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Gcmaupin
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# Posted: 11 Aug 2009 11:27
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CAUGHT IN A LIE MADE BY ROBERT FITZPATRICK AND JOHN TAYLOR PHUD
Grab Your Calculator!
"Data supplied by MLM companies reveal that tens of billions in consumer losses are caused annually by MLM Recruitment Schemes as 99+% of all participants "fail" each year in these "business opportunity" scams. * Before you join an MLM, read this document."
I did a screen shot of the above paragraph just because it is such a blatant lie as much of the research below proves. Let's see if there is such a failure why do MLM Companies go into a panic when new distributor signups drop out rate goes above 50%? Why are there experts who specialize in improving retention rates for MLM Companies? There are over 13 million MLM Distributors. If that is the 1% the Pyramid Scheme Org fraudsters claim... That means the population of the U.S. must be over ..... 99 x 13 million = 1,287,000,000. In a humorous light Fitzpatrick and Taylor have given us a billion person population boost. Come on you guys if you are going to invent lies.... at least make them plausable! Don't rush to change them, I will have to put up the screen shot of your website - with the lies!
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Matt Zenittini
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# Posted: 11 Aug 2009 12:02 · Edited by: Matt Zenittini
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Well,
Not to defend the person who said that. But it appears to be taken slightly out of context..
There are lots of "MLM Recruitment schemes", as well as legit MLM companies.
I think this paragraph was targeted at the "MLM recruitment schemes."
Just a guess.
Also a bit of advice that may or may not help you... Don't get caught up in the politics of it all.
If the products are good and you get your paycheck don't worry about people that focus on the negatives of things.
Good luck,
Matt
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getagrip
Joined: 20 Feb 2006
Posts: 1786
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# Posted: 11 Aug 2009 23:48
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When you think about it, when you are recruited by a MLM company, you really are being recruited to be a salesperson for that company, but unlike regular sales jobs where your money is earned by the amount you sell, most MLMs reward you based on how many people you bring into the company. This fact alone shouldn't raise any eyebrows, but it raises eyebrows when you consider that most MLMs charge people initiation fees to get in. Picture a sales job in the newspaper which required people to pay money to join - this doesn't happen in the real world for real jobs - only with MLMs, and they try to convince you that it is not just a sales job by calling it a "business opportunity". Something just isn't right there...
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BobFirestone
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Joined: 1 Jul 2009
Posts: 68
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# Posted: 12 Aug 2009 01:36
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getagrip: unlike regular sales jobs where your money is earned by the amount you sell, most MLMs reward you based on how many people you bring into the company.
This is a misconception. In MLM's you are compensated for the amount you sell and receive a commission override on the sales of the people you bring into the company. The more people you bring in the larger your organization should be so you override a larger number of people but what you get paid off of is the amount of product that is sold.
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Matt Zenittini
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# Posted: 12 Aug 2009 13:11
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getagrip: most MLMs charge people initiation fees to get in.
Well, did you know that in most MLMs you get product equal to the fee you pay to get in?
And if you don't want to get in with the high fee you can pay a smaller fee to be able to purchase the products on your own.
Sounds like a club....
hmmm...
Costco, Sams club, Bjs etc...
All because MLMs are more convienient and online and PAY you to shop there... They get beat up.
The whole idea is you get PAID to shop there. As do the people under you. They just pay you on multiple levels to push their product.
Smart on the companies part and great for smart consumers.
Matt
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Matt Zenittini
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# Posted: 12 Aug 2009 13:17 · Edited by: Matt Zenittini
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getagrip: they try to convince you that it is not just a sales job by calling it a "business opportunity". Something just isn't right there...
Sorry I missed this part as well.
How is MLM selling anything at all? You talk to people about joining your business. And they buy from the business.
What did I sell?
A business opportunity?
So you are telling me, that when I call someone who requested information about a home based business, and I tell them how to make money by converting their spending and teaching others to do the same... I am "selling" them something?
We are actually taught if someone is not interested not to push them at all. Most MLMs do the same.
We don't want to sell people.
We want people who want to better their lifestyle, and teach others to do the same.
In fact that is a mistake lots of people make. They TRY to sell the business. That simply will make you FAIL in MLM. We don't sell. We don't ever sell.
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getagrip
Joined: 20 Feb 2006
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# Posted: 12 Aug 2009 14:04
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BobFirestone: In MLM's you are compensated for the amount you sell and receive a commission override on the sales of the people you bring into the company.
Basically, in MLMs, the more people you bring into the company, the higher your commissions are going to be. Why the drive to bring people into the company? Because MLMs charge up front fees for people to join the company, and this produces revenue for them, regardless of whether or not any of their new representatives sell any product.
Matt Zenittini: Well, did you know that in most MLMs you get product equal to the fee you pay to get in?
They want you to believe that the fee you pay to join the company is offset by the products they give you, but the truth of the matter is that they are making a huge profit off of the products they give you.
In most cases, the products are severely over priced - we are talking about selling a bottle of shampoo for $30 that would cost you $3 in the grocery store - this is just one of thousands of examples.
What most MLM companies try to convince you of is that their product is the best on the market, and has a rare ingredient that you can only get in the Amazon forrest or something to that effect - that is the pitch that makes you think you are getting something of great value, and what's funny is thousands of MLM companies are selling the same kinds of products and just about all of them make these claims.
MLMs give you these kinds of pitches to build value in their overpriced products to get you to keep buying them, regardless of whether or not you sell any products. And if you can bring more people into the company to pay sign up fees and to buy their over priced products, then they are going to make lots of money, and they use the lure of "wealthy and riches" to reel people in.
Matt Zenittini: How is MLM selling anything at all? You talk to people about joining your business. And they buy from the business. So you are telling me, that when I call someone who requested information about a home based business, and I tell them how to make money by converting their spending and teaching others to do the same... I am "selling" them something?
There are two things you sell:
1. You are selling the company
2. You sell the products that the company produces
Way back in the early 1990s, I was involved with one of the major MLM companies. One of the things I remember them saying was that they wanted you to try and sell actual products to at least 10 customers per month. Why should you do this? They said that you needed to do this in order to make it legal.
Now, I don't know about the 10 customer requirement, but what they said makes sense, because it would show that if all you are doing is bringing people into the company and not selling products to actual consumers, it would mean that their organization was nothing more than a piramid scheme...
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Matt Zenittini
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# Posted: 12 Aug 2009 15:51
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getagrip: Basically, in MLMs, the more people you bring into the company, the higher your commissions are going to be.
The more PRODUCT that is sold as a result of you bringing the company customers results in higher commissions ^^.
getagrip: In most cases, the products are severely over priced - we are talking about selling a bottle of shampoo for $30 that would cost you $3 in the grocery store - this is just one of thousands of examples.
I have seen that as the case in many companies. You need to find a company you are comfortable with. In my company products are cheaper in most cases.
getagrip: Why the drive to bring people into the company?
Because then YOU and the COMPANY make more money  .
getagrip: They want you to believe that the fee you pay to join the company is offset by the products they give you, but the truth of the matter is that they are making a huge profit off of the products they give you.
hmmm, well if you spent $300 at walmart don't you think they are making a HUGE profit too?
getagrip: the lure of "wealthy and riches" to reel people in.
As with any online business, those who want to succeed will.
getagrip: There are two things you sell: 1. You are selling the company 2. You sell the products that the company produces
Strange, I havn't sold either ^^.
The company sells their products and I refer people to them.
That's why it's marketing. ^^.
Last I checked marketing and sales were two completely different departments.
getagrip: sell actual products to at least 10 customers per month. Why should you do this? They said that you needed to do this in order to make it legal.
Network Marketing and affiliate marketing are very similar. All I do is refer people to a company and teach them to do the same and get paid many levels down.
As I stated every company is different and every team is different. You need to find a company you like and a team that is ethical and you like as well.
There is nothing that would make an MLM company a "scam" or anything. Lots of times the teams are unethical and use bad tactics.
I certainly understand where you are coming from my first MLM I was taken for more money that I'd like to admit ^^.
Matt
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getagrip
Joined: 20 Feb 2006
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# Posted: 12 Aug 2009 16:37 · Edited by: getagrip
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Matt Zenittini: The more PRODUCT that is sold as a result of you bringing the company customers results in higher commissions ^^.
True, but my point is that in most cases, the MLM company does not make their profits from actual customers - they make their money from sign up fees generated by new people who pay money to join the MLM company.
Matt Zenittini: hmmm, well if you spent $300 at walmart don't you think they are making a HUGE profit too?
Of course Walmart is making a profit - the difference between Walmart and MLM companies is that they don't make you pay money up front to shop there, and they don't sell their merchandise at overly inflated prices.
Matt Zenittini: The company sells their products and I refer people to them.
That's how it should work...that's how MLM companies should make their money - not by making people pay sign up fees to sell their products.
Matt Zenittini: Network Marketing and affiliate marketing are very similar. All I do is refer people to a company and teach them to do the same and get paid many levels down.
The difference is that in 99% of cases, you don't have to pay money to promote the affiliate program. Also, there are programs out there that teach you how to learn affiliate marketing for free, so if you want to be an affiliate marketer and promote products from thousands of different companies, in most cases, you are never absolutely required to pay a fee to earn the right to promote them. However, in 99% of the cases involving MLMs, you have to pay a fee to promote their products...
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Matt Zenittini
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# Posted: 12 Aug 2009 16:56
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getagrip: they make their money from sign up fees generated by new people who pay money to join the MLM company.
Then why, in many MLM companies are the signup packages CHEAPER, than the products if you were to buy them separately?
getagrip: the difference between Walmart and MLM companies is that they don't make you pay money up front to shop there
What about sam's club?
getagrip: and they don't sell their merchandise at overly inflated prices.
Higher quality product costs more.. As well as most products in my company are cheaper than in store products.
Think of all the people in Avon that don't promote the business but buy their products.. It's because of the high quality.. They like it =].
getagrip: That's how it should work...that's how MLM companies should make their money - not by making people pay sign up fees to sell their products.
The sign up fees that you refer to are for product. Which is why you can sign up at different levels to receive less products. Or if you want to sign up with NO product there is a small distributor fee similar to joining Sam's club.
Only with Sam's club you can't get a free membership by buying an amount of product like MLMs... Which seems like the bigger scam?
Also Sam's club doesn't pay you to shop there ^^.
getagrip: The difference is that in 99% of cases, you don't have to pay money to promote the affiliate program.
Same with MLMs ! =]
getagrip: Also, there are programs out there that teach you how to learn affiliate marketing for free.
Training for MLMs is almost always free on most teams!
Matt
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mountainmom5
Joined: 30 Aug 2007
Posts: 1788
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# Posted: 12 Aug 2009 17:00
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Interesting thread going here - nice that you keep your cool about it all...
Having been on both sides of the fence - Matt is right.
In simple words mlm is a way for the average person to be the middleman and make the commissions that would be paid to the salesperson, should the company go to traditional marketing.
And yes, there are bonuses made for signing up others into the opportunity but the commissions are usually made by selling product and it takes both to become successful in it.
Plus a whole heck of a lot of work!
getagrip: The difference is that in 99% of cases, you don't have to pay money to promote the affiliate program. Also, there are programs out there that teach you how to learn affiliate marketing for free, so if you want to be an affiliate marketer and promote products from thousands of different companies, you never absolutely have to pay a fee to earn the right to promote most affiliate products.
True and I absolutely love affiliate marketing but the benefit of doing affiliate stuff with an mlm company is that once you have a team working for you, your income can become exponential, but I am not willing to work that hard - lol
Great discussion......thanks guys!
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Matt Zenittini
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# Posted: 12 Aug 2009 17:08 · Edited by: Matt Zenittini
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I appreciate your input M5.
mountainmom5: And yes, there are bonuses made for signing up others into the opportunity
You are correct there are bonuses . That is money that the company is losing off the products that your member receives as well .
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mountainmom5
Joined: 30 Aug 2007
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# Posted: 12 Aug 2009 17:32
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Don't get me wrong Getagrip! I like you guys BOTH.
I am not taking sides here - that just happens to be the way I fell about it all...
Remember - I LOVE good healthy discussions and have a hard time keeping my nose out of them.
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Matt Zenittini
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# Posted: 12 Aug 2009 17:41
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Same here ^^. I don't have any problems with anyone on these forums .
I like debating topics though ^^
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getagrip
Joined: 20 Feb 2006
Posts: 1786
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# Posted: 12 Aug 2009 17:48
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Matt Zenittini: Then why, in many MLM companies are the signup packages CHEAPER, than the products if you were to buy them separately?
Most people would never in their right mind buy the products in the first place from many of the unknown MLM companies if they didn't have to pay money to join the company to try them out. Sure, new recruits might get a "discount" over what they might charge an actual customer, but that doesn't mean they are getting a quality product, and it doesn't mean that they couldn't get a comparable or better product at the local grocery store for half the price.
Matt Zenittini: What about sam's club?
Last I checked, Sam's Club only cost $40 for a year membership - some MLMs charge sign up fees of $500 for the "right" to be a distributor of products that no one has heard of. Additionally, many of the products you can get at Sam's Club are sold at a much lower price per unit than what you would find at local grocery stores - the majority of MLMs can't make that same claim. I've seen some MLMs that offer "virtual malls" and that kind of a thing, but you can usually find the same merchandise at other online or even local retail outlets at cheaper prices.
Matt Zenittini: Think of all the people in Avon that don't promote the business but buy their products.. It's because of the high quality.. They like it =].
Its because companies like Avon have a reputation of selling high quality products - not crap products that no one has heard of at inflated prices. Oh, and by the way, I just checked online, and assuming the information is still accurate, Avon only costs $10 to join - that's a lot more reasonable than shelling out $150 or $500 that some MLMs charge for new members.
Matt Zenittini: getagrip: The difference is that in 99% of cases, you don't have to pay money to promote the affiliate program. Same with MLMs ! =]
If you are talking about online promotions and word of mouth, that is true. However, what I meant when I wrote my statement is that 99% of affiliate programs are free to join, but 99% of MLMs charge sign up fees. In fact, I only know of two MLMs without sign up fees, although I suppose that there are a few others out there.
I'm not saying that all MLMs are bad, and I do understand why an MLM would charge a small sign up fee like Avon's $10, and I also understand that there are a handful of MLMs that offer products at lower prices than what you could find locally. However, this simply isn't the case with the vast majority of MLMs...
Many of the MLMs out there will try to convince you that you are signing up to become a "business owner", and that you can get "product discounts", but the reality is that in most cases, you are paying money to become a salesperson for the MLM company and their products, whether you are willing to admit that or not.
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getagrip
Joined: 20 Feb 2006
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# Posted: 12 Aug 2009 17:51
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mountainmom5: Don't get me wrong Getagrip! I like you guys BOTH.
Oh, I like Matt too - I know he's a good guy and he might even belong to one of the few good MLMs out there - but that doesn't mean that I don't think most MLMs disguise themselves as legitimate business "opportunities" when the reality is that they make most of their money in sigh up fees and by selling their products to their recruits...
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writingmoney102
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# Posted: 12 Aug 2009 17:56
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i dont think there are any legit MLM businesses online for a number of reasons. Any business that is more concerned with getting team members than the actual product itself is a MARKETY PYRAMID SCAM. I am surprised that the law is not cracking down on this crap. And plus, anytime you have to hunt for people to sign up, you should run the other way. It is ridiculous actually. I don't know why people still fall for this crap.
Plus, most MLM companies what you to make an "investment" of 250-1000 dollars. But what most people don't know is that it is against the law to charge more than a couple of hundred dollars for a business opportunity. Its sad cause people could have took that money to open their own business. A legit business. UGH
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Matt Zenittini
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# Posted: 12 Aug 2009 17:56
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Well, I can't speak for the bad MLMs.
I can only speak for my MLM.
So we are now talking about to wide a range to find a solution :P.
Many MLMs are bad, I don't know anything about them.
I focus on positive, good things.
Shaklee for example. Charges $40 to be a distributor. The products in most cases are better and cheaper than in store products.
I can't speak for others, other than Amway and I'm not a fan of them.
No matter what path one takes I wish them luck ^^.
Hopefully this thread has been helpful on pros and cons to the MLM industry.
Matt
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getagrip
Joined: 20 Feb 2006
Posts: 1786
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# Posted: 12 Aug 2009 18:09
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Hey Matt, check out my thread about Girls, MLMs, and Toilet Paper That Cures Cancer (its a true story):
http://www.work-at-home-forum.com/5_2944_0.html
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westfam11
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# Posted: 12 Aug 2009 18:37
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I am enjoying being involved in a not so
traditional MLM that has millions of customers
and built their business on customers first and
then after a couple of years decided to start the
MLM side of it and allow distributors to be brought
in and start a business.
It is so much work to have to keep recruiting after
others drop out because they are not making any
money.
When I joined at the level I did in this business it
came with 25 customers and I was making money
the first month. It is very motivating to make
money from the start and helps to keep you
going and helping others to realize that they can
do the same The attrition level is very low with
this type of business model.
Just thought I would add my opinion here.
Becky
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BobFirestone
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# Posted: 13 Aug 2009 02:06
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getagrip: Oh, I like Matt too - I know he's a good guy and he might even belong to one of the few good MLMs out there
This is really the big issue of MLM as an industry or profession is finding one of the few good companies. If you show me 100 companies 98 of them are bad. It could be the product is low quality or over priced or just bizarre and unnecessary. It could be the company or the management. Or it could be the pay plan isn't right. Or the only money is made off of the recruiting bonuses not the sales of product.
I just read your story about the "nice girl". That was really funny.
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getagrip
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# Posted: 13 Aug 2009 02:54
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Good points, Bob - I guess there is good and bad in any industry. Glad you liked the story!
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happywife
Joined: 14 Aug 2007
Posts: 1059
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# Posted: 13 Aug 2009 17:37
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I'm not a big MLM fan as a general rule, but I do happen to be part of an MLM company as well. I didn't have to pay any start up fee to join because I was making a minimum purchase of 2 products that I intended to use.
The company does have a membership fee (either $15 or $25, can't remember) if you just want to join without purchasing any products (don't see why you'd bother).
I learned affiliate marketing first, and I've tackled my MLM more with an affiliate marketing mindset, I suppose. I am not really working at getting people into the business opportunity. Instead, I'm recommending the products on my health site as a solution to various health issues.
As a result, I make decent commissions, but I don't/won't make nearly as much as I would/could if I was getting business builders under me. One day I suppose, when time permits, I'm going to have to start focusing a little attention to that side of the equation.
To me, the sign up fee isn't the big difference between affiliate marketing and MLM. The big difference is the purchase requirements.
With affiliate marketing, I'm not required to make any monthly purchases to qualify for the commissions I've earned in a given month. With my MLM (and any other I assume), I do.
Fortunately, I happen to use and enjoy the products myself, so it's no biggie. Also, no matter how 'high' in the company I go, I'll never have a huge purchase requirement - the most being about $150ish.
So, it works for me. I think it's important when 'recruiting' business builders in an MLM that you make sure the prospect has a genuine understanding of how the system works and what all is involved and required. Otherwise, you really don't do yourself or them any favors in the long run.
I agree that there are both good and bad MLM type programs. I would approach going into one with the idea of whether you can see yourself using the products for many years to come. Otherwise, you'll have a lot of stock in your garage after a while. 
Just wanted to add my own little penny's worth.
Blessings,
Angie
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Matt Zenittini
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# Posted: 13 Aug 2009 17:44
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happywife: Otherwise, you'll have a lot of stock in your garage after a while.
Well said . I always buy the products I can eat lol. Also the vitamins. Yes expensive, but it makes me feel like I'm not wasting my money to get my PV because I use them :P.
Matt
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BillMaverick
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Joined: 13 Aug 2009
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# Posted: 13 Aug 2009 23:09
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mountainmom5: Plus a whole heck of a lot of work!
Well said, more work than most disclose
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Matt Zenittini
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# Posted: 14 Aug 2009 00:07 · Edited by: Matt Zenittini
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writingmoney102: it is against the law to charge more than a couple of hundred dollars for a business opportunity.
Lol, do you happen to have sources to back this up?
writingmoney102: anytime you have to hunt for people to sign up, you should run the other way.
Actually, if you "hunt" to sign people up.... Then you are a "beta" and you will not succeed in MLM =].
Read Magnetic Sponsoring... Great book.
writingmoney102: I don't know why people still fall for this crap.
Ohhh, you got me there.
Why don't you ask one of the following people that:
Donald Trump
Robert Kiyosaki
Warren Buffet
Roger Barnett
It's funny the way some of the most successful people in the world are all in Network Marketing when it's such a total scam . I mean I CAN'T believe they fell for it!!. That's so funny that billionaires are sucked into it just as we are. =]
Maybe you should do your research before spamming threads.
Thanks
Matt
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BobFirestone
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Posts: 68
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# Posted: 14 Aug 2009 02:27 · Edited by: BobFirestone
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Matt Zenittini: writingmoney102: it is against the law to charge more than a couple of hundred dollars for a business opportunity. Lol, do you happen to have sources to back this up?
Against the law is the wrong choice of words.
In the U.S. there is legislation regarding the amount of disclosure that must be presented to perspective business opportunity buyers prior to getting started and $500 is the line in the sand.
If the startup kit is under $500 there are minimal amounts of disclosure required which is why in most MLM's the agreement is only a page or two long. And why so many charge exactly $499.
If the startup kit is over $500 the company is required to provide a large disclosure document including things like actual income breakdowns and lists of current participants that perspective business owners can contact. If you want to see what this type of disclosure looks like inquire about buying a traditional franchise.
The $500 is only the distributer kit (or what ever the company is calling it) not product. A MLM can offer a $999 starter package with a $39 kit & $960 of product.
This leads to the issue of "front loading" which is against the law. Front loading is where a company requires you buy thousands of dollars of product to get started. A company can't require you buy thousands of dollars of product, but it can offer it. To ensure compliance most companies offer multiple startup packages with different inventory investment levels or just a distributer kit.
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Matt Zenittini
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# Posted: 14 Aug 2009 03:07
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Thanks for clarifying Bob.
That makes very good sense.
writingmoney102: Plus, most MLM companies what you to make an "investment" of 250-1000 dollars. But what most people don't know is that it is against the law to charge more than a couple of hundred dollars for a business opportunity.
So lets not spread nasty rumors .
Matt
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Matt Zenittini
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Posts: 133
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# Posted: 15 Aug 2009 23:54
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BillMaverick: Well said, more work than most disclose
It's like going in for a job interview.
Ask about your job description and understand it well.
If you don't ask and then find out you have to take the trash out.
Don't complain =]
Matt
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