FORBESWOMAN
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9/27/2012 @ 4:53PM |331 views
Is MLM a Bad Word?
Jody Coughlin, Contributor
Ever been confused about how a “home business” works? Of
course you have, so have we. Most people have heard the term MLM (Multi-Level
Marketing) and usually at the end of that the word, “scheme” is added – giving
the whole business model a bad name. Well…let’s change your negative perception
and tell you how your Great Aunt Joan, actually earned that pink Cadillac from
Mary Kay! It’s brilliant really…
Not only are “home businesses” or “MLM’s” very
interesting, they are successful. Many of the longest standing organizations in
this country have this business model. MLM is a marketing strategy in which the
sales force is compensated not only for sales they personally generate, but
also for the sales of others they recruit, creating a downline of distributors
and a hierarchy of multiple levels of compensation. Most commonly, the
salespeople are expected to sell products directly to consumers by means of
relationship referrals and word of mouth marketing. Sounds legit right – so why
the bad press?
Well MLM companies have been a frequent subject of criticism
as well as the target of lawsuits. Criticism has focused on their similarity to
illegal pyramid schemes (hence the “scheme” reference), price-fixing of
products, high initial start-up costs, emphasis on recruitment of lower-tiered
salespeople over actual sales, encouraging if not requiring salespeople to
purchase and use the company’s products, potential exploitation of personal
relationships which are used as new sales and recruiting targets, complex and
sometimes exaggerated compensation schemes, and cult-like techniques which some
groups use to enhance their members’ enthusiasm and devotion. Eesh!
However, as aforementioned, you may know people that sell
products from Mary Kay, Avon , Advocare, Tupperware and
the like (see more companies in our Featured Home
Businesses section). You know people who sell these types of products
because they believe in the products and the companies that stand behind them.
These companies empower those who sell their products to actually establish
their own businesses, selling the products. This is very attractive to many
entrepreneurial-minded people who do not want to have a boss watching over them
but also want some pre-established structure and support. Most MLM
organizations provide a very robust infrastructure and great training as well
as impeccable rewards (hello free cars and trips!).
I recently spoke with San Diego based, Vicki Martin, about her experience
with Rodan + Fields. Here’s her take on her home business and why the
opportunity was so appealing for her and her family, “The decision to join
Rodan + Fields Dermatologists came easily. Since 2008 the construction industry
[which I was previously in] has been hit hard by our economic downturn and my
income has been greatly affected. We were working harder for less like many of
our friends. Being part of Rodan + Fields Dermatologists is allowing me to work
with highly educated people who share a passion for business and for teamwork.
Building a recurring, residual income that grows month over month is going to
give my husband and I the peace of mind and financial freedom that is so
vitally important to our future. My skin looks better than ever. And, I get to
work my job around the rest of my life instead of the other way around.”
So, the next time you meet someone who runs a “home
business” or “MLM” give them a high five for taking their career and life into
their own hands and becoming an entrepreneur.
