Most of us are all too familiar with advertising and sales gimmicks thanks to the continuous influx of social media marketing in our feeds, and too much of it tends to be multi-level marketing schemes.
Like many women, my social media feeds are full of dramatic before-and-after weight-loss pictures, reviews of favorite cookware products, DIY tutorials and beauty tips, and testimonials on how to make thousands of dollars per month from home.
These are not just average social media ads: These are actual posts from people I know.
What Is Multi-Level Marketing?
Multi-level marketing (MLMs), also known as “direct sales” or “direct marketing,” starts with a company that sells its products through independent sellers earning a commission on sales.
Many MLMs offer incentives for independent sellers to recruit other sellers as a part of a team, furthering their commission potential. The business also further rewards its top sellers by giving them cars, trips, and swag. There are even large-scale conventions and conferences that connect leaders with those who want to learn how to sell.
About 7.7 million Americans participate in some form of multi-level marketing, according to the Direct Selling Association (DSA), and 75 percent of the sellers are female.
As a single mom of three children under the age of 5, Brittany struggled to find a job in her small town that would pay her bills and help her afford day care.
When she saw a friend’s Facebook post to join her “sales team” and make nearly $5,000 per month, Brittany didn’t hesitate.
After attending an information “party,” Brittany paid nearly $600 for her first sales kit, which included actual products she would be selling, a payment to the business for the rights to sell, a custom website she could use to attract clients, and access to weekly video chats with star sellers across the country.
Brittany took to social media to sell, posting at least twice a day on local sales groups, private pages she set up, and even on her own pages.
“I wanted to be this awesome business owner who could reach a ton of buyers,” she recalls. “It looked so easy.”
However, after three months with only a few sales, Brittany was out about $500. Worse, as a seller, she was required to purchase and sell even more products with another launch of products in her fourth month.
Luckily for her, the MLM for which she was selling went out of business before she was required to pay another $100 to $200. Currently, she is part of a class-action lawsuit against the company, alleging unfair business practices. When contacted, the company declined to comment. The name of the company and its merchandise are not being revealed for privacy concerns.
Brittany’s story is not uncommon.
The Reality Behind MLMs
The average income of a direct seller is a mere $5,208 per year, according to the DSA.
“What they don’t tell you is how little you actually make,” Brittany laments. “Those top sellers were only making a couple hundred a month. How was I supposed to learn from them when they were barely getting by?”
Disillusioned MLM sellers aren’t the only ones who have noticed. For example, the DSA no longer allows member MLM businesses to require sellers to have products on hand. There has also been a big push to lower the buy-in cost to reduce the risk to independent salespeople.
A Multi-Level Marketing Success Story
Despite the horror stories, some MLM sellers have found great success. Sellers like Mary Stephenson enjoy the flexibility and career potential these businesses provide. A former beautician, Stephenson sold nearly $300 worth of products in her first month, and with that, she was hooked.
Fifteen years later, Stephenson entered the top 5 to 10 percent of all sellers nationwide.
She has been invited to conferences and even earned herself a car. Stephenson makes nearly $10,000 per month, which has allowed her to quit her full-time job and sell the products from the comfort of her own home.
Stephenson recommends that aspiring MLM sellers investigate the business before signing up; have a network of potential sales ready to go; and, above all, sell what they know.
“People want to buy from experts,” Stephenson explains. “Sellers who can prove they are experts in their field always make the most money or get tons of referrals from their friends and family.”
Stephenson is one of the few who has highly profited from MLM. Considering that most sellers make only a few thousand dollars per year, it may not be the best bet for those in need of a significant and consistent income.
How to Say No to Multi-Level Marketing
It’s tough to say no to friends of yours — which is exactly what these MLM companies bank on.
So what’s the best way to say no to MLM invitations without ruining relationships? I decided to ask some of my more money-savvy friends to see what advice they had.
The Soft Approach
Although the constant sales pitches may make you want to scream, it’s often better to take a gentle approach. Nick True, founder of Mapped Out Money, suggests that you honestly listen to your friends’ sales pitches first before declining.
“If you immediately say no, they will keep harassing you and insisting you just need to hear them out,” he says. “So hear them out, and then politely decline and cite a few very specific reasons. Then remind them that you’ve listened and hope it works out for them, but it’s just not for you.”
But what about all those annoying ads and selfies sneaking into your feed? Jason Butler, creator of My Money Chronicles, has a solution: “I’ve had people that I’ve had to unfollow their posts. It’s annoying seeing that stuff all day.”
By unfollowing them, you still remain friends, but you’ll stop seeing their posts in your feed. The best part? They’ll have no idea that you’ve done it.
Sometimes, softening the blow of bad news can also help. Sylvia Inks, of SMI Financial Coaching, flat out tells friends that she doesn’t support the MLM business model. However, she follows up by offering to refer other people who may be interested.
“I say if I find someone who doesn’t share my opinions and really wants to buy the product, I would be happy to refer the person to her.”
The Hardline Approach
Some people just need to be told “no” right from the get-go. According to John Rampton, of the financial company Due: “Just be honest with them and tell them you’re not interested in joining an MLM. I’ve found that being up front (before they drag you into their hour-long conversation) is the best way. Nip it in the bud before it starts.”
Lauren Greutman had been a high-level seller in an MLM company before she realized the dangers that they pose. (One night, she racked up $12,000 in credit card debt to reach a company goal!)
Now she just tells people, “I have a boundary where I do not attend or purchase from direct-sales companies. I am an overspender, and it is a boundary of mine that I cannot cross.”
You don’t have to be rude, but telling a good friend “no” can still be scary.
Don’t worry about it too much, though. If your friend is willing to break off your relationship because you don’t want to purchase a high-priced energy drink, chances are that they’ve already stopped thinking of you as a friend — you’re just a dollar sign to them. True friendships are strong enough to withstand hardships — multi-level marketing included.
The Bottom Line
Deciding to sell with an MLM can be risky or underwhelming. But if you have the right set of resources, expertise, and mentoring to find success in selling a particular good or service, MLM can offer a flexible work experience, and potential financial gain.
Just make sure you know what you’re getting yourself into.
If you’d much rather push past the pushy ads on your Facebook page, there are ways in which you can respectfully unfollow, navigate those conversations with sellers, and avoid falling into a MLM trap.
Additional reporting by Ellie Schmitt and Lindsay VanSomeren.
The post Multi-Level Marketing: The Tips, Tricks, and Traps appeared first on CentSai.
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