Multi-Level Marketing (MLM) “The naked truth revealed”

BL on Sat, 20th Jan 2007 10:46 am 

Alvin,

Nice post. I have seen a lot of young people (partcularly even university students) who lose their credibility and money getting into this kind of business. Even one young entrepreneur (who was pretty good) got burnt and learned from it.

AnonymousCoward on Sat, 20th Jan 2007 12:54 pm 



Actually MLM entrepreneurship is an oxymoron.

Gosh.. if you have a brain, you’d know that all MLM is bound to fail!

Hun Boon on Sat, 20th Jan 2007 2:07 pm 



Many highly educated people got burnt. I know of doctors, managers, dentists, lawyers etc who got duped during the MLM craze in Singapore in early 2000s.

Now the gullible victims left are housewives, study mamas, retirees, and the otherwise unemployable. It offers them hope and the opportunity to earn money in their free time. But in the end, they’ll lose much more.

It’s an unethical business model, and anyone with a modicum of common sense should steer clear.

Vivien Ting on Sat, 20th Jan 2007 2:57 pm 



Hi Alvin,

I most certinly agree with what you said here. One question though, so are you saying in your aticle that as long as the company products are good, (like that of Amway and TupperWare), the MLM model would work for this company and people who join it?

DK on Sat, 20th Jan 2007 3:09 pm 



Actually, MLM is a good training ground for entrepreneurs wanna be. But they need to be careful not to be burned too badly

WeiChang on Sat, 20th Jan 2007 5:16 pm 



I agree with DK. There are some MLM companies which only require you to pay a nominal fee (<$20) as membership fee. One example is Forever Living, which also concentrates more on their products than recruiting personnel so it is technically not possible to get burnt.

This will however, give you a chance to try your hand at selling (getting rejected), which is crucial to all entrepreneurs though I feel there are easier ways to make your million bucks than using the MLM way.

I am however, unconvinced that using a MLM system would save costs as compared to traditional marketing as touted by those who champion MLMs. Maybe more qualitative research should be done in this area.

I also have an issue with the way some MLM companies toy with the ignorance of the masses in matters of science. I’ve personally seen one MLM guy demonstrate mixing ‘Omega 3 oil’ with sodium hydroxide which clears up the colour and the white debris in the solution. They go on to proclaim that the ‘Omega 3 oil’ will clear debris in your stomach.

But as every chemistry student knows, any acid will neutralize any alkaline and the ‘experiment’ is like dark magic away from the classroom. Housewives actually gather around this demo ohhing and ahhing away…

The Uncharted Waters on Sat, 20th Jan 2007 5:47 pm 



I am actually quite skeptical about the argument that “MLM is a good training ground for entrepreneurs wanna-be”. Afterall, selling is just a small part of entrepreneurship. If anyone really wants to gain the “selling and rejection” experience, there are plenty of sales positions available at other companies.

Moreover, a lot of MLMers are more interested in recruiting instead of selling. So maybe it would be more appropriate to say, MLM is a good training ground for future HR specialist? :P

The original concept of MLM (or network marketing) is to cut down on overheads like advertisements and retail rentals, so that the price of the products remain competitive. However, it turns out that many MLM products are a few times more expensive than similar products sold at retail stalls, because they need to feed all those uplines.

Jade on Sun, 21st Jan 2007 7:23 pm 



i am a person who feel that MLM is not totally a way of cheating people.. It is good for those who believe in co.’s products ( of course the product is effective). I have been invited by someone from NUSKIN entreprize to join them in MLM, and so far I can see a lot of poeole succeeded as well as falure.. And the lesson I learnt from it which is For those who are strongly believe in what they do, They will succeed. MLM is also a type of entreprineuship that it helps people to make money.

WeiChang on Mon, 22nd Jan 2007 1:58 am 



Selling is one of the most important parts of entrepreneurship. If you take part in any business plan competition, speak to any VC, look for any partners, do any fund raising or even to convince someone to lease you their space for a novel idea, you’ll have to sell your idea right from the start. And I’m not even talking about selling your products or services directly to the customers. Steve Jobs is one of the best salesman in the world for obvious reasons.

donald on Mon, 22nd Jan 2007 11:32 am 



my 2 cents worth:
mlm is actually a biz model that works if u just look at the model itself.. the reason why it has gained a bad reputation is becos of the ways how lousy companies and people implement it..

the difference between mlm and pyramid selling is only a very thin fine line…

While pyramid selling is illegal while the ones who benefit the most are the ones at the highest level, mlm is not.

In a real mlm model, it does not mean that the ones at the highest level wins, in fact, if you are the first level but you just sit by and do nothing, it does not guarantee that you earn more (or any $ at all) than the one who is several levels below you who works hard. A properly implemented mlm model ensure that only those who produces results will get the rewards.

for a mlm model to really works, the products and services that are being moved along has to be good or really good. if not, mlm will only be seen by everyone else as something to peddle lousy products along. and the sad thing is, this has been the case, more often than not.

also, as with a mlm company who adopted and implemented the mlm biz model properly, the company will not make you buy tons of products when u joined as a distributor, in fact, most of the time, you are just required to pay a very nominal fee for your distributorship. this is usually to pay for your membership card, your marketing materials etc

also a real mlm company will back their products up with money back guarantee and they will honour the refund. many of the times when you see people who join a mlm firm and then buy tons of products, usually it was under the instructions of the distributor who brought them in, but if you check the mlm company policies properly, they did not mandate that any new distributors must buy any minimum amount of products.

MLM biz model is just like many other biz models but becos of the ways it is implemented, it has blinded many people, including highly educated people, to see what it really is, a biz model that works. and the real truth is that, only a handful of mlm companies practise the model correctly and enjoyed tremendous successes

Alvin on Mon, 22nd Jan 2007 3:23 pm 



Hi Vivien,

I strongly believe that the “TEAM” is the most crucial aspect of a company’s success and failure as they carry out the execution. Reason why MLM companies fail is because their team is made up of random individuals pulled off the street.

Second to “TEAM” is the “PRODUCT”. Name me 1 successful company in the world that does not have good product(s). Say if you developed a cure for cancer and decide to push it out through MLM, you can still be equally successful. There is absolutely nothing wrong with MLM as a business model, but the fault lies with people that abuse it.

Jean Yip on Mon, 22nd Jan 2007 10:43 pm 



Hey Jade,

I strongly agreed with you.
MLM helps no. of people achieved their dreams.
The one who comes in would enjoy the more, so what you guys waiting for? Waiting to be the last?
You will say, I will not be thelast, as so many people in this world still cannot accept MLM business method.

A good friend of mine, is a high post in MLM for 20years. But they went thru hard time with determination and hardworking.
Why they gives up traditional business and join MLM company? hence, they enjoying freedom of times and financial. They have times be with their family members. They help alot of people successful and get freedom like them as well.

For a people like me who still working for others, the most valueable time, we spending for company, selling our most precious time for bosss. We left home with frustration or tiring face for our dearest family members. Worth it? this is the value of living in this world?

A quote from Andrew Carnegie : “I’d rather have 1% of the efforts of 100 people than 100% of my own.” The autor of “rich dad poor dad” quoted : ‘The riches people in the world look for and build networks, everyone else looks for work.’

Not all MLM are bad. Good MLM has good value, helping each other to be success and enjoy the fruits together.
Sharpen your eyes, join the right MLM!

Jeremy Yew on Tue, 23rd Jan 2007 11:29 am 



Great article!

“Ironically, MLMer’s instinctive prey usually comprises of friends, relatives and family – the people they really care and love for. Sad but true, MLM has driven human greed to even betray one’s moral and ethics.”

I’d like to share my thoughts on the last few lines of the article, as reproduced above.

I really couldn’t agree more with the statement.

Having experienced first-hand how friends and acquaintances who had joined MLM call me out of the blue, with the ultimate intention of wanting to sell me MLM products (which are not of much use to me), it really strains, if not ruins, my relationship with these people…because 1) I have to reject them (politely, of course) and 2) I will subconsciously become wary of these friends and acquaintances in my future dealings with them, as much as I would like to not be wary of them.

I’m sure some, if not many, of you will empathise with what I just said.

I’ve also had acquaintances (who had just quit their jobs and joined MLM) borrow money from me, probably to pay for the “entrance fee” or what-have-you, but I never heard from them again after that.

Regardless of whether MLM is a valid business model or not, I think we have to seriously critique its social value and its effects on human relationships and society as a whole.

Just my thoughts.

BL on Tue, 23rd Jan 2007 12:05 pm 

I have the experience of seeing how one of my students being ruined by MLM. I don’t want to talk further about it because it’s such a disappointment to see how a youth being destroyed by the debt and other problems arising from it.

Somehow, some people think that MLM is entrepreneurial because it offers the easy way out, but then in the end, these people are the ones who got conned.

An important thing I picked up from good entrepreneurs: have a product (even if it’s chicken rice) and just sell it.

Real entrepreneurs don’t do MLM.

Wu Di on Wed, 24th Jan 2007 1:47 pm 



From my half a year experience in MLM businesses and another 3 years of observations on MLM market and people, 90% of the time I see only one word: DISAPPOINTMENT. I don’t like to elaborate that, as each time I do, it takes me more than 3 hours to throw them out.

I agree with what Donald mentioned in the comments, that the MLM biz model alone is theoretically sound. However, I’d be more specific in this that, it’s the MLM marketing model instead of calling it “MLM business model”.

I’d like to distinguish the meaning of two terms: MLM marketing model and MLM business.

In short,
(1)”MLM business” = “MLM religion”
(2)”MLM marketing model” = “Effectively lower the price & encourage customers help promote”

The real life examples of (1) are plentiful, and I don’t want to name them one by one. However, as for (2), I only found one successful example so far - dreamhost.com

Eventually, if MLM is treated as THE “business”, then very likely it’ll be implemented in a wrongful manner with reality distorting “brainwashing” processes.

However, if MLM is not the focus of the business, but simply a marketing tool, it may possibly utilized to scale the business, depending on how it is implemented.

For the past 3 years, I have helped a few friends de-brainwash and moved out of their misery “eventually”. I stress on the word “eventually” becoz it was a really long and tough process, and the hardship was forever imprinted on our memories.

Riki on Thu, 25th Jan 2007 6:22 pm 



Extracted from a mail which my friend wrote it.

Truth Behind Multi Level Marketing (MLMs) companies that tell you selling is not required.

I hope that anyone who has ever thought of, or is thinking of entering into MLM will READ THIS…UNDERSTAND…THEN DECIDE whether or not it’s worth going into MLM!

Most of us who have encountered MLM would have seen the many different products, people and strategy used in achieving their “MAGNIFICENT sales target”. But the question we have to ask ourselves is whether or not the company involved in MLM is using this sales tool correctly…What do I mean correct? Well you will have to ask yourself:

Is this method used morally correct?
Does it go against your conscience?
Is this method right in principle?
Will I hurt anyone in the process of earning this amount of money
Even if I became rich, would I be proud of myself knowing that many people got hurt in the process?
Even if I became rich, would I have learned anything in my life?
If you ever decided to leave the MLM Company, would the people in there still really be my friends?
Even if I wanted to do something for my family, would this be the right way of doing it?
Would my family be proud of me even if I brought home more money than usual, knowing that I had to hurt many people in the process?!
Would I be misusing my friends trust by borrowing money from them?
Would I be a friend knowing that as I hurt others, my friends who I introduce to this MLM Company will continue hurting others in a never ending cycle?

I just want to expose what some MLM groups are doing so that if anyone comes across the same situation I’m stating here, you will know what your getting yourself into 100%, if you decide that you want to walk that particular MLM path…So please read, understand and most importantly think before you decide.

THE PROCESS OF LURING YOU IN

The people who ask you to the MLM seminars will probably be your own friends, but before they get you interested or even think of calling you, they will ask you out for a meet up as this is required of them by their up lines. Your friends are actually given a form which has been developed by these groups so as to find out as much about you as possible…

…Why you may ask?! What does this form consist of?! Well read this summary- They will ask you about:

Your family background
The most important thing to most of us is our loved ones and no 1 would ever want to see their loved ones suffer.Understanding this part of the human psychology, the people who will try and get you in will continuously tell you: “You’re doing this for your family, so don’t think so much. You should do it because you love your family.” Most of us will fall into this trap because even if we didn’t trust what we were being exposed to, the intention to help our family members will overshadow any individual’s ability to think prudently. Unfortunately, this feeling will also be fueled by greed of money, since we live in Singapore where everything is expensive.

2. Find out more about you and your character

Next, they will use what they have learnt from your friend who is trying to bring you in. Knowing a persons character allows any other person to manipulate the individual by talking about and relating to whatever he/she may be interested in, therefore you will always feel at home or as though you have met someone who understands you and your situation well. Sad to say…IT’S BECAUSE YOUR FRIENDS HAVE GIVEN THEM THE RESEARCH INFORMATION ON YOU! This is why they will be able to relate to you very well.

3. Current occupation

Understanding your occupation to find out whether you are happy or not…OR WOULD YOU PERHAPS WANT TO EARN MORE THAN ANYONE ELSE?

4. What you think about MLM if they have the chance

5. Whether or not you would agree that you would want to have another avenue of income other than work

6. Whether you have ever thought about starting your own business (If you say yes…they will most probably ask you down to their seminars)Whether you would ever be looking for an opportunity if one ever made itself present (This is also a question they will monitor)

Step 1: You will be asked to go to play a board game (Robert Kiyosaki’s CashFlow Game)

Step2: You will be asked to go down and listen to the product seminar and see how good the product is and why it will work.

Step 3: They will ask you to go down for a meeting speak with the senior up lines.

Step 4: You’ll be asked to go for their Family night and see how fun the Company culture is.

Step 5: You will be asked you if you really want to be a part of the team…Being so tired and interested you will do anything they say because of the greed in all of us.
Ultimately, many people will decide that it would be better to suffer at first and have a good life at the end!

I just want to sum up with a few things:

IF SOMETHING SOUNDS TOO GOOD TO BE TRUE, IT USUALLY IS!
IF YOU REALLY WANT TO BUILD A BUSINESS OF YOUR OWN, THEN HAVE THE COURAGE TO DO IT INSTEAD OF TRYING THE ROAD WHICH MOST MLM COMPANIES ARE TRYING TO OFFER – THERE ARE MANY WAYS OF STARTING A BUSINESS IN SINGAPORE

These are some webs for your reference:

Business Related:

http://www.acra.gov.sg/

http://www.business.gov.sg/

REACH ONE GOAL AT A TIME, FROM THE SMALL ONES TO THE BIG ONES…LIKE STARTING YOUR OWN BUSINESS OR WORKING SMART AND DILIGENTLY IN ORDER TO SUCCEED
PEOPLE HATE MLM ASSOCIATES; THEY HAVE A NICKNAME – THE LEGAL CON-MAN
MLM COMPANIES WILL CONTINUE TO TEMPT YOU WITH MONEY BUT EVEN IF YOU EARN THIS MONEY, YOUR LIFE WILL BE WORTHLESS CAUSE YOU HAVE NEVER DONE ANYTHING (like succeeding in a business or building a successful career) TO MAKE IT WORTH ANYTHING (IF YOU CHOOSE TO DO MLM) – YOU JUST DIDN’T DARE TO DO THE RIGHT THING
LASTLY, PLEASE TELL THOSE WHO ARE TRYING TO LURE YOU INTO MLM – DON’T TRY THE “DO YOU THINK YOU CAN EVER EARN SUCH MONEY IN YOUR LIFE”.
I BELIEVE ANYONE CAN DO ANYTHING, IT’S WHETHER YOU WANT TO OR NOT…AND IF YOU WANT IT THAT BAD, FIND OUT WHAT NEEDS TO BE DONE IN ORDER TO REALISE YOUR DREAMS…

YOU ARE BETTER THAN ANY MULTI-LEVEL MARKETING COMPANY AND YOU CAN SUCCEED!

DO YOU WANT TO SUCCEED OR DO YOU WANT TO MLM?
ARE YOU A BUSINESS PERSON OR ARE YOU A MLM PERSON – THEY ARE DISTINCTIVELY NOT THE SAME!!!!!!!!!!

THE CHOICE IS YOURS!!!!!!!!!!!!

Attached in this email is a research done on the Multi-Level Marketing Method of not selling anything, where they just recruit you and tell you that you are different from those who are selling – This is called the MLM recruiting MLM concept – It’s a 40 pages research on why you should trust them, so if you still choose to do MLM – Good Luck!!!

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astro on Mon, 30th Jul 2007 2:29 pm 



I think the MLM concept is fundamentally flaw and i do not see how it is related to entrepreneurship. Arguments that state that it is a more effective way of distributing products, is simply not true upon closer examination.

From a monetary perspective, one can definitely make money out of it provided that one gets the timing correct and possess the necessary sales techniques.

However the key problem i find with mlm is based on the issue of ethics. Anyone who gets into MLM did so because of the financial gain rather than the product itself. Same goes to those who sell it. More often than not, they are selling the dream of earning passive income rather than the product itself. This to me is unethical as it is no different in getting people to buy “magic stones”.

As for training in sales, there are better ways to do it. I agree that selling is a small part of entrepreneurship. The bigger picture in entrepreneurship is marketing, not selling.

You Cheng on Wed, 1st Aug 2007 2:17 am 



I have been listening to MLMers (ie my friends and their uplinks) persuading me to join their downlinks. And after doing some research here and there, I find that it’s not the system that I would want to be involved.

I have explained my views to many friends of mine and even one of the managers in one of the MLM companies. I’ll do it here again.

Lets have an example. If I introduce you into the company (ie. I’m the referrer). You joined. You refer your friend to join the company. Am I suppose to get some commission from your effort? Are you willing to give me any amount just because I referred you into the company?

I wont. And I’m sure most of you wont. The reason is easy. Why should I give? It’s my effort to refer someone in and I should get the commission. Not the one who have referred me in also. And not anyone above me.

For a typical referral scheme, if X refers Y successfully into the company, X gets a 1 time referral fee. If Y refers Z into the company, Y got a 1 time referral fee. X got nothing from Y’s effort.

Similar in selling of products in most commission based company. If I sell a product to you, say I got a 5% commission for doing so. If you resell it to your friends, are you willing to give me 3% also? Then if your friend sell to his friend, give me 2% and so on…

Really, to me, there’s no free lunch. Everyone is selfish when it comes to money. Who will say, “I have more then enough money and I dont want any more. Dont give it to me.” ?

Too cut it short. To me, referral is okay. Commission is okay. But I’m not for MLM. Don’t find it morally right. If you want to be an entrepreneur, go spend the money on some courses in recognised institution. Sales is important to the company. But not always the most important. To me, the most important asset is the customers of the company.

Eddie on Thu, 9th Aug 2007 1:02 am 



In reply to You Cheng post, I can see where you are coming from. However, there are two sides to everything. Yes it is all about money, if it wasn’t nobody would be doing it. You work right, why do you do it?? Because you want money, it is something you need so that you can live in this world. It is sad to say, but it is the truth. Everyone one being for themselves, that depends on the person. As for me, I pay anyone who gives me a referral. Why should they back my company if they are not getting anything out of it??
Your right sales is important. Also, the customer is the most important asset to a company. But in network marketing you have many different types of customers! And you have to cater to them all. Some you sell to, some you recruit, some you market with, and so on. You have to tap into all of these to be successful.
Some people go about doing this the right way, and some go about it the wrong. Why should the ones doing business the right way get belittled because of the wrong doing of a few others??

SC on Tue, 9th Oct 2007 5:48 pm 



My boyfriend and I were in MLM too. We also earned our fair share ($10K and above) and lost it too. What do we lost? Things that $ can never buy. It’s a great testament to my friendships and relationships with people and that’s when I realized I have this good traits. The trust that my friends had in me was very great. Thank god! Though I was in MLM, and now that I’m out of it, my friends are still with me! My friends and family are most important to me! We were in the management post and that’s when, I can see the harsh realities of MLM and what it is all about.

I agreed with some of you that MLM is a good training ground. However, not for sales (there are so many sales company that we can learn to do sales, why choose MLM?) but in building the right mindset to build a business (because they have alot of very good training too), till now, I still used this mindset and apply in my work and it works wonders.

But I do agree that MLM is just another type of business. The kind of mindset and business ethics in MLM are the same as in any traditional businesses. To be a business person, we have to be firm and in the business world, there are no friends. Can we live with that? If we can’t, then my advise is, don’t do business. Not everyone can do business.

Just to quote an example of a boss in traditional business. My boyfriend used to work with one boss (in a small company). In order to survive, he can used all sorts of what we deemed as ‘despicable’ means, but to him, it’s surviving. The partners of this boss left him because they cannot tolerate his business ethics. When I look at him, it’s the same kind of mindset and business ethics that we see in MLM too. It’s all about surviving!

Look at our Minister Mentor, Mr Lee Kuan Yew, he’s one harsh and firm person, that’s why Singapore is what it is today. If not because of Mr Lee, can Singapore, a little red dot, without resources, be number one in this world? If not, for Mr Lee, when we travel overseas, the mention that we are from Singapore and the mention of Mr Lee, it’s always thumbs up? In order to survive, we have to be that firm like him, but most of us, cannot tolerate that, that’s why, not everyone is a business person.

I left my MLM because I realize that that’s not the kind of life that I would want. The reasons why most of us keep complaining about MLM, it’s bad, unethical, etc, is simply because we cannot tolerate the kind of business ethics, the reality of business world. A true business person is firm and most of all, it’s harsh. It’s what I see most business people.

To add on to Riki’s explanation about the process of luring you in, well, the first part is warming up. Your friends, out of the blue, will call you for a meetup, so as to get to know you better.

They will follow a standard procedure in getting to know you better. They will use the ABC role: B is the bridge and C is the customer.

A could come in the later part or if your friend brings him, he is the A, most likely is the upline. A can appear at a later stage.

B is the bridge bet. A and C. B will be your friend. If A comes at a later stage. He will t-up A saying something like I have a business partner who used to be working in a well-known company who used to earn $3000 every month but felt that working is not the way, why not do a business and now earns a 5 fig. income every month. (This is call T-up where your friend will t-up A in such a way that may be quite similar to your thinking or your background now so that the next time you meet, you will feel that there’s someone similar background as you). Sometimes A will not appear.

C of course is yourself, who is your friend’s prospect.

Of course, after the meeting up, your friend will need to fill in a form called the ‘C’ information which has the following: Family, Occupation, Recreation, Money, Health, Dream, Obstacles. These are valuable info of you so that when ‘A’ meets you. They know what to talk to you. Of course, other info are character, product cutting point, career cutting point, action plan, etc.

So now you understand why your friend’s upline knows so much about you.

Of course, ABC role is nothing new. ABC role is used in the working world or any businesses. My boyfriend’s ex-boss uses alot of this tactic. Perhaps if the person did not do MLM before, they may not notice this. But too bad, my boyfriend and I have done it before and we know straightaway what this ex-boss is up to.

Actually, it all boils down to what we value most and what do we want? Do we really want to live the kind of life that most MLM perceive it to be? When we agree that we want to live the kind of life that we dream, are we prepared to fork out not just $, but the time and effort to build that kind of dream? We always see the successful business people, such as Li ka-ching, Bill Gates, etc, that’s why we always see their magnanimous, the beautiful life that they have and that’s why we are blinded. But do you know, the life and sacrifices that they’ve been through, before they were successful, do we know? We don’t because it was not reported.

Most of us, including myself in the past, don’t see that. We choose to see the beautiful picture, that’s why when things don’t work out the way we want, we say they cheated us! No! It’s us who choose the path! It’s us who choose to let them cheat us!

A very good example is my brother, he’s no longer working and is now doing and setting up his own business (traditional business, of course!) The time, efforts and sacrifices that he put in is equivalent to the time, efforts and sacrifices that I put in when I was in MLM.

It’s not only MLM which needs to put in that kind of effort, but in traditional business too! If you are prepared to give your time, efforts and sacrifices, then all I can say is, think carefully and good luck! The $ that I spent in my previous MLM, I just take it that I attended a business course in a business school. But of course, it’s an expensive lesson!

Anonymous on Tue, 7th Oct 2008 1:24 pm 



Do you guys trust Ah Bengs and Ah Lians in Business Suit? I wouldnt for sure, MLM is nothing but is for dreamers and repeat failures

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