The Business I Work for Is Considering a Multilevel Marketing Model. What Is Your Advice?
Question from a reader:
I read your article on multilevel marketing and would like your advice. I work for a small but incredibly successful Christian company. Every year we give away 50% of our pre-tax profits to Christian charities. The owner is looking for ways to grow so we can give even more.
We kicked around the idea of MLM at a recent meeting as a way to do this. Is there such a thing as a version of MLM that does not have a hierarchy structure and instead everyone who sells our products gets a generous commission (maybe 20%)?
Answer from Randy Alcorn:
I don’t really know the answer but will share some thoughts.
To me the key is selling a product on its own merits and seeing people as customers rather than those who can make you money by selling for you or under you. Now, when people are your employees you pay them a wage and hope they bring in profits exceeding your cost to employ them. You put yourself at some risk by employing them. But in MLM you don’t pay them; they pay you in the form of you receiving a percentage of their profits. In my opinion, this is what makes it go sideways in some cases.
It’s true that a conventional business owner can view people just as customers and use their church and small group contacts opportunistically. However, at least they are receiving real goods or services from him or her.
But with MLM the incentive is to get people to do work that costs you nothing (beyond recruiting them), yet brings you profit. The temptation is then great to see people as potential money makers for you beyond the normal model of buying your goods or services. It tends to make people more opportunistic and to pursue relationships not for the benefit of the relationships but for the benefit of financial gain.
This is where the zeal of recruiting people blinds many in MLM. They are always talking about the good they are doing and often the giving away of profits to great causes, which is great, but they can still become blind to how they are using people in the process. This is not always true, but in my experience it often becomes true.
How that would or would not apply in the case you’re talking about I’m not sure, but those are my thoughts.
Here are a few good articles I just read that might benefit you: