Multi Level Marketing and Network Marketing explained - vital information for the potential new MLM recruit.
The MLM Recruiting Machine
I see many websites dedicated to both promoting MLM and trying to denigrate anti-MLM sites. The people behind these efforts choose to ignore basic common sense, insisting instead on concentrating on delivering a barrage of mostly irrelevant illogic to overcome some of the lesser cogent arguments of some anti-MLMers. So be it. Let the pro-MLMers answer this:
I live on a remote island with a single town of 100,000 people, as yet untouched by MLM.
I decide to make MLM my life's work. I have 100,000 people as my marketplace.
I have ten retail customers. I find my first successful distributor convert. My new downline member invests, I earn money. Provided only that I have recruited a person of equal capability to myself (am I not looking for the best downline possible?), I have just cut my marketplace down to less than 50,000 people, as my downline member must be treated equitably. Right? After all, I've just sold him or her some product and the opportunity to make money.
The very next person sold into my downline, by me or by my initial recruit, causes my market to become just some 33,000 people. One more and it becomes 25,000 people.
With just three recruits in my downline I have dropped my market share by 75%, from 100,000 people to just 25,000 people. With four recruits, 20,000. With 5, just under 17,000. My common sense tells me that this number would adequately service the island with the type of products offered.
To complicate matters, I’ve just realised that I was only one of ten people who were originally recruited by the same off-shore recruiter... and all of them are doing exactly as I am doing! What’s worse is that my local paper is now filled with other off-shore recruiters trying to find recruits for their own downlines. The competition is hotting up.
The question, of course, is, "If they haven’t already realised the situation, do I tell all this to my recruits?"
You see, I get a cut from everything sold by my downline, but each of my downline members would then NOT have this same opportunity. They would get their own retail sales profit, but would find it harder and harder to find more recruits. With the market becoming progressively smaller with every new recruit in every downline, it suddenly becomes obvious that the opportunity is NOT equal for all, doesn't it?
So, my upline will say I shouldn't tell my downline about this. In fact, I should do everything in my power to prevent this knowledge getting out. Besides, they will continue in justification, it's more a case in the first instance of recruiting that 2 people have 99,998 people to work between them, NOT 50,000 each (and so on). Simply put, may the best man win. This is capitalism at its very best, they say.
At all costs, I should not explain to a new recruit that I have just recruited my own competition. And that that is what they will be doing in turn if I ignore my common sense. Instead, I should explain that help will be forthcoming, that every resource within my power will be made available to them so that they might succeed in recruiting. And that they should do the same with their recruits.
The problem is, how do I reconcile the fact of diminishing market share with each new recruit in every downline against my promise to them that I will help them succeed within a "burgeoning" marketplace? The two are diametrically opposed. The market is a fixed, finite number, (no matter how large that number may be), and I have no control over what is happening at all.
Ah! say the pundits, but everyone has the whole world in which to operate their business! So don't worry about it! Recruit overseas!
The whole world is available, that’s true, but it makes no difference to the end result locally or elsewhere. The larger the numbers involved, the larger the problem for the more recent recruits. The business will grow for the company until the number of recruits/distributors servicing a given area reaches saturation, at which point people are forced to simply give up. This is called "distributor failure" by the company. After a time, the area will change demographically and voila! the company is back in business recruiting more people.
It all just means the company may make a lot of money over time. The people who are good at recruiting may also make great income. It will all be paid for by the recruiting machine system churning through recruits who pay their money up front and who must eventually fail as the company grows its influence.
Sad but true.