So What Is “Ethical MLM”?
A man I highly respect once wrote an article warning people about joining any network marketing company. It was called “A Multi-Level Warning About Multi-Level Marketing” and I link to it so you can be fully informed. My friend was rightly concerned about the near “cult like” environment and attitude of the network marketing groups he’d encountered. As a pastor, he certainly didn’t want to promote an “alternative religion”. Frankly I can’t blame him.
If your network marketing company is a cult or a mind control group with a compensation plan attached, I’d steer clear too! So should you.
But I do believe it is possible for some people at least to engage in “Ethical Network Marketing”. And that’s what this article is about.
I believe many of the concerns were connected to “old style” MLM or network marketing. They used to be circuses and groups who were more known for psychological manipulation of potential recruits to buy garages full of soap powder than anything else.
So what is “Ethical MLM” or “Ethical Network Marketing”?
Here are the traits I look for…
1) A product you, the distributor, would likely buy on its own merits but NOT built around claims of “miracle cures”.
“Miracles cures” are sensational and get some customers. Personally I’d rather represent something people will use monthly whether it’s glamorous or not. When your “miracle product” doesn’t live up to your friends’ expectations, your business evaporates overnight!
Does “Wal Mart” survive on “miracle products” or “boring products”? By and large the products are boring. Follow that lead. People will be buying vitamins and environmentally friendly cleansers long after they grow disillusioned with “miracle products” that don’t deliver. And promising things that won’t deliver is, of course, unethical!
Keep in mind that these products are likely going to be “premium products” at a higher price than the “cheapo stuff”. Brand names always do. It’s all right for an MLM to be a higher priced brand on the items they represent. Just be honest with yourself – can you see yourself paying this price even as premium “name brand” product? It’s your conscience!
You can expect that to be a distributor and participate in a compensation plan, you’ll need to find about $150 per month of products you’ll enjoy using.
2) A product you, the distributor, would likely tell others about even if you WEREN’T being compensated for it because of its quality.
For instance, I routinely buy and use an herbal product from an “old line” MLM company I have no distributor relationship with. I’ve recommended it to others without trying to “get paid”. It may take you sampling the product some before you can determine this. But this step is vitally important so you can move forward in good conscience.
The reason these first two items are so important is because there are always people who never recruit anybody. They are your retail customers and product consumer who just like a good product at the distributor price.
3) An honest presentation of how you make money in network marketing
Understanding this goes a long way to protect you from scams and explain the concept of ethical network marketing to others.
Basically every product or service you buy has a “cost to market”. For every dollar sold, the manufacturer figures not only their profit, but the cost payable as commission to a distributor to “deliver the product” to the end user.
Network marketing companies pay these marketing costs and carrying costs to their distributor network in lieu of this money going to “middle men”. In ethical network marketing, the distributors are the “middle men” and “distributors” paid to get the product to the end user.
In general the actual product cost of a name brand product distributed in a store and a name brand “MLM” product is similar. The point of sale price is likely similar too. The difference between the two products is how the difference between product cost and point of sale price is distributed. In network marketing, it’s possible you can be receiving that money for your efforts.
4) A compensation plan that rewards “small producers”.
Most of the abuses in former days were from the “Stairstep Breakaway” compensation plan. These accounted for more soap powders filling garages than you can imagine! The reason otherwise intelligent people bought such large amounts of “soap” is because by purchasing in bulk, they received the maximum rebate on those sales. And their sponsors could usually pocket a pretty heft commission themselves! These plans also allowed a few occaisional massive producers to generate huge incomes that at times totaled literally hundreds of thousands of dollars per month!
Today though, it’s much easier to find compensation plans that reward small producers. The company should be able to show you how soon you could conceivably earn $300 per month if you worked at it. By “work at it” I mean that you introduce the product to others and help them do the same.
I mention $300 not because most people earn that much. But some older informal studies showed that when people finally started earning $300 per month, they “stuck” with the program and kept building a business.
Another reason I mention this is because most people need to see the power of small amounts of monthly income.
While most people NEVER earn $10,000 per month (or per year) in network marketing, they may never need to! The person who can generate $500 per month after the cost of personal products and any business expenses could make quite alot of financial progress.
For instance, this person could use that $500 net monthly income to first pay off their credit cards.
Then they could take the $500 per month PLUS the credit card “minimum” to pay off their car loan.
Then they could use the $500 per month + their credit card payment + their car loan amount to pay their mortgage payment using the so-called “snowball” technique.
Over time, a $500 income from an ethical network marketing business could give them an extra $1,500 per month (total) to save and invest for their future!
Just be sure you pay attention to how you may achieve your goals given the company’s compensation plan.
5) An Ethical Sponsor
Lastly you should find an ethical sponsor. This person won’t major on “hype” or outrageous “miracle product”, “simple success” or “easy income” claims.
They will show you how to talk to people in ways that don’t trigger a “hype alarm” in them.
They will help you and your customers know “why” this company is a strong choice and worth the investment of your time.
They will help you place your first order.
They will help you sponsor people into your business.
Conclusion
I believe that if you follow these guidelines, it’s possible to engage ethically and productively in a solid network marketing opportunity that will give you an extra potential income stream.
In the worst case, you’ll identify yourself with a brand of products that you enjoy and would use even if you didn’t get paid.
In the best case, you may find a new income stream or even a new career as many of my friends have!
For me, Ethical MLM or Network Marketing provides the greatest number of people with a simple business model they can use to generate additional income. That’s why I include it in my “arsenal” of techniques to help people achieve the American Dream of having their own business!
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