Multi-Level Marketing & Network Marketing – Are They All Scams?

Ask 10 people what they think about multi-level marketing, and you will get some very strong opinions.

You will probably find that most people have a very low view of MLM (or network marketing). At your next big family event, stand up and announce that you have just joined the fastest-growing MLM opportunity on the planet, and see how your loved ones react.

Why? Why does a simple business model for product distribution garner so much criticism? Why is there some much negativity associated with MLM? Why are there consumer advocacy groups that actively protest the entire idea of multi-level marketing?

Is all multi-level marketing a scam? What is the real problem with multi-level marketing?

It is not the multi-level aspect. Taking royalties and generating residual income is common practice in the insurance and financial service industries.

It is not the direct-to-consumer distribution model. Many successful companies (such as Dell computers, Sara Lee, and other famous brands) use direct-to-consumer models to sell their products and services.

It is not the concept of paying for the opportunity to distribute a product. MLM critics might knock companies for charging to become a distributor, but this is the same concept that a standard franchise uses. The only difference is that you can get set up with an MLM program for $200 – $500, where getting started with a franchise will begin at $250,000.

So why does MLM have such a bad reputation?

Most of the time, it is because of the second “M”.


Most MLM distributors are taught to leverage their “warm markets” to grow their businesses. They are taught to try and sell their friends and families products, and try to recruit them as distributors.

Why? For two reasons:

It Used to Work For The Average Distributor
Back in the 1950′s and 1960′s, when multi-level marketing first became known, people had much larger warm markets. They lived in suburbs, and had neighborhood picnics. Everyone knew everyone else. Our society was very close-knit, we truly lived in communities. Not only that, but multi-level marketing was barely known then. It was a novel concept – make money in your spare time by telling other people in your neighborhood to stop buying from the department store and start buy your products from an MLM company.

Fast-forward to today, and the picture is very different. People barely know their neighbors next door, much less throughout an entire neighborhood. These days, everyone has heard about some sort of “make money from home” scheme. Today we live in a society of guarded skeptics, and we do not want to be sold stuff from our friends and families. Leveraging our personal relationships for financial gain can be interpreted as insulting, and can seriously damage relations with those we most care about.

It Still Works Quite Well…For The Parent Company
The average MLM distributor will stay with a business 3-4 months before giving up. During that time, if they are chasing their friends and family, they will probably sign up 1 or 2 people and spend a few hundred dollars. From a distributor standpoint, it’s peanuts. But from a company standpoint, it’s great! They continuously have new recruits joining the business, and they pass on all the costs of marketing on to the distributors.

They can get away with making it sound like growing a business is a piece of cake by communicating the message that all you have to do to make a significant income is talk to a few friends and family, hand out some flyers and product samples, and you will wake up one morning with a gigantic business.

So can the average person make money in a home-based business? Absolutely. But they can’t rely on their warm market for sustained profitability. A distributor will eventually have to find their target market, and use sound marketing strategies and techniques to target people that are already looking for their products and services.

There are many different marketing tools that a distributor can use to grow a business. However, the reason that most MLM’ers get involved with a business is because they do not have tons of money to spend on their businesses. The three most cost-effective, best-bang-for-your-buck marketing tools that the average distributor can use to find their target market is:

- The Telephone

- The Internet

- The Written Word

When used properly, these tools allow a distributor to leverage their time and their marketing efforts with relatively little investment. They can combine these tools to create effective direct-response campaigns that allow a distributor to see a faster return on their investment. And best of all…they can leave their friends and family members alone, and simply enjoy their relationships for what they are without trying to “pitch” them on their product, service, and opportunity.

If you want to make money in MLM, then learn how to become a good marketer. It is only with good, respectful, effective, target marketing that a person can build a strong downline. MLM is not a “get rich quick” type of program. It pays out via residual income, which means that you get paid tomorrow and the work you do today. It is a legitimate business only if treated like a legitimate business, and that means it takes time, effort, energy, and investment to make it work.

Did the Internet Kill Direct Mail?

It’s hard to think direct mail still reaps benefits when everyone is resorting to online marketing. Put simply, many marketers now see the internet as an untapped chunk of potential markets waiting to be uncovered. This resulted in the boom of internet marketing websites, forums, and seminars. So did the internet kill offline marketing techniques such as direct mail? Many people will say it did, but there are always two sides of the coin. Let’s look at this topic from a fresh perspective.

The world has become so internet oriented that you can hardly have a conversation without weaving internet website or tools into it. People who don’t have basic internet skills are now met with raised brows and sometimes even jeers. So how does this relate to direct mail? When all marketers shift to a different technique, you have an advantage once the coast is clear. An average internet user has become so used to those flashy ads on blogs and websites that a paper under their door can definitely grab their attention more at this point.

Before internet advertising, one would receive heaps of junk mail under his door and would toss it away instantly. Now with companies shifting towards internet marketing, less are sending out direct mail. Chances of exposure now are much higher than they were in the past. The trick now is to grab your prospect’s attention in an unconventional way – a way that totally goes against internet basics.

Let’s put this scenario, your prospect wakes up, pours juice and checks the mail. You have up to one minute to grab your prospect’s attention. In the internet world, at the moment, you have up to 8 to 10 seconds to grab the surfer’s attention. That’s the first benefit of direct mail over the internet marketing techniques.

Let’s look into the factor of personalization. When your prospect surfs the internet, he is aware that at least thousands are being exposed to this ad in the very same second. This puts your prospect in the “impersonal, indifferent” mode. With direct mail, the ability of the prospect to touch a postcard or brochure addressed to them creates a sense of intimacy or connection. That is yet another benefit of direct mail over internet advertising that can reap enormous rewards on the long run.

The last factor that kicks in is your prospect’s curiosity. While in both offline and online campaigns you can pique interest via design, copy, or incentives, when a prospect curiosity is minimal due to distractions. Let’s see how this applies to a daily scenario. Let’s say you’re online, you find an ad that says “Are you broke?” While this may pique your interest if you’re indeed broke or bored, you may click the website only to find it’s a paid service and close the window.

The attention span of an internet surfer is very low. How about someone who’s on the couch, bored to tears, with a direct mail catalogue on the table? Most people will look at catalogues for hours just for the heck of it. Their attention span amounts to how bored they are. That’s a huge advantage for any company looking for exposure.

This effect is only maximized by targeting market segments. This can be done by distributing direct mail to those in need of your product.

How Can Direct Response Marketing Deliver Education Leads & Increase Applications and Enrollments?

Innovation Ads was originally formed as an education lead generation agency to service academic institutions. As time went by, colleges and universities began demanding applications and enrollments rather than leads. We saw that most academic institutions needed help with the lead follow up process–so we built and refined a set of solutions that address not only lead generation, but lead conversion as well. The Enrollment Solutions Platform, or “ESP”, is a unique platform that combines executive analysis and evaluation, with a dynamic lead generation and lead conversion system. The first step in initiating a campaign that generates more applications and enrollments is a thorough analysis of the existing enrollment process.

Analysis and Evaluation Analysis is the firm bedrock beneath a successful enrollment marketing campaign. In order to establish a comprehensive foundation, our senior staff members work closely with you, in order to: define your current goals and market share; identify the most effective means for attracting and retaining new students; and help determine the appropriate budget for the projected enrollment goals.

Another pivotal piece of our analytic process is “Mystery Shopping”–a term that refers to an anonymous evaluation of the existing enrollment process. Members of our enrollment specialist team walk through your enrollment “funnel” from start to finish, in order determining where improvements can be made. Once analysis is complete, we begin to initiate contact with prospective students.

Initiate Student Contact through Lead Generation We generate student interest by marketing across multiple channels. The direct response nature of our marketing process allows us to reach vast numbers of potential students, in a meticulous manner. Our large economies of scale in both the online and direct TV channels–combined with the direct response marketing and our tracking technologies–ensure that we’re generating more highly qualified leads, for less money. Our direct response strategies include:

o Online Media Planning o Online Media Buying o Direct Response Television o Creative Development o Micro-Site Development o Lead Remarketing o Search Engine Optimization o Trade Name Management o Virtual Tours Lead Conversion: Increase Student Enrollment with Our Prospective Student Conversion System (PSyC) In addition to our lead generation capacities, we’ve created a unique lead conversion solution–the Prospective Student Conversion System (PSYC)–guarantees that your enrollment funnel is working as efficiently as possible. PSyC marries our lead generation capacities to our unique follow up marketing process.

Once we’ve initiated marketing campaigns, and begun to generate student interest, our enrollment specialists that work in The Academic Advising Center (TAAC) initiate outbound phone calls to interested students, and field the inbound phone calls that marketing campaigns generate. The Enrollment Specialists help the prospective student to apply.

In helping students to apply, our Enrollment Specialists gather important marketing information. They enter this critical feedback into our technological platform–Multi-channel Interactive marketing Database, or MIND–, which organizes and tracks the response that each marketing campaign generates. Once the information is in our system, our technology optimizes your campaign according to the response that each piece of marketing material generates.

Our technology informs our Client Services Team which channels and campaigns are generating interested students, and which are not. Our client services team reacts to the success/failure of each phone call by boosting media allocation to successful campaigns/channels, and decreasing allocation to the channels that are not successful.

The must exciting feature of PSYC is the Real Time Optimization that takes place. We’re able to reduce marketing costs because we immediately know which advertising campaigns work, and which don’t: we’re able to cut campaigns that don’t work, and boost campaigns that do work, in a real time manner. This removes a large portion of the “x-factor” from marketing to prospective students.

Growth Strategies: Higher Education Consultant Solutions Enrollment Growth Consultant Solutions that are based on results. Because we have been so successful at increasing student enrollment at colleges and universities, we understand the daunting task that colleges and universities face: providing an academic service to more students within an economically viable framework is very difficult. Because we understand the goals and roadblocks that higher education institutions face, and because we’re able to offer pragmatic Enrollment Management Solutions, we’ve been able to refine our consulting skills in a way no other firm has. While many other consultants do just that–consult–Innovation Ads focuses on generating leads, applications, and enrollments. It is our experience generating tangible results that makes our consultant services so valuable.

Want to learn more about Enrollment Management? Click here to sign up for the Innovation Ads Enrollment Management Whitepaper.