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How is MLM Different From a
Pyramid Scheme?

There are many benefits to joining a multi-level marketing or MLM company.

But there are a few misconceptions that prevent many people from joining. Most of these are misconceptions about MLM itself. One of these is the concern that MLM is a pyramid scheme. In this article I address this and other common objections to multi-level marketing. 

Objections to MLM

The main objections to MLM are the misconceptions that many people have of it. Chief among these are:

1. The mistaken idea that MLM is a “pyramid scheme”
2. The (very mistaken!) idea that MLM is somehow a  "scam"
3. The thinking that it is somehow “wrong” to make money off the efforts of someone else, and
4. The idea that to be successful in MLM you need to relentlessly chase after your family members and friends to get them to “join your business”.

Let’s take a look at each of these.

How MLM Differs From a Pyramid Scheme

A pyramid scheme is a plan in which money changes hands but in which no product or service is provided in exchange for that money.

As an example, remember that “chain letter” you received when you were in the 5th grade?

You were supposed to send a dollar to everyone on the list, then delete the name at the top of the list, add your own to the bottom and pass the letter on to 5 friends to do the same.

Presumably, you would then be on the receiving end of all those dollars kids were sending to the list until your name finally reached the top of the list and was deleted.

That was a pyramid scheme because money was exchanging hands but there were no goods or services being provided for that money.

In contrast, in MLM companies money is always exchanged for legitimate products or services.

While pyramid schemes are illegal (just think of all those 10 year old criminals!) MLM is a perfectly legitimate marketing model.

Is MLM a "Scam"?

Right behind the Pyramid scheme is the misconception that MLM is somehow a "scam". 

In fact, MLM is a perfectly legitimate marketing model.

In the US multi-level marketing has grown into a $200 billion a year industry with over 100 million marketers. Indeed, tens of thousands of people join these networks around the world every year, and many earn a very good - and sometimes a truly remarkable - income from it.

Objections to Making Money From the Efforts of Others 

This objection is somewhat baffling to me because all profitable businesses make money off the efforts of other people.

If you are currently employed, ask yourself if your employers are making money off your efforts?

Of course they are. Which is why they employed you in the first place!

But, in return, you are receiving employment. Which is why you agreed to work for them.

One of the differences between the standard employment business model and MLM is that, as an employee you are limited in how much money you can make. You can ask for a raise, but your employer is only going to give you so much.

Whereas if you join an MLM company, your income potential is virtually unlimited! And everyone who joins the company under you has exactly the same income opportunity!

Chasing After Friends and Family 

Another major objection to MLM is the apparent need to chase after friends and family to get them to purchase your product or "join your business". This method of selling and recruiting dates back to the origin of network marketing.

While somewhat unclear, most people believe network marketing or MLM  began back in the 1930s. This is when a man named Carl Rehnborg started a a company called the California Vitamin Company,later renamed Nutrilite.

When Mr. Rehnborg noticed that some of his most successful sales people were selling much of their product to family and friends, he began to promote this as a way to sell more product.

Today, most MLM companies still advocate this method of marketing.

And since the real money in network marketing comes not from direct product sales but from recruiting other people into the business, many network marketers try not just to get family members and friends to buy their products but also to "join their business opportunity”.

The problem with this is that it frequently doesn’t work very well. And the prospect of having to chase after friends and family can really turn people off to network marketing.

Fortunately, there are much better ways to promote your business – and this is especially true if you are a health care provider or owner of a wellness oriented business and choose the right company to work with.

In my next post, I’ll tell you why I choose doTERRA essential oils, and why this is a particularly good choice for health care providers and owners of wellness-oriented businesses.

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The doTERRA Compensation Plan

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