me wrong, I don’t have anything against MLMs themselves, as long as they’re actually selling products that people want. If you’re making money distributing products you like, and products you believe in, that’s great. I actively support a few MLMs that truly sell great products that I believe in. I’m also friends with people who are consultants/sales reps for these companies that don’t pressure me into buying their products constantly.

LuLaRoe? Great leggings. Cute dresses. I bought that stuff.

Mary Kay? Beautycounter? Lemongrass Spa? LipSense? Awesome makeup and skincare products. I would (and do) buy that stuff.

The other great thing about these companies is that the products sell themselves. People see the product, and they want the product. The sales reps don’t have to constantly irritate their friends and family into considering getting involved. It’s about the product and serving other people by providing a great product. That’s good business, my friends.

The problem with MLMs

But the problem with a lot of popular MLMs these days is it’s not actually about the products. It’s about getting more people to sign-up as a distributor of sub-par products, who will then get more distributors signed up…and so on and so forth. People that represent these companies are also the same ones who don’t like to take “no” for an answer, and constantly sell an unrealistic dream about how this company will make you rich and you won’t have to do any extra work to get there. Girl, bye.

I mean really, who doesn’t have a bitter taste in their mouths because of a run-in with a bad MLM consultant? I can remember in particular a Facebook “party” my husband was invited to for a product he didn’t care about, and would never purchase. The sales representative kept tagging him and other participants in the event, and badgered them into checking their Facebook for “great deals” and “awesome sales.”

No. If your product doesn’t actually appeal to any market, and you’re not naturally attracting potential customers who want to buy your product because it’s a GREAT product, you’re not a part of a direct sales company. You’re a part of a pyramid scheme.

MLMs can deteriorate your social relationships

Relationships are based largely on give-and-take. Sometimes you have to give more than you receive.

But for some reason, MLMs seem to deteriorate that relationship a bit…it becomes all take, no give. They also seem to take the focus off of the relationship themselves, and more on what someone can get from the relationship.

Have you ever met those “serial” direct sales representatives? They jump from company to company, peddling dreams of independence and self-sufficiency, but you can tell they don’t actually care about the product they’re representing because it’s just a step along the way that will help them meet their dreams.

How can that person be trusted? They’re asking people to buy a product from them, but what message are they sending? “Please spend your money on this item. I know I was selling you something different last month, but if you buy THIS product this month, you’ll get 10% off whatever products you buy from this same company NEXT month.”

It’s rarely ever a great deal, and you can’t help but feel like they don’t actually believe in the product with their branding. They only believe in how much money they’ll make off of you.

MLMs can break your budget

The people at the top of MLM chains know what they’re doing. They know how to market well to people. They know it so well, in fact, that they can help people who have NO marketing experience learn how to sell and market products moderately well.

But aside from the marketing, they also know how to make money off unsuspecting people who had other plans for how they were going to spend their well-earned paycheck. MLMs, much like Kohl’s, know how to work the system and make you think you’re getting a deal when you’re really just lining their pockets.

Awesome discounts? Not really. Great, limited-time sales? Probably not.

They know that we’ve got a serious case of “fear-of-missing-out,” and that we tend to make unwise sales purchases whenever we’re provided with a “limited time offer,” and they use that to the best of their ability.

It’s not uncommon for these companies to encourage their distributors to spend inordinate amounts of money and forsake their immediate well-being in order to one day achieve their dreams later (and also help the COMPANY succeed at the present time). That’s not healthy. I’m all for companies turning a profit, but not at the expense of the direct sales representatives who are actually bringing that profit in.

Doing MLMs the right way

So, I started by saying that I have nothing against MLMs. That’s still true. If handled wisely, these companies can bring their employees lots of confidence, secondary income, and great products.

But the key word there is “wisely.” If you can start getting into these companies without going into debt, without taking food money away from your family, and while still saving up for retirement, then hey, do what you want to do. But too many people make unwise decisions and ruin their finances for the sake of a “good deal.”

Also, getting involved with an MLM selling a great product is very different from getting involved with one whose business model is more focused on getting people “sucked in” to the process. If you find an MLM with a company that you really like, and you want the whole world to know about it, GO for it.

People will see your passion and want to know what this is all about. But respect their opinions, as well. If they aren’t interested, don’t approach them anymore. Basically, just respect the laws of human decency.

So that’s my two cents on multi-level marketing companies. Let me know your thoughts on MLMs. Do you agree with me? Do you disagree? What’s your stance on MLMs?

About Kelsey and GoalGetter

Kelsey is the author of the GoalGetter blog, where she shares reflections on the pursuit of excellence in personal and professional development. Her blog and YouTube channel offer advice that encourages others to look at life from a value-adding perspective.

17 thoughts on “The Social Impact of Multi-Level Marketing”

  1. My husband’s sister was involved in a number of these MLMs in the nineties and later, and I always felt obligated to attend parties and purchase products we didn’t need or couldn’t really afford, etc., etc. Not that there was anything wrong with the products themselves, it was simply that we bought them based on frankly, emotional blackmail. I agree with the other responders here and say those things are not for me and I would hate to try to guilt people into buying what I was selling, especially in their homes or mine.

    1. I think we’ve all been in that boat at one time or another – we feel obligated to attend parties, and then to purchase items because we’d hate to make the seller feel uncomfortable. It’s unfortunate that sometimes, companies depend on that guilt, because they know that it will result in more profit for them.

  2. Excellent food for though here. I was involved with MLM a few times in my life and it just wasn’t for me. I hate pushing people. especially friends into things. :)

    1. Thanks for stopping by! Yes, I often wonder if there is a “salesman” gene that some people have which allows them to feel comfortable selling things to people! I’m with you, I can’t seem to stomach that kind of thing, either!

  3. Back in the early nineties, my ex.husband and I did Amway. I learned much in those few years about him and the pyramid concept, because, no matter how it is dressed up, it is all about pulling new distributors in. After a few years of time at seminars, leaving my baby with a sitter and countless amounts of money being spent on dream building tools of books and tapes, a few things happened. My ex.husband insisted that this was what he was born to do and if he couldn’t do this, then what good was he?? I sat in a seminar and actually said out loud ‘This is nonsense, absolute nonsense’ and I pulled the plug on it all. Without me, my ex. could not do it, so I stopped doing it. Our ‘upline’ went from chastising me for upsetting everyone at the seminar, to trying to cajole me into staying on board. I would not touch any of it with a ten foot barge pole. A very informative article, thank you.

    1. I’m so proud of you for realizing how dangerous and unhealthy some MLMs can be! That must have been a very hard decision for you.
      And yes, it seems like the mindset for people who get sucked into the worst MLMs is that they must sacrifice all else, because being rich & successful is “right around the corner” and “it will all pay off in the end.” It’s so frustrating to watch!

    2. Yes, exactly Kelsey and I don’t mind going public and saying it. So much ‘motivational’ spouting and encouraging, with little to back it up. Our marriage would have failed anyway, but I do regret the time spent on the MLM though. The flags were there for me to see, but I wasn’t ready to see them. Amway started just days after we were married and I recall almost begging my husband for time to unpack and settle into our new home, before we started anything else new. My pleas went unheard, hence my pulling the rug a few years later. Gosh, the memories are still sharp, even after all these years. Anyhoo, life goes on and if my words can help anyone to pause and think before they jump in, then it’s not wasted. Great post my lovely and thanks. Xx

  4. I totally agree with you. My daughter in law was going to start doing the Plexus MTM and asked me to go with her to a “party”. After and hour and a half I still didn’t know what she was selling. As a researcher I had already dug into the company and the fact that Amazon had quite carrying a few of the products due to known carcinogens. So finally I asked her what are you selling, a product or how to get a new car on the company? What is in your product? No answer. If you are looking to annoy your friends and family go ahead and sign up. We did not.

    1. Oh wow, I didn’t know about the carcinogens in the Plexus products! I have a friend who distributed for them for a long time, that’s crazy!
      And yes, it’s crazy how so many people don’t really know who to answer the very simple question: “What product does your company sell?”

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