MLM – a dangerous marketing strategy

[mv1986]

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.

[promise444c5]

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.

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 .

[btcltcdigger]

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