Written by Rochelle BurnsideRochelle Burnside is a Content Management Specialist for Best Company. She is hungry for knowledge, travel deals, and a big spicy bowl of chili.
Multi-level marketing is a business model with a tarnished reputation. It has over fifty years of baggage behind its name, strongly associated with the terms “pyramid scheme” and “scam.” In fact, it’s become the butt of several internet jokes. People are tired of meeting up for lunch with an old friend only to get pitched a business idea, and it seems most everyone has been slighted by network marketing at least once.
This makes MLM growth an uphill battle for recruiters and their businesses. A business model that relies on converting others to a cause and sharing products with claims of superior quality needs consumers’ trust to work.
Multi-level marketing has immense potential. With forms of traditional advertising now failing to capture the attention of younger audiences — 89 percent of Millennials trust friends’ and family’s recommendations more than they trust a brand's claims — network marketing should be the paragon of marketing success. Instead, it’s subject to a slew of negative criticism.
How could multi-level marketing undo the damage? Some targeted initiatives might turn the situation around.
Remove MLM recruitment emphasis
Pyramid schemes rely solely on recruitment to turn a profit, delivering no real product and creating a long downline of recruiters who rope people into this empty opportunity. If an MLM profits primarily from recruitment, it’s teetering into dangerous territory. A legitimate network marketing opportunity will offer quality products with ample evidence of consumer interest and purchasing.
“Multi-level marketing is wasting its potential by completely failing on recruitment,” Raj Vardhman of 99firms.com claims. “The principle behind ‘sign up’ bonuses is completely wrong and it leads to the creation of a bad reputation.”
Network marketers are sometimes compensated for signing other people into the company, creating the push to convert others to the business model. According to MLM Law, that practice constitutes a pyramid scheme.
All MLMs compensate for having a “downline”: distributors recruited by a representative. A percentage of these distributors’ sales go to their upline for recruiting these new representatives. This incentive creates the push for recruitment, and if the product of the business itself is mediocre, this would be the best way to make money.
Retrain MLM recruiters
So how can multi-level marketing remove its emphasis on recruitment? By training representatives thoroughly.
“The biggest issue . . . is training the frontline people to treat things like a business, develop relationships with potential clients, and stop looking at everything (and everybody) as a transaction to get closer to a bonus, points, etc.,” David Hooper, founder of Big Podcast, explains.
Many MLMs have training programs, seminars, videos, and upline sponsorship. Several of these opportunities are optional; others come at a price to the employee. This differentiates multi-level marketing from other careers. Most professional opportunities require mandatory training before employees are allowed to begin working. Allowing fledgling network marketers to “jump right in” creates the notorious 95 percent failure rate.
But worse are the training programs that promote disingenuous “marketing” tactics to get to know an individual as a selling or recruiting opportunity. Leadership needs to replace these programs with palatable alternatives.
Hooper has an idea: create training and motivation podcasts. “Doing this makes it easier to control the message the company is sending out, instead of handing it out to the churn-and-burn ‘make money fast’ contingency that often hasn't been trained properly themselves and only adds to the problem. It also makes selling the opportunity more hands-off, and because of this, it’s a better option for a lot of people who don't like direct sales but are open to doing something passively, like sharing a podcast link.”
Read also: How to Tell the Good from the Bad: Multi-Level Marketing
Teach multi-level marketers networking
Multi-level marketers also need to improve their networking, marketing, and selling tactics. “Multi-level marketing” and “network marketing” are synonymous terms, but many people are put off by recruiters’ ideas of networking.
“The leadership needs to step up and train [multi-level marketers] to understand the differences between selling, marketing, and networking and when to use each,” Beth Bridges, founder of The Networking Motivator, says.
Bridges has a networking tip for recruiters: “Open the door . . . then back away! Let them know what you have and the problem it solves . . . then back off and give them space to ask for more. Give them time — over time — to get to know you and see that you're ready to treat them as a human being, not a prospect, and they'll approach you.”
Recruiters might hesitate to employ this concept because they are worried about their MLM prospect’s visibility. That’s why Bridges adds this condition: “This strategy must be accompanied by a robust marketing program (for example, lots of testimonials, lots of examples of solving problems for people, lots of sharing the value of what you do) and plenty of visibility so that you can stay on top of the mind with people.” Essentially, remove the pushiness of slamming direct messages, but keep the friendliness of meeting new people and spreading encouraging messages.
Rebrand the MLM industry
Leaders and recruiters also need to abandon the baggage of their miscommunicated brands. Some stereotypes include MLM’s reputation for forced positivity, its air of superiority over 9-to-5ers, and a lack of transparency with recruiters and consumers.
To create a paradigm shift for multi-level marketing, it’s up to recruiters and business leaders to reframe the industry. Marketing Director of ReputationManagement.com, Jonas Sickler, says, “The industry needs to rebrand. . . . Once the underlying issues have been resolved, the industry would benefit from new terminology to replace the damaged reputation of ‘multi-level marketing.’”
Multi-level marketing should reinvent this opportunity as a genuine business prospect that its recruiters need to take seriously. Comprehensive training and community-building resources will strengthen MLM companies’ brands and hammer out the inconsistencies sometimes created by representatives.
Emerging industries often rebrand multiple times before they hit a sweet spot; it’s likely that network marketing will be no different. There’s hope for multi-level marketing, but that hope does not lie in staying the same.
Read also: Finding Legitimate MLM Opportunities with an Author of The Flip-Flop CEO