I issue a challenge to the LYN members on this particular thread.

Try comparing MLMs to referral marketing then.

For those who know about the principle of referrals, do try and explain how this relates or doesn't relate to MLM. You'd find that the answers for referrals are somewhat insightful in helping you to learn about MLMs and what you REALLY think about them.

A lot of people that I know claim they know a lot about MLMs and why it is good or bad etc., but they never really sit down to think about how it is astoundingly similar to a good number of programs and sales mechanisms out there that are not only legal but fully supported or boo-ed against by the VERY SAME PEOPLE who have the exact opposite remarks about MLMs.

Something worth thinking about.

This post has been edited by thyceult: Aug 19 2009, 11:30 AM

This is terrible to hear cipsmor. Things like this should never ever have to happen honestly. Sigh...

Dear sweet_pez,

The reason why I asked this rather critical question is because while a lot of people glorify referral marketing as a meaningful, legal etc. they fail to notice that the fundamental business acumen for both MLMs and referral marketing mechanics match on so many levels.

What I would agree with kairulai is that MLM is just another form of business. One shouldn't attach negative input or opinions on the mechanics of the business simply because they were at one point or other, involved with bad companies that ended up being scams and such.

The point of my debate is that before one can talk about the consequences, one must properly understand the definition of MLM and how this relates to scams. MLMs are just the mechanics of business that allows profits to be distributed in an orderly fashion.

Companies that use MLMs in an improper way for the purposes of scamming other people are what we'd call bad companies or "scams" in general. A bad company is just that, a company out to cheat people's money using poor products or improperly represented corporate and production practices.

The MLM mechanics itself stays the same, whether it involves DIRECT SELLING companies (a lot of people confuse this), governments, franchises, and even MNC marketing and sales gimmicks.

I do not disagree with your opinion that MLMs, by the common LYN definition, has brought about more evil than good, but I just want to educate the public here that MLM is a mechanism, NOT a business type.

Case in point: We know that accounting is a subject. Some people choose to use accounting to calculate their profits and losses, while others use creative accounting to evade taxes. By that observation, we conclude that using accounting to evade taxes is wrong/bad/evil etc. Does that make accounting as a subject evil?

Conclusion (to LYN): Blame the abuser, don't blame the tool.

This post has been edited by thyceult: Aug 22 2009, 01:37 PM

Mmm Zaypher,

I second that opinion. I wouldn't really mind it as much if it were a genuinely good idea and that the business concept is sound. However, a no is a no, in my opinion. If and when I have heard enough about it and decide that it is not something that I want to get into, the "salesmen" should just back off and know their limits. The point behind a really workable MLM mechanism is all about sharing the business idea. That's it. Somehow the rest of them have the overzealousness of a barbarian horde.

Kind of reminds me of:

"Join us or die!"


At the end of the day, I don't really blame these people. I'd chalk it down to either they're not following the instructions on sales properly, or that they are just overeager to seal the deal. Even at the cost of losing friends. The sales training just needs to be complete and allows them the space to learn and understand that not everyone can be converted, but it is a numbers game. Instead of wasting time making enemies out of your friend, move on and try someone else who is genuinely interested.

This post has been edited by thyceult: Aug 22 2009, 02:19 PM

Note: For the purpose of all my replies in this section, I am assuming that MLM refers to what most of you would consider to be direct selling companies ala Cosway, AMWAY, Herbalife etc.


Dear wodenus,

Good to hear from you again old friend! How are you doing lately? It's nice that we've met up again on this thread. Okay, apparently there's been a number of responses already after mine, but I'll answer the non-overlapping ones first:



1. Inefficient and waste of resources: Probably yes for some people, but not a yes for most. The idea of the original concept of MLM was to help support individuals that wanted to earn money but didn't have a clue. So based on your example, the 2k is pretty much an "education fee", to put it bluntly. Problem is, while the system is purportedly "perfect", the teachers are far from it. The level of teaching varies greatly based on how well your mentor picked up his/her lessons in the first place. So therein lies the problem of MLM quality. If strictly arguing about the teachers alone, they can very strongly influence whether you have a good time with MLM or not.

2. 2k as working capital: I can only assume that when you refer to 2k as paying someone, it means that the money is completely gone? Usually the money that is involved often gets you something, a base product that is given out to you either for self use or for sale to others. By right, the money should be seen as paying for the right to use the system the way it is intended for. Even if you were to start your own business, you'd still need to buy the raw materials or ingredients etc.

Some businesses do require the mammoth structure and leverage of size/sequencing that large MLMs offer. Imagine trying to start a business selling perfumes right off the block with just a RM$2k set up? Not impossible, but tough, especially when you don't already have a brand name to build on.


3. Advantage of MLM vs. sole proprietorship: The most obvious one would be: Accountability. As in partial loss to total loss. In sole proprietorship, in the event of a dispute or lawsuit, you stand to lose everything owed to the third party all the way up to the house and car (and even pet cat too j/k). For most MLMs that are done up properly, they have a proper legal structure that protects them from such lawsuits. Even if one were to get through to them, you as the 3rd party vendor would be shielded under the coverage of the associative protection laws granted by the MLM itself. Only relevant if you were actually selling their products and not trying to mix it up with your own of course... in which case you might expect a lawsuit from the MLM itself!


Hope that answers your questions for the meantime. Time to address Zaypher's comment!

---

Added on August 22, 2009, 6:00 pm

Wow Zaypher!

That's quite a long reply! Haha... finally I have found my match. Okay... let's see:

1. Problem with salesmen: The major problem is having to put up with their BS. EVERYONE is right about this. A lot of overenthusiastic youngsters and tai-tais forget the MAIN focus of a REAL MLM. That is to build a proper working business structure streamlined such that everyone gets to benefit (whether from someone else's effort or not is debatable).

A lot of people forget the main focus of the MLM and end up focusing on the fluff, money and worse... recruitment. I keep telling people time and again, the main core of the business should literally be about the business. About selling so damned good, that even you would want to buy, consume or wear it yourself. Something that is almost so good that it'll sell itself, and your only role in this big picture is just to share with your friends and family what is so good about it.

A lot of amateurs overdo this part, which is really very sad, in my opinion. They should sell their products to people who genuinely need it or can improve their lives as a result of it. Unfortunately, due to aggressive market tactics these days, the "feel good" way of marketing has been replaced with hard sell methods which you have so aptly described.


2. Your 2k explanation: Sorry to say Zaypher, but that is a very, very dangerous way to describe MLMs. In fact, that kind of explanation causes the misunderstanding that results in people hating MLM in the first place. Again, as I have stressed in another thread vs. ChatWarrior once before he got shut down was that MLMs are not = pyramid schemes. Having said that, pyramid schemes work fundamentally on the basis of rapid recruitment. So much so that once the engine slows down, the whole thing comes crashing down.

The major difference between RECRUITMENT SCAMS and MLMs are the products. So, the lesson here is:

If the company does not have a genuinely trustworthy and reliable range of products that even you (as the average consumer) believe in, then don't buy into it!!



3. 2k business: You can obtain a partial license for Ramli burgers. I have an interesting revelation for you guys later on about this if you choose to follow up on it. Bet you guys are going to go

This post has been edited by thyceult: Aug 22 2009, 06:02 PM

Well,

I guess wherever there's promise of money, people follow. Hehe...

Well met Zaypher,

Firstly, you should pat yourself on the back for being able to carry a matured, educated conversation about this. It's good to know that there are still open-minded people around. Responding to your responses:

1. Yeah, no more talking about bad agents. They are just simply misguided people. Their heart is in the right place, but their focus is totally off. Sigh~

2. It's quite all right. I am glad to have been able to share on the issue of MLMs and how it works. If I were me say 20 years ago, I'd think the same actually. However, having said that, the dangerous line that MLMs crosses over into pyramid schemes or scams is defined by its product.

Lampe Berger is a very very famous case as you'd already know. Thing is, Lampe Berger IS actually following an MLM structure (one of many structures as I'll later explain). Problem is, why I'd consider it a pyramid scheme or an al-crappo company is simply because of the product line. Tell me honestly, who the heck buys things like that? The rules regarding the company protect only itself and none of its "investors", if you can even call them that. I've had a friend who tried to pull out of the company but ended up getting burnt really badly because of the fine print.

3. Aah, our friend Mr. Ramli. He's a very crafty one. We know of Ramli burger as a business. We know of it as a franchise, but do you know of it as an MLM? Hahah...


Thanks for sharing the video. It is very enlightening. People should have a look at it.

In any case, if you are interested in knowing about the mechanics and different structures behind MLMs (for education purposes only), I guess we can probably start another thread for it or continue here if the rest want to know.

This post has been edited by thyceult: Aug 22 2009, 09:08 PM

Mmm sweet_pez,

I concur with your observation. It is very sad and true that a lot of people cannot help associate bad scams to MLMs and vice versa. Worse yet knowing the fact that this is further reinforced by bad attitudes and execution from people who cannot follow instructions properly. Or worse yet, follow instructions based on their own interpretation of the "rules of engagement" which seems to benefit themselves the most in terms of monetary gains.

Their idea of the dream MLM is one that maximizes earning potential. Both trainers and members agree on this one fact: That the best selling MLMs are often the ones that sell on hype. If something doesn't excite, it belongs in the shelves of a supermarket. That is why confidence artists have room to weasel their way into people's hearts by applying similar approches with less than genuine products.

Pavlov's bell theory... good one. People become conditioned to think that if one is bad, then all are bad by association simply because they bear similar charateristics and symptoms of experience.

In conclusion however, my only purpose on this particular thread is to share with people that:

1. Multi-Level Marketing (MLM) is a business tool that is applied to companies, NOT a company itself

2. Companies can decide to be "good" or "bad" depending on the way they carry out the business based on the
principles of MLM

3. Companies can also decide to be "fraudulent" by claiming to sell good quality products when they are not

4. Pyramid schemes can pretend to be full fledged MLM companies by practicing all of the same business mechanics, but the top members run when the money comes in (this should be handled in a different thread by the way, because there IS a difference between pyramid schemes and MLMs, people need to be educated properly... and the difference doesn't lie in just having a product or not. The difference lies in the matrix structure and calculation formulas, not the presence of a product)

5. Malaysia is the current regional capital of MLM with over 130 registered companies dealing with direct selling products as of 2003

6. Scammers either scam through the fine print, or by running away, or by having products that have extremely high profit margins because they don't contain what is claimed. Again, none of this has anything to do with the MLM concept, which is a business tool involving mathematical formulas.




EDIT: I have come to realize that a lot of Malaysians and just about 99% of LYN members refer to MLM COMPANIES as MLMs. If this is the case and the purpose of this thread, then I stand corrected. I'll carry my conversation to another thread!

This post has been edited by thyceult: Aug 24 2009, 11:43 PM

The real unfortunate thing is that people are still confusing the two so... *sigh*

Anyways, registration-wise, one would be surprised to know that at the height of the MLM mess in Malaysia during the late 90s and early 2k, more than 300 companies that operate based on MLM principles are not only registered but "approved" by the Malaysian government as legally operating entities with the sole purpose of performing direct selling activities using MLM principles. You can only imagine the even bigger mess having to try and clean them out later on.

Yes, undoubtedly, as long as the lack of proper education and with the presence of greed everywhere, the bad perception of the public towards MLMs will always be there. Not that MLMs by itself is necessarily a good thing either... hehe.

The biggest flaw with failed MLMs is that they have broke their own first law:

1. The rules, processes, methods and tools used in any business venture must be easily duplicated and its success repeatable.

The Law Of Duplication = Fail = Poor MLM

I'd have to go with gark on this one,

Thing is, nukienemec, are you just harping about UK for the sake of doing so, or do you actually know what is going on over there? Are you aware that the retrenchment exercise (and by association the economy) is by far more severe / worse over in the UK than it is over here? You are more likely to get a position as a manager over here than you will over there as a toilet cleaner.

Granted, it's probably a case of sheer exaggeration, but I think nothing short of that will shock you to your senses that the entire world is dealing with the crisis of new, devalued money being created faster than we can put a value to it. I'd be dead blunt with you right now nukienemec, it doesn't really sound like you've got a really strong case when one statement mentions you wanting to pursue any form of job in the UK and yet in another post, you've mentioned about the merits of USANA (as being better than selling goreng pisang by the roadside)

Have you some kind of prejudice against these street vendors? You might have, in your infinite wisdom, noticed by now that these two "organizations" have a core similarity. While fundamentally functioning at two different levels, they both involve the same requirement, SELLING.

SELLING a transformed product is the fundamental for both of these businesses. How is one intrinsically better or more successful than the other, might I ask?