Pyramid Schemes and the Law: How to Use a Multi-Level Marketing Sustainably and Legally
Multilevel marketing can be an excellent way to make money and be in control of your own work life. Follow these instructions on how to use a multilevel marketing plan.
Know as much as you can.
Unfortunately,
this form of business can also be eerily close to a pyramid scheme – often
an illegal and dishonest con.
So where exactly do multilevel marketing end and a pyramid scheme begin? Continue reading and we’ll walk you through how to use a multilevel marketing operation effectively and legally.
How Multilevel
Marketing Works
When you’re a
contractor who works in multilevel marketing, you’re going to make
your revenue by selling your goods to other multilevel marketing
employees.
You also make
money by selling the company’s products to consumers directly and earning a
commission.
Popular
multilevel marketing companies include Amway, The Pampered Chef, Mary Kay, and
Tupperware.
How a Pyramid
Scheme Works
The main
difference between a pyramid scheme and multilevel marketing is that pyramid
schemes put the majority of the focus on recruiting more distributors.
Generally, to
become a distributor in a pyramid scheme, you have to buy a significant amount
of inventory from another contractor in the company. Your main objective then
is to sell inventory to another potential contractor.
For example,
the only “product” that the recent company 30 Day Success Story has sent
to new distributors was a flyer on how to recruit more distributors. They’ve
since been labeled a pyramid scheme.
A pyramid
scheme is very similar to a Ponzi Scheme. Both schemes are sustained
by paying one group of people with another group of people’s money yet
without any legitimate exchange of goods or services.
How to Use a
Multilevel Marketing Operation Effectively
If you run a
multilevel marketing operation, you should be focusing more on selling
your products to consumers rather than recruiting more distributors.
For a pyramid
scheme to continue, it needs more and more distributors to contribute money. So
they focus almost exclusively on recruitment.
Also, look into
the products themselves. Do they have real value and will consumers actually
want to buy these products? Or do they just exist to help the company look more
legitimate?
A legitimate
and legal business will make its intentions clear and sell products that work
and are in some demand.
Your company
also shouldn’t have it set up so that future employees have to buy large
amounts of inventory in order to get started working.
Utilizing multi-channel marketing is a
great way to run a legitimate multilevel marketing business. With this kind of
marketing, you can market more easily to specific customers by figuring out
which marketing tactics they respond best to.
An Effective
Way to Make Money
By knowing how
to use a multilevel marketing business strategy legally and sustainably, you
can grow a business as well as a dedicated community. Just make sure that
you’re always keeping the customer at the front of your mind!
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for other helpful articles about marketing? Check out the rest of our blog
today for more!
