Multi-Level Marketing: Sound Marketing?

By: Kyle Elliott Click author's name for more of his/her articles

I am persuaded it is true that MLMs are based on solid business thoery. The notion that it is more cost-effective for a company to distribute products through a system of continually growing "warm contacts" then through usual marketing channels makes a lot of sense to me. The budget ordinarily set aside for interruption advertising is usually sizeable - at least it would be for any company that is able to make use of a MLM business model to begin with - and to roll that into incentives for sales and recruiting can be prove to be quite efficient.
I have been involved with a couple different MLMs over the years (my parents were deeply involved with a popular MLM for a few years back in the 80's) so I do have knowledge with the model. I am also a marketing consultant so I comprehend the differences between this sort of business model as it relates to the individual as opposed to usual small business marketing plans.
I have consulted with the leaders of considerable sized teams on how to successfully communicate with their teams, as a chief portion of the challenges related to implementing a MLM organization model involves the geographical restraints that come with having a sales force spread out all over the place.
The most important issue that I have discovered with most MLMs is the same thing that gives them life – often it's all about the hype. I have not come across many MLMs that offer a firm, easy to implement turn-key business plan.
The majority of the people that I had the pleasure of meeting during my time involved with MLMs had quite a lot of things in common:
1. They were generally frustrated with their lives as they were - they didn't like their career, they didn't like their standard of living, etc.
2. They were looking for a way to make an income outside of the "normal job rut"
3. They felt like they belonged to something greater than themselves when part of "The Business"
4. 95% of them tend to stop when the hype wears off - before they achieved the goals that they put before themselves at the first "meeting" (the goal list never changes - it just forwards to the next MLM that appeals)
5. If they are honest, they probably would tell you that "this isn't the first MLM I have been involved with..."
Now don't get me wrong - I don't think that there is anything particularly bad about any of the things listed here. I am familiar with every point I have mentioned perosnally!
What is too bad is that most MLM leaders don't genuinely care about this 95% of the associates that are recruited into their business.
It is kind of like strip mining - the top leadership of most MLMs initiate hyped-out recruiting programs to work through as much unrefined material (recruit prospects) as possible to find the 5% of ones who will truly reproduce the model. Along the way they come across and cultivate out of that 5% motivational speakers, real sales people, event organizers etc. etc. that produce the foundations of their actual business - which ultimately is to push product.

What I have noticed, however, that I find especially troubling is the actuality that many of the business models I have seen are in reality indoctrinating their sales force into a market. A lot of MLMs sell a majority of their products directly to their sales force! Their major market is the same persons they entice with ideas of freedom and affluence, when in fact they are being sold soap and a book of the month. And what a dependable market they make! Back every month to buy the next book or another roll of toilet paper... at least until the hype wears off... hmmm...could this be one of the main reasons for the hype? Good question I think.
As far as marketing planning goes in my humble estimation, a MLM business model could be the ultimate distribution force for almost any product - if the management could actually get beyond the enormous potential to enlarge their own wealth, provide solid sales training and incentives for their team members to promote sales outside of the association and beware of the long term affects of too much hype.