PONZI, PYRAMID AND MLM ARE NOT THE SAME!
April 25, 2013
PONZI, PYRAMID AND MLM ARE NOT THE SAME!
Before I get down to delivering on the promise I made last week to share with you some simple steps to succeeding in the business of Multi Level Marketing (MLM), I feel compelled to define the operations of Ponzi and Pyramid schemes which are structured differently and have no relationship to legitimate MLM businesses.
Ponzi scheme was introduced back in the 20s when investors were cheated out of a few millions, nothing in comparison with our modern day Bernie Madoff who ran off with BILLIONS, now languishing behind bars. A Ponzi scheme has a single perpetrator who acts as the hub for all transactions and has many victims. The perpetrator of a Ponzi scheme is usually someone well respected and is a very influential professional or entrepreneur. Deposits are expected to gain substantial appreciation within a certain time. The investor is always expected to take out more than he invested.
In the case of a Pyramid scheme, it is initiated by an individual who invites other persons along for the ride and continues to apply the system of duplication. A pyramid has many perpetrators and many victims. If there is no product, or a product that is of no value to the customer who is not involved in the scheme then it could be considered an illegal pyramid. Pyramids never pay out more than they receive – Ponzi does.
MLM plans are not supposed to pay out more than the amount received. A MLM model must offer a product but in recent times scammers have been offering low end products which only benefit the Distributor and not the end user, leaving them wide open for the FTC to step in. Pyramid scheme promoters have given the MLM industry a bad name as they attempt to disguise their offers.
Be careful when looking at compensation plans as in some cases the impression is given that they pay in excess of 100%. Most times it seems this way, the company is actually applying the percentages on Bonus or Commission points – Bonus Volume (BV) and Commission Volume (CV). Watch out for the most lucrative payment plans. Today, companies are paying as much as 100% Fast Start Commission. No wonder companies are going out of business nearly as fast as they get in. In all the confusion that is out there, there are companies in operation for several decades. Beware of startup companies in prelaunch offering the world, not saying what the product is, and don’t even have a contact address. Many are only building a mailing list. Be sure to check all prelaunch offerings for the promoters, information about the product and street address of the company.
I am first to accept that some of the worst scammers pass through the MLM industry, many are presently behind bars. This happens all because the business is very lucrative and the urge of unethical greed. Greed is good. Who can be against wanting more but not at the expense/hurt of others? Keep up to date on the postings of Rod Cook at www.mlmwatchdog.com This is a free service but could be a very high priced subscription. However, because of Rod’s love for the MLM industry, he exposes the bad guys and embraces the good ones. He is an advocate of the MLM industry.
Here is the system I promised that will make your experience in the MLM industry hassle free. You had the opportunity to read my articles and to do your own research on the internet. I feel very confident that you are ready to get to the next stage which is to get involved in the industry. Here are a few steps.
1. Take your time to research the type of company you wish to be associated with before making the decision to get involved. You have the choice of a well established company with many years in the industry or a company under 2 years that is making strides and holding its own in the rankings at www.mlmrankings.com Be sure the company is offering product/s that will give value to the customer. Remember always – if it sounds too good to be true, it may well be.
2. The company’s products must be affordable so that the Distributors can maintain their active status. Most important, affordable products guarantee a constant flow of new Distributors.
3. The compensation plan must be simple and not complicated. There are several types of compensation plans, Stair Step, Unilevel, Binary, Matrix, etc., etc.
4. In recent times there is no need for you to make a list of family, friends, business associates, etc. Your warm list is your friends on Facebook, Linkedin and Twitter. I have news for you, you don’t even need them, you have over a billion people to make friends with and introduce your business to them. Recruiting persons into your MLM business has never been easier. Get a working knowledge of Social Media and its contribution to MLMers’ success. Visit www.maxsteingart.com/webinars and www.youtube.com/freeleads You will be pleasantly surprised at the information shared by Max for FREE!
5. Make sure that you have the right mind set from the beginning. You are in a global business not a local family and neighbourhood business. The persons who you know don’t have to be in your business. They don’t have to be your first stop. Launch out globally and let them see your new lifestyle and then they will be asking questions. The industry that they now look down at, they will be soon be looking up to it. MLM is good for the little guys and for the economy.
6. MLM/Network Marketing is all about relationships. Speak with a minimum of 5 persons per day whether in person or on line. However, be respectful of the other person’s privacy.
7. Stick with the script provided by your company. Follow the system to the letter.
8. Be supportive of your downline, help them grow and you will prosper.
I am happy to share these simple steps with you and I sincerely hope you will look at the MLM industry as a means of changing your circumstances for the better. Put your desktop or your laptop or your smart phone to work for you. If you are currently unemployed, you can be employed. If you are underemployed, you can do a makeup. If you are looking for an additional source of income, MLM can be the answer.
Next week, I will conclude my series of articles on the MLM industry and point you to a business opportunity that has changed the industry. Remember MLM is good for you!