Multilevel Marketing – Opportunity Or Scam?

Posted on November 14, 2012 · Posted in Business, It Works Body Wraps, Salon Direct
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Multilevel marketing.  What comes to mind when you first hear that?

Almost all of my working life had been as a salaried employee until 2005 when I finally cut loose my ties with the corporate world to seek fame and fortune in other ventures.  Multilevel marketing was not even a consideration as a possible source of income since I grew up thinking that all multilevel marketing companies were either scams or just didn’t work.  Looking back, I have no idea why I’d condemn something about which I had very little, or no, knowledge.

Multilevel marketing and network marketing are often used synonymously but, in reality, they have two different meanings.

The term “network marketing” refers to the marketing methods used to get customers and other people to help sell the products and/or services produced by the company while the term “multilevel marketing” refers to the compensation structures of the people who are selling those products and/or services.

Despite the distinct differences between the terms “multilevel marketing” and “network marketing”, let’s just use the two terms synonymously for purposes of this blog post to keep things simple.

I’d heard a little bit about multilevel marketing companies, like Amway and Herbalife, while still working at my salaried job because I had a friend involved with Amway and an aunt who was marketing Herbalife products.  But I never completely understood how they would get paid since the multilevel marketing compensation structure was completely different from how I’d gotten paid my whole life.

Now that I’m involved in a multilevel marketing company, I understand the earning power capable of the right company when introduced to the right people.  When the right person finds the right multilevel marketing company, the amount of money earned can go through the roof and a mere distributor can actually earn more money than the company owner and executives with the proper multilevel marketing compensation plan.  I have yet to hear of a lower-level, salaried employee earning more money than the company CEO in a typical corporation.

As an example of the compensation structure of the multilevel marketing company I’m in now, a brief summary on how we get paid is as follows:

Our compensation plan is unilateral and has 6+ levels of pay you can make depending on your status in the company.  You make 10%, 10%, 5%, 5%, 5%, and 2% to infinity on loyal customers and distributors. 

Different levels get paid as follows:

Distributor = 10% (on first level), 10% (on second level)

Executive = Same as above plus 5% (on third level)

Ruby = Same as above plus 5% (on fourth level)

Emerald = Same as above plus 5% (on fifth level)

Diamond & Above = Same as above plus 2% (on sixth level and beyond)

While the core multilevel marketing compensation plan is laid out above, there are performance bonuses available us as follows:

1. Fast start bonus: Every time you sign up a new distributor and help them get 2 loyal customers within their first 30 days, you get $100 cash.  This is paid out on a weekly basis on Fridays (you don’t have to wait until your monthly check to get it).

2. “Car” Bonus: No, you don’t get a “car” but you sure could finance one with $600 a month once you get 60 loyal customers.  The company will allow you as long as it takes to make this happen.  To maintain this each month, you must also have $3,000 in BV each month.

3. Wrap Rewards: Every time you get 2 loyal customers, you can get a box of wraps (4 in a box) for just $25.  Your wraps then just cost you about $6 each and make about $75 when you sell them for $25 a piece.  To buy them at our regular distributor cost they are about $15 each and you make only $40 when you sell them for $25 a piece.  This is a great way to earn more quickly.

And yet more bonus money is available at the Diamond rank and above in our multilevel marketing company as follows:

- An extra 2% override on entire volume

- Customer Acquisition Bonus (CAB): $80 bonus for everyone who does the steps to success no matter where they are at in your downline.  This is triggered by fast starts.  Once a new distributor gets 2 loyal customers in 30 days, you not only get $100 fast start (if you were the one who enrolled them) but you’ll also get $80 CAB on top of that.  CAB bonuses get higher as you move up from Diamond (Diamond gets $80, Double $120, Triple gets $135, Presidential $145, Ambassador gets $155).

The above compensation plan is specific to our multilevel marketing company.  Each multilevel marketing company will have its own compensation structures but I believe ours to be among the most generous of them.

Another issue I used to have with multilevel marketing companies is that I thought they were all “illegal pyramid schemes” in which only the people who got in first really made any money while all those who got in later made little or no money.  I now know that multilevel marketing is not an “illegal pyramid scheme”.  These illegal pyramids are formed when the money is made only from recruiting people into the structure with no  goods or services being sold.  In contrast, the multilevel company I’m in now has very high quality health and beauty products which I now distribute through my entity, Salon Direct.  If multilevel marketing was illegal, it would have been shut down by the government a long time ago rather than be thriving as it is now.

I think a lot of the confusion with multilevel marketing and illegal pyramids is caused by the similarities in shapes of the drawn out structures.  People with salaried jobs often tell me that multilevel marketing is an illegal pyramid scheme just because they see the shape of the compensation structure to be that of a pyramid.  But let’s look at the typical organization structure in the corporate world and compare it to the organization structure in multilevel marketing.

As can be seen, the corporate organization structure is also shaped like a pyramid like the multilevel marketing structure but, in the corporate structure, the lower level salaried employees very rarely, if ever, make more money then their bosses whereas the lower ranking people in the multilevel marketing structure commonly make more money than the people who are above them.

Unlike the corporate “pyramid” in which you are someone who is supposed to only do what you’re told to do by your higher ups, the multilevel marketing structure makes it clear that you are the one in charge of making decisions and building your team, or your business.  With true multilevel marketing companies, your pay is directly tied in with how much value you give to others, and this is how it should be.

Our Presidential election just ended with the incumbent, President Barack Obama, retaining his office.  In response to Obama being re-elected, a number of companies immediately announced layoffs of employees in anticipation of our economy only going down rather than improving during the Obama administration’s Presidential tenure.  Additionally, we are experiencing a worldwide recession in which there is much uncertainty regarding job stability and this uneasiness about possibly losing their jobs will plague American workers for at least several more years.

With all the uncertainty regarding the ability of companies to survive until the economy improves and decrease unemployment by hiring again, becoming your own boss and determining your own pay with multilevel marketing provides a very feasible alternative to relying on others to give you a paycheck in the salaried world.