Topic: MLM – a dangerous marketing strategy (Read 1578 times)

MLM will only work for influencers, and organic ones at that.
I'm a community moderator for one project, and each week we get "influencers" asking us to pay them for exposure.
When in fact, that project has an affiliate program which gives you 2% cash of every sale. We offer them that, showing them that they can make much more with the numbers they say they can get us.

Guess what? no one ever takes us on that offer

The MLM model..
It's  more of a system adopted by  ponzi scheme operators  to me , I can just conclude it a sibling to ponzi scheme scams even though it might not be directly scamming at first ,  I hate anything that deals with the referral system  because you can never know how far you will get placed on their pyramid system, it's more like first come first serve, the lower  part of the pyramid investment are used as payoffs profit to upper part of the pyramid  and little to them back, when it collapses they suffer most of the loss.
Hence, most people are after bonuses ? getting more profits for their investment ( more like greediness sometimes)  so people will continue to get scammed  , most people think they can trick the system and opt out ASAP they make small profit and not know how far they will be dumped on the pyramid plus how long it's being running... research helps too hopefully uninformed gets informed .

It's pretty simple if you examine the incentive structure in an MLM model and what the impacts of the incentives are and there is no way around it.

The biggest problem in an MLM model is the pressure to recruit. It is not the pressure to sell, but to recruit and then pressure the recruits to sell, but they rather want to recruit. This is a vicious cycle to begin with.

But the pyramid structure is a huge one too because what does it lead to when the sale of a product is supposed to benefit dozens of layers in the MLM model? The products are sold for inflated prices and again there is no way around it. The profit margins of those products have to go hand in hand with the number of layers the MLM model is supposed to benefit. But this is an interesting one:

The MLM model could be relatively flat with very high requirements to achieve the next level. A flat model gives the impression that the way up is not too far, but if the requirements to get there seem unrealistic, recruiting won't be successful. If the model consists of a dozen layers but the requirements are relatively low, it motivates new recruits but the margin has to go up exponentially.

Either way the biggest problem is time and effort spent on recruiting vs. selling and because this causes distress, people usually start selling within FFF circles, which makes it even worse later down the road.

Many people lose eventually or realize that promises won't become true, hence they leave, which then leads to more pressure on recruiting instead of selling.

The only way to become rich is to be pretty immorally hard on pressuring recruits and shoving products down the customers' throats or to get in early. While getting in early sounds so harmless, it often means you have probably been part of the founders cycle or very close to it and had a plan from day one to run a get rich quick scheme or to skim off profits of the poor dudes joining after you.

The pyramid schemes they are introducing is not really sustainable and it will end up collapsing at the end. Those who are in the bottom will be the victims of this schemes that's why I really don't like the model introduced by this MLM's scam.

I will never forget the famous MMM global which scam a lot of people from the past. That's why its better to avoid any schemes like that since they really cannot get anything from it unless they invite a lot of people and also became a scammer to earn from referrals also from this they help those top leaders to get rich to.

To many scams like this happened from the past so hopefully new investor in the scene would do a research and learn something from history so that this mistake will not happen again in present times.

Exactly! Ponzi and MLM both may have different business models, but most of the time the end result is always the same: SCAM.

Even now and then, we see these kinds of MLM scams happening. I don't know about your place, but we are seeing a lot of these MLM based companies at my place. They would promise a lot of things, but at the end of the day, they would just scam people. I understand that MLM itself isn't bad, but we are not seeing good either. Most of them turned out to be a scam. Rebranding themselves and starting scamming again.

Just take a look at the news below. People lost more than TK/BDT (our currency) 220 billion or USD 2.2 billion. Literally, my friends invested here (MTFE MLM Scam - I told them not to, but they did anyway), and what did they get? Nothing. So, as 1miau said we therefore can say, "MLM goes hand in hand with Scam somehow", which seems fair IMO.

https://www.dhakatribune.com/bangladesh/322956/another-mlm-company-vanishes-with-20-000c
https://en.prothomalo.com/business/lasu2kcsw2

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How is this dangerous? Is educating people of these business models, trying to tell them about the consequences, and showing them the history a bad thing? It is up to the users what he will do, but shouldn't we at least try to make them aware of the good and bad sides of these businesses?

Honestly, if we were trying to get more people into these schemes, that would be dangerous. Apparently we are not doing that. We are just trying to spread some awareness, and it's best to avoid these models. Nobody is losing anything here!  

Ah MLM, the big brother of Ponzi.
I know few people who got big bucks off of MLM's, and suddenly, they just exited and disappeared.
You know the ones, like Herbalife, Amway, Lyoness, and so on.

I think you really need to be a certain kind of person, shamless 1st, to be able to profit from that

I've never been a fan of multi-level marketing (MLM) strategies. Whenever someone introduces me to a referral-based commission structure, I get discouraged. I prefer earning a fair income through direct payment rather than relying on referrals.

I'm skeptical of MLMs because they often prioritize the business's interests over the individuals involved. The model can be unsustainable, as it relies heavily on continuous recruitment. If I don't refer someone in a month, I don't earn money. This can lead to financial instability and even bankruptcy.

I'd rather advise one to work for their money fair and square than get involved in MLMs. However, if it works for you and you think it's a business model you want to pursue, that's okay. Some people prefer to try things out for themselves before taking caution. Whatever works for you is fine, but be very careful not to get hurt.

No but you are kidding yourself.


You are talking Bullshit.
MLM is not scam itself, like stated in my article but it goes hand in hand with Scam and therefore we are best to avoid it.


Wrong, it's a translation campaign led by Porfirii and GazetaBitcoin which have selected my article to be translated.
It's not dangerous at all to translate good articles.




+1

In all fairness, to compare MLM and Ponzi as synonymous is probably wrong. They aren't exactly the same banana. It's one thing to say MLM is Ponzi and quite another to say Ponzi uses MLM.

So, yeah, I agree, there is a thin wall-- not even a wall actually-- that differentiates the two. But that simply means they aren't exactly the same.

The problem, however, is that for Ponzi to become legal, to become a legitimate business, it oftentimes transforms into MLM or use the MLM model. In which case, 99.9% of MLM businesses are now essentially Ponzi. But, again, that means to say they aren't the same.

are you kidding me?

What are you talking about? Are we talking about knowledge or bullshit? In the realm of knowledge, it is clear that MLM is one of the marketing models. However, if you are talking about bullshit then you can say that MLM and Ponzy Schemes often go hand in hand, yes that is true, but scientifically they are different.

So, you have come to the wrong conclusion about MLM and Ponzi. You should explain both in a scientific perspective and not consider them the same. And the worse, you are making a campaign to translate this misinterpretation. This is very dangerous.

Agree to what has been explained here since its common nowadays that there are lots of MLM companies are pulling off their scams. Although we cannot also deny that there are good companies using this system but I guess the warning goes with those companies who usually do fake promises of gaining a lot of money if they are going to get involve and invest some money in their company.

We see so many incident where MLM scams are been pulled off that's why people really needs to be careful when someone opening a discussion about this and say something about that they can earn a lot of money if they put some money on their company and invite a lot of people that will also invest then earn some commission from those people. This is the start of how shady they are trying to pull since those system like pyramid they are trying to run will collapsed soon which is always so bad for new people who entered that system.

As far as I understand, in Ponzi's there aren't any actual products which is being sold, it's just a dummy company, a false investment, and some fake promises!
On the other hard, mlm's can be used as a medium for an actual product which can be sold for profits and gain new recruiters!
But in most of the cases (mostly), it's used for the opposite purpose (scam obviously)! Otherwise mlm itself isn't bad, the people who are abusing it are.

I agree with @PytagoraZ in terms of defining the thin wall between MLM and Ponzi Scheme, they are two different business model.  If we look on the difference of the two, the Ponzi Scheme relies solely on the entry of future members while Multi Level marketing earnings depend on the products sold personally and commission on the product sold by the recruited person or downline.  Ponzi Scheme is an illegal business model while MLM being product-focused make it a legal business.

Anyway, this is a good comparison between MLM and Ponzi Scheme, I believe it is better to hear or know it from someone who is really into the system: https://www.linkedin.com/pulse/ponzi-scheme-vs-network-marketing-whats-difference-tim-sales




Pioneers always get the most benefits, that is true universally.  Even in investment, buying shares, and stocks, those who buy in the early phase before the project develops get the most benefit.

Product-focused MLM (under the umbrella of direct selling) being a legal thing makes it a saint over fraudulent Ponzi Scheme any time of the day  .

In MLM, the early birds occupy the juicy slots while having others join the pyramid to enrich them. Same is applicable in Ponzi scheme. The notable difference is that Ponzi scheme ends faster when there's no more inflow of income to sustain the system while MLM can go for so long.
If there are things I need to know in MLM that made it a saint over Ponzi scheme, please let me know.

In fact, you explain it well in your topic, when you say that MLM doesn't necessarily mean scam, but that often there are scams behind MLMs.


Perhaps the disclaimer may seem too direct, but I think that it is justified in any case (for those who only read this part of the text, it is a good piece of advice) and especially when the thesis is developed below.

It's not a wrong interpretation. MLM and Scam often goes hand in hand because it is so critical to gain new customers.

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Thanks a lot for your help, translation is added now in my list:

Language	translated by	Title
___________________________	_________________________	_______________________________________________________________________
Pakistan	Adiljutt156	ایم ایل ایم – ایک خطرناک مارکیٹنگ کی حکمت عم

Hello @1miau   !

I am a part of The Alliance of Bitcointalk Translators (AOBT) gang.

I have translated your topic (MLM – a dangerous marketing strategy)  into my local language Urdu ( Pakistan board) and my translation has already been approved by Gazetabitcoin. Please add it in OP list.

Here is my translation link: ایم ایل ایم – ایک خطرناک مارکیٹنگ کی حکمت عم 

Thanks.

Merry Christmas 1miau stay happy and healthy in your life 

This is a wrong interpretation. MLM is a good marketing concept. What is wrong is the ponzi scheme system. I think MLM and ponzi scheme are different things. This is a wrong interpretation

Hello, dear Publictalk792 

Unfortunately, my topic "MLM – a dangerous marketing strategy" is currently not available for translation:


If you want to make a beneficial translation, I'm sure you'll find more interesting topics for translation which can be helpful for your local board like "[TIPS] to avoid pyramid quotes (for Newbies)" or similar.
As far as I know, LoyceV also has a great list here, where you can select from: [GUIDES] on Bitcointalk. Index thread (until there is a dedicated subforum?)

Dear 1miau sir,

I want to translate this topic in my Local Language and want to post it in my local community thread. I seem this topic helpful for my community so I decided to translate this topic. I shall be happy if you will allow me to translate your topic and reserve my seat for this purpose. If you will allow me to I will start my work. I will wait for your kind reply.

Thanks
Publictalk