Daniel Pink may argue otherwise in his recent bestseller To sell is human, but not everyone is cut out to be a salesman or saleswoman. Yet, this is what multi-level marketing schemes actually promise - that anyone can be a marketer. The arrest and release last week of Amway India's CEO has put the spotlight on multi-level marketing (MLM) schemes.
So how do they actually work?
Most people will relate with being at the receiving end of fiery sales pitches extolling the virtues of a MLM or Network Marketing Scheme (NMS) and the new product which, though it is quite expensive, is the miracle cure for your problems. Often folks who submit to such friendly pitches over cheerful banter often realise that they couldn't say no because the seller is a relative or a close friend. You put up a brave front, buy the product. But it doesn’t stop with that. In a MLM, to really get to the top, you will have to expand the network, recruiting other people.
THREE PRINCIPLES
At the core of all MLM schemes lie three principles.
* They play on your economic insecurities. If you have inadequate money, a passionless job, rising expenditure and many unfulfilled aspirational needs, the promise is how the scheme can help you take that dream vacation in Cyprus, or buy a new car or an expensive watch.
* They recruit you with fancy recruitment meetings that have the look and feel of an Evangelist session. Newcomers are greeted by scores of older recruits showcasing how they attained power, status and money through the scheme.
* Once enrolled, you are told that you can attain quick riches by adding as many other people as possible to this ‘network’ and receiving a share in their commissions. This is where very few actually make it.
Most originators of MLM schemes succeed because they can always get new votaries to sign up, even if the ones down the line keep dropping out because they couldn’t keep up with the pressures of selling.
ENTREPRENEURSHIP
Many argue that becoming a network marketer is a stepping stone to entrepreneurship. Yet you will find that people who sign up, usually students, homemakers, young executives, are usually un-initiated in the basics of entrepreneurship or finance.
No angel investor is going to advise them on a successful business model. Nor do many of them have the expertise to accurately assess the financial results of their venture. Many of them use an income and expenditure view of the transactions, rather than a time-weighted return on investment. Others may end up absorbing the inventory losses all on their own. At the end, instead of taking baby steps towards entrepreneurship, quite a few may end up shrinking their savings.
Having worked long hours at a day job for many years, my take on pursuing a MLM career is simple. One, whether you are an employee or a business owner, your biggest asset is your career. Investing in yourself and your career through education has the best pay-offs. Do not fall for the glamour of a global company or its business model.
Don’t lean heavily on your inner and outer circle of friends and relatives to further your business. You can succeed only if your technical skills make you independently employable without your friend circles chipping in. There is no financial freedom that comes without hardships.
Taking up a profession should not expose you to the risk of becoming socially undesirable. Be your own architect. Why be an MLM evangelist?
(The author has worked in the finance industry since 1994. Views expressed are personal)
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