Why MLM (Multi Level Marketing) is having a trust issue?

How often you came across someone known to you associated with MLM and boasted a lot of benefits of pursuing the same and earn big? I am pretty sure that at some point of time or other you would have the same experience like many other who are promised to riches and perks for joining this business model. If you ever been a part of any such discussion or ever came across someone who is much eager to let you join the business and shares lengths of details of benefits of being a part of it, you would have been surprised for a moment for the feasibility of such business model. Had it been such a great business model, why it is less trust worthy and why and how it can lead to a possible business scam. Off late I had a the same experience when one of my neighbor approached me and despite my least interest explained the faulty business model to me which tend me to introspect and write a detail write up on MLM.

There are several reasons as people keep a bay from this business model and have trust issue in it. I have tried to figure out the details as:-

a)   INDIVIDUAL EFFORT IS LESS APPRECIABLE: - Most of the MLM business models are so faulty that they did not encourage individual effort for long but the efforts of people working under you. That means your individual effort will not be counted until people under you (hierarchy) not working efficiently and diligently. All you need to keep on poking your lower legs to keep on adding more and more people under them and keep on going this cycle.

b)   A FAULTY BUSINESS MODEL:- This type of business model is similar to pongee scheme, in which one will keep on getting reward until he reaches to a certain level but with every step of ladder you climb the benefit will dwindle as this model encourages only new entrants and the benefits and rewards are higher on lower level. Although learning from some competitive business failures many MLM companies offers products in lieu of the money and tries to develop a kind of assurity in terms of offering a tangible product.

c)    LESS ENCOURAGING:-Irrespective of what benefits and perks would have promised and assured to you for joining this business, it seldom motivates people for long as a reason out of peer/colleague/relative pressure one might join this business but does not put his/her effort very long and becomes a dummy partner/sleeping partner in this business. Moreover, people associated with it for long is not sure as how long one can avail the rewards and benefits as it never offers 100% benefit to them. Only some part of it would be shared with them according to hierarchical order.

d)   COST BENEFIT IS NOT ASSOCIATED: - It has been observed that MLM products are costly in nature and it does not go with the price and utility benefit as a reason people keep on looking for relatively better option than it. Usually people are tend to use the product they have been taught and practicing since years as a reason a sudden shift of usage pattern project the product costlier than the benefit they drives from it.

e)    LESS FAMILIAR TO MANY:- Since this model is mainly focuses on its many layered marketing effort of its members as a reason it generate word of mouth publicity which does not perfectly blend with product line and it becomes very difficult to create a brand image a positive perception in the mind of the new comers/user. Although many MLM companies trying to break this though various television campaigns however their advertising frequency is low as a reason brand recognition is a big challenge.

f)     PITCHING THE WRONG WAY: - Countries like India it is very imperative to understand that what customer really wants irrespective of what someone is offering. In a nutshell understanding buying behavior of an Indian customer is slightly different from rest of the countries. Remember the story of how Kellogg failed in India despite having so good for health. Similarly, price, health concerns, color, packaging everything has an impact on customer. Only a single parameter does not work here due to diverse cultural background. Unfortunately, MLM companies focuses on products that have health benefit usually herbal or medicinal benefited product.

Writer:-DEVSHEEL GAURAV
Pic Credit:-listverse.com

Disclaimer: - This article is still in developmental phase and can be modified later on if needed. The picture has been used for information purpose only, it is not the intellectual property of writer.