Are all MLM companies scams? (Such as AmWay, Herbalife, Beachbody)

By Taylor

Since you've found this article, I'm assuming you probably know a little bit about what a Multi-Level Marketing business is, or maybe you heard about one and you're wondering what it is. Well read on to learn more about these!

Also, just kind of as a side note, this post is going to replace any individual reviews of different MLM companies. Why? Because they are so similar! The only differences are found in the product type or quality of apps/websites, whereas the overall flow, structure, and culture is always very similar. This post will then serve as a comprehensive guide on everything that is MLM!

Before going anywhere else I just want to clear something up... There is a very large viewpoint that MLM companies are all super scammy, just wanting to rip people off. Now yes, there are of course businesses in this industry that provide no value to it's customers and associates​, but there are definitely some out there that stand out by providing true value. I suppose you could stop reading if that's all you wanted to know, but I urge you to keep reading on so that you can get a full understanding of these businesses and decide if they might be the right option for you.

I'm going to go through every facet of what makes up a MLM business from typical tools, recurring monthly product systems, referrals and teams, pricing, target audiences, and more. Oh, and my personal experience with them!

What do I think about them?

When I was in about 10th grade I was working at McDonalds busting ass when one of my coworkers came in super excited all full of energy! I was really thrown off by it, and asked him about it. He told me about a business opportunity where you can make as much money as you want just by getting people to join it with you. What?! I had never heard of anything like that before!

This business was called Vemma and looked like an incredible opportunity for me! They sell energy drinks that are meant to be healthy and other health drink stuff. All that it really entailed to make money was being great at being social and effectively using social media to get  people to buy into the product and the team! Well... I was terrible at being social, but I still tried it out because I knew some people that would be great themselves at it because of how popular they were!

Well, turns out that it's really hard. Like, really, really hard. In fact, most often you have to get people via cold calling through social media or in stores. The other problem was that my leaders and coaches weren't any help either, mostly using the money they made for drugs or to party while neglecting me. So naturally, I quit.

​Enter 2 years later, I was messaged by a stranger on Facebook. He provided me with the same type of opportunity with a business called WakeUpNow. Now this business seemed better! They had much better products and also had various services for travel, managing finances, and saving money.

Now I gotta say, this one was definitely better than Vemma. It was really aimed at young 20 somethings and had a super fun atmosphere to it that was great to be around! I was able to actually hang out with and be around leaders in the business that were making 50, 80 thousand a year just through the business! Too bad I also sucked at it and got fed up with the fact that nobody I knew was willing to put the work in to be successful. So I quit.

Alright, so this was just my story in the field of MLM businesses. I was just not cut out to do them back then because I was too introverted and had terrible social anxiety. I'm a much different person now, but take this as a sort of warning for yourself! If you don't do well with talking to strangers or have a very small social circle, this type of business isn't for you!​ There is a way however that anyone can make money online that works no matter what your interests are.

(By the way, Vemma was effectively defunct in the fall of 2015 thanks to the FTC filing a complaint about it being a pyramid scheme and WakeUpNow went bankrupt in February of 2015. Not all MLM's survive the market and some are destroyed internally by money hungry management.)

Define an MLM business please!

Now that I've given you my story and briefly covered what a MLM is like let's dig into what makes it the way it is! This will apply, to my knowledge, every single business in this industry, so you can take this and apply it to any opportunities somebody might offer you.

There are just a few characteristics that let you know a business falls in this category and they involve a team and line structure, recurring products and/or services, branding resources, and group meetings.

​Structure

This is the thing that a good amount of people know about about. MLM's referral setups are often referred to as pyramid schemes due to how they look when there are a enough people on the same team. The picture below is a very typical structure:

​Let's go over the way this structure works! I'll try to make it as straightforward as possible! 😉

  • ​The red A would be you!
  • The Blue people directly below is everybody that you personally convince to join the company and your team or are at least buying products on a monthly basis.
  • The green is everybody that person B directly recruited, whereas all the orange are the people that E recruited.

Simple, right? Can you also see how, eventually, a person could get a large gathering of recruits underneath them? Good! So how do you make money from doing this? Well the trend for most of these businesses is to start rewarding after around 2 or 4 people are directly underneath person A, with an emphasis on having an equal amount of people on a couple branches. AKA, to form a balanced tree, not a lopsided heap.

Then, of course, everyone else under the tree must do the same, recruiting those 2-4 people to get rewards. As this is all going on person A gets to reap the benefits of not just the people they personally recruited, but also ​get rewards from their 'downlines', or person B, C, B1, etc. Pretty slick, right? As I've said before, it is quite a bit more difficult then it looks! Although it's not like anyone promised making money is easy!

​Recurring Product/Service

The second big identifier that a business is MLM styled is having this weekly, monthly or whatever payment. The reason that this is needed for them is the same reason why engines need fuel. They are setup to grow exponentially and because of that they need some kind of guarantee that the every person in the structure is buying products.

So what they do is make it so that in order to receive payments ​from having referrals and downlines you have to buy some amount of product every set amount of days. If you don't, you risk not only receiving no payments but also losing your position within the structure!

Some example products would be drinks, beauty products, supplements, or anything that has to be consumed. That way, the company ensures that it's customers will have to keep buying. Services provided might be something like group rates on travel or cruises, insider prices on various products, etc.

​Branding And Team Culture

In this industry it is a must to have a vibrant culture surrounding their business! Why? To drive growth, of course! All of these businesses very quickly spiral towards bankruptcy once it's members lose their drive, motivation, and belief in it.

This leads to a very unique approach to handling growth compared to most industries, I would even say cult-like! But it's a good thing, because it leads to a very positive and empowering community (usually)! One of the most common strategies they tend to employ is using photos to persuade people to join their teams on Instagram, Facebook, Twitter, or any other social media, such as the one below:

​The businesses must also provide resources to it's associates so that they have an easier time recruiting. This can range from having a free website, shareable banner images, apps to manage their progress and statistics, signs like the one above, and many other tools. Overall, MLM's are very good about aiding recruits with getting their own signups and downlines.

The other bit that all of these businesses share is having meetings. Meetings on top of meetings, gatherings, huge events all the time! ​This again builds upon the team culture and builds confidence in the business and leaders.

This also leads to really great support and the ability to get help with any questions or problems. The great leaders also give self help advice to recruits so that they can really build business and personal skills.

Sounds pretty great, right?!​ The only problem is that after joining it is very easy to get lost and isolated if contact isn't kept with coaches and leaders. The other issue that comes up quite often as well, and I've seen it with friends and family, is that they get sucked into it. Well, maybe not intentionally, but they choose to join out of emotion instead of thinking it over a while so that they could decide if it was a good fit for them!

Target audience?


It's fairly typical for MLM's to focus on recruiting people under 30 due to their natural expertise with social media, their large social circles, and the fact that most of them don't like their job! The other reason is that these businesses focus on the type of lifestyle it's members have, such as taking trips, being fit, or what have you.

​The reality is that us younger people hate jobs! It's really easy to convince younger people to go all in to these businesses when they don't have very big responsibilities or solid jobs they've had for 10+ years. Not to say that there aren't older people that join in, but in my experience it's youth that dominate the industry.

Not much more to talk about here, so let's move on!

Pricing

​The pricing is pretty varied in this industry! I tried to find a good pic from a couple MLM's that serve as good examples of the two main business types but only found one, so I'll have to do some good explaining for the one, sorry about that! If you have a suggestion, please let me know!

Service Model

Alright, so our first one here is Dream Trips. This one provides a service that allows members to acquire cheaper rates on travel through, I'm assuming, group rates and other tricks. Pretty nifty if you're into that sort of thing!

Anyway, the price breakdown is a big first time payment and then a smaller monthly fee. They of course provide two different memberships, one of them providing better rewards and services.​ This business uses a points system from memberships to determine payments, which is pretty common. Looks like they provide a big payout for getting people first signed up and then it goes down to a smaller monthly payment (or whenever they give checks out). This is pretty typical for all purely service based MLM's, although the price can even be upwards of $200 a month for all the bells and whistles the business might provide.

​Product Model

Alright, so this one is pretty much the same as the service business model but there is a small difference! It still drives the idea of monthly memberships, however they usually allow the individual to choose from a variety of products to get qualified. This means they use the same points system to determine payouts.

So many of these will also encourage it's recruits to push selling more than the basic packages. They will sell extras such as additional drinks or beauty products and earn an extra commission on top of it.

These sound great, do they work?!

Well, here's where we come to the problem I find within this industry... Very few profit from it. Below is an example income disclosure from Advocare:

There is one caveat with this diagram, and it's the fact that it comes from the end of 2014. Maybe more are earning now! Or maybe not. Either way, this is common across all MLM's. Very few earn any money and often times anywhere from 50-90% of new recruits quit within a year.

So in my opinion? No, I don't suggest them as a great option to people who want to earn an income with a side job. Some people do phenomenal with them due to having that 'X' factor and perfect personality, mentality, and drive, but most people fail at it!

Final Thoughts

Going back, I never had any success with the whole multi-level marketing industry. I hated it, but I also was not very good at social media, had a small social circle, and I didn't believe in myself, so your results may very!

I personally suggest a different method to make money for those who are SERIOUS about creating a long term business. Oh that's the other issue I have with MLM's... You don't get to talk about or sell anything other than what the business you're stuck in provides! Besides the fact that, usually, only the top 5% make more than a couple thousand a year in them.

So, to sum things up, there ARE viable MLM businesses out there that are not scams, however I do not suggest them. There are better options available to you.​

If you have any comments, questions, suggestions​, whatever, please go ahead post it below! I'd love to hear from you! 🙂

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