Many people confuse network marketing with pyramid scams. This is troubling for network marketers because pyramids have a bad name (and they deserve to).
Be careful if you use the term “pyramid marketing” with your new prospects. There are many people out there who will not give you the time of day if you say “pyramid marketing” because they automatically think it’s a scam.
Pyramid marketing is one of those phrases that can have different meanings to different people. When you use the term pyramid marketing you may be talking about your MLM company. However there are many others who think of a “pyramid” as an illegal scam. You’ll see an example of one below.
If you’re planning to use the phrase “pyramid marketing” with your leads, it’s important to clarify what you mean so their assumptions don’t cost you business.
The shape of the organizations are what causes people to mix up the legitimate MLM companies with the pyramid marketing scams. In each case there is a person on the top of the chart with 7 people (for example) under them.
Then each of those people add 7 and so on and so on. At each level of the organization, the number of people increases 7 times. This shape of an organization (like a pyramid) is where the term pyramid comes from.
Whether it’s a multi level marketing company or pyramid marketing (see below), the result is the same. An organization that is shaped like a pyramid.
Here are basic descriptions of network marketing companies and pyramid marketing scams. Hopefully this will help you talk to leads who are confused about this.
MLM Marketing
In regards to MLM marketing, you will normally see that the products and services are the main part of the business. These products can be literally anything because there are over 1000 network marketing companies. They run the range from eco-friendly cleaning products to beauty products to coin collecting.
Typically (but not always) these products are only available through the MLM company. This means that in order to buy the products you now want, you have to join the company. When you buy products, the people in the organization above you will earn commissions (just like in a store).
Once you become a member, there are certain rules you must follow. The main one is usually about committing yourself to purchasing a certain amount of that same product every month. Your job is to show the products and services to new people and hope they like them well enough to want to join the company in order to purchase them from you.
Pyramid Marketing
With the pyramid marketing scheme, a person is up against just a what it sounds like – a scheme. Clearly the only people who stand to make money are the ones who thought it up in the first place. One of the best examples of this type of fraud is the infamous “chain letter” that has been circulating for years, which has bilked countless people out of their money. You get a letter from “John” telling you how he’s made billions of dollars and you can too, if you follow his instructions.
Then he tells you to send a small amount of money to the name at the top of the list he gave you. Then you simply take his name off, add your to the bottom and send copies to as many people as you can. When your name gets to the top of the list, you’ll make billions. Not. It’s a pyramid marketing scam.
Conclusion
Now you are more aware of the differences between MLM network marketing and pyramid marketing scams. One is a way that you can generate legitimate part-time income by acting as a salesperson for your company, but doing it from your home instead of a store. The other is about trying to find people who will buy into the scam and give you their money.
Make sure that you can talk about the differences between MLM companies and pyramid marketing scams with your prospects so you can make sure they do not instantly dismiss your company because they assume it’s a pyramid marketing scam.
Have you ever come across this confusion with pyramid marketing scams when talking to your new prospects?
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Other articles you might like;
- New Small Business Opportunities – The Reasons People Join Network Marketing
- Hot New Business Opportunities – Brainstorming To Get Them
- Who The Heck Am I?
- Pyramid Marketing Could Be Causing You Problems
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