If we were in a perfect world - the 'geometric progression' of 2 getting 2 getting 2 (or any other number) would yield great numbers... and carried out to the logical conclusion - everyone on planet Earth would join... Most successful MLM's wind up with hundreds of thousands if not millions of people world-wide involved with their company - but not in a 'perfect matrix' - generally there are 'leaders' who are willing to get really good at building others and sometimes there will be a few that will 'duplicate' what the leader has done... there is very little chance that the 'matrix' of a hierarchy will be built out 'evenly' among all comers - in fact, there are precious few people who ever get an organization of any size...
Part of how some people can earn a living or even better is due to the fact that they build a retail business regardless of recruiting..
In my company (financial services) I can make a 6-figure income from developing a client base - my products/services arena allows for this... on top of it I can hire others (they 'sign up' - start running!) to learn to do what I do... if you are willing to go through 'The Dip' (great book by Seth Godin) of the learning/doing curve and willing to hone your skill and knowledge, then 'you too' can earn a living wage... I can hire as many as i am willing to train.... no different than if I were a typical Investment Brokerage, Real Estate Broker, Insurance Broker (office)
If anyone ever bothered to check to see how many 'entry' level folks who enter Insurance, Real Estate, Investment industry and how many of them quit before they ever really get any return on 'their investment' (State & Federal license fees) it would most likely rival the numbers in MLM as far as 'turnover' goes... at least a person can start part-time with my company and not 'lose their house, job, family' if they don't become' successful... no big investment but some time to see if they are willing to dedicate the time to become a professional. So far there is little differentiation between Real World business & MLM...
Where it deviates from the conventional business is when I find someone who can build a team like I've done - and they happen to be on my team - they will want to do what I've done - run their own office... they can, by fulfilling the company promotion guidelines they can 'take' their Regional Vice President contract and open their own office...
Now we are on 'the same contract level' - in the real world I would have just lost... I lost my 'best guy' and trained my own competition... however in the MLM world - My company pays me a % of everything this guy's entire office does but it does not come out of his profits! He now runs his own biz and I 'override' his business - kind of like getting a 'franchise royalty'...
The question you should have is - how can the company pay me anything on top of what he does when we are at 'the same level'? Good question:
The company does not advertise - every company generally will take between 3% to 30% of their revenue (depending on the industry) and plow it back into Advertising, Marketing & Sales...
My company is no different - they could say - "Jake, you made $100,000 this past year - do you want us to take, say, $30,000 and run some TV ads and some magazine ads and see if we can get your phone ringing?" - And I would say - Heck No!! That’s my money... I'll develop the client base and hire and train others....
The company already has a 'built-in' allowance to 'reward' me for finding, training and developing other business leaders - instead of spending the 3% to 30% on advertising & marketing - that money can be 'set aside' to pay me when I help another 'franchise location' 'distribution center' 'office' or 'sales organization' get on their feet and produce business... I can repeat this as many times as i'm willing to dedicate the time & effort it takes to help someone else reach the level of running an office... (generally about 2-3 years)
This is how my company tends to work – I am not saying that there are not flaws in MLM when it comes to ‘selling’ the compound geometric growth projections… they tend to make it sound ‘easy’ “if you get just two people who just get two people’ – sure this makes it seem like ‘easy money’ – we all know, no matter what compensation model, business model etc we get involved in… to make a six figure income or even a living wage below that takes a real dedicated effort to become a pro in the chosen profession…
But, because most MLM’s products are small ticket items… it is very difficult to ‘sell enough’ products on your own to make much of a living and to ‘control’ enough other people (Read: influence enough others to influence enough others) to sell the product is very difficult…
Maybe picking a product/service that has a higher profit margin can give you the ability to allow you to make a living ‘selling’ while you as ‘building’ an organization…
I believe the most letdowns are in the ‘expectations’ we have as a naïve, new to the industry (of mlm) participants ‘buying into the company line’ that it’s easy and ‘all you need to do is….’
I hope this helps you grasp the reason why MLM could be a good way to monetize a business…
If you are trying to get started in an MLM click HERE for help to get started making money now!
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