Not only is network marketing a proven business, being one of the longest-running business models in the United States.
Jody (Coughlin) Greene argues in her Forbes article titled “Is MLM a Bad Word?” that MLM has had a bad reputation because its structure is similar to pyramid schemes and its negative image isn’t deserved.
Not only is network marketing a proven business, being one of the longest-running business models in the United States, but its marketing strategy has also proven successful. Distributors create income through their personal sales and the sales of those who they’ve recruited in their downline. Because of its pyramid-like structure, MLM has in some cases gotten a bad name.
Ms. Greene explains just some of the criticisms faced by network marketing companies:
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.
However, companies like Avon, Mary Kay, Tupperware, and the like have stood the test of time. MLM companies continue to attract new consultants because many people want to be entrepreneurs but begin their companies with established support and structure. Not to mention, consultants usually love the products, and the rewards offered by the company can be quite attractive.
The direct selling industry has had a lengthy and complex history. Read more about the history of MLM in Attorney Jeff Babener’s blog post “A View of the MLM Industry: Past, Present and Future – Interview with Jeff Babener.”
For more information and updates on the direct selling industry visit www.mlmlegal.com and www.mlmattorney.com.
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Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call Charity before September 1st to receive a discount! 503-226-6600 or 800-231-2162.