Multi-Level Marketing (MLM) and direct marketing are very popular. The rate of growth of direct sales companies is staggering, especially in the healthcare industry.

Unfortunately, the MLM business model is predatory and takes advantage of people who are in vulnerable situations. Health and Wellness products sold by MLM companies are often unregulated, overpriced, and exaggerate the results.

In this post, you will see why MLM companies take advantage of our basic human needs, and actual statements they use to influence unsuspecting people into signing up.

How MLM Companies Work

Companies that use the MLM and direct sales model depend on a continuous cycle of recruiting sales representatives.

Rather than producing products that can stand on their own in the marketplace, MLMs often sell sub-par products and services at inflated prices. What they’re REALLY selling is the “opportunity” to benefit from a discount if you join as a team member, distributor, or another of the many creative titles used by MLM reps. (Read more in 199 (Potentially Dangerous) Titles Used by MLM and Direct Sales Reps)

The reality is that companies with a recruitment focus are designed to attract and acquire an endless base of customers.

Logically, this model is impractical and unsustainable. The number of potential customers is not large enough for every newly signed Distributor to grow a significant, prosperous business. This means that it is nearly impossible to succeed as an MLM rep.

This need for recruitment forms the shape of a pyramid—which is why MLMs are often called “pyramid-based schemes.” Take a look at the similarities between these models; they are practically indistinguishable, except that Pyramid Schemes do not even pretend to sell products, whereas MLMs have a veneer of legitimacy.

 

MLM and direct marketing companies are proven to be very dangerous, according to the Federal Trade Commission (and thousands of former members including myself). Although the products being sold could be just fine, when you’re required to sign up “downlines” in order to get ahead financially, this puts the rep in a very risky position.

MLM and the Hierarchy of Needs

I have reviewed hundreds of MLM and direct sales company websites from around the world, especially those in the Health and Wellness industry (take a look at a comprehensive list here). What I’ve discovered is that their main intent is to sign up new sales representatives and “grow the business,” not necessarily to promote their products.

MLMs make all sorts of promises to convince potential recruits of the benefits of joining their company as an Independent Consumer—oops, I mean Representative. One of their tactics is to offer products at a discounted rate if you sign up at a low fee, but require a minimum monthly purchase to keep qualifying for the discount.

MLMs also rely on new recruits in order to generate revenue. To do that, they often use brilliant marketing techniques that appeal to our most essential needs of

1. survival (Physiological),
2. security (Safety),
3. a social group (Belonging),
4. recognition (Esteem), and
5. the ability to reach our full potential (Self-Actualization).

You can see this pattern in the Hierarchy of Needs, Fears, and Expectations (staring with the bottom level, Physiological needs).

 

I want to show you exactly how Multi-Level Marketing companies entice people by taking advantage of these 5 needs we all have as humans.

Note: Each of these phrases is taken verbatim from actual MLM company websites.

1. Basic Needs

What we are looking for: Adequate wages for survival

MLM companies promise the ability to:

… care for your family financially

• “Guaranteed pay”
• “Decide your income”
• “Make great money”
• “Our generous compensation plan gives you multiple ways to earn”
• “Immense opportunity to create a sizable income”
• “What would you do with an extra $1000 a month?”
• “Supplement your income”

…start today

• “No start-up or operational costs.”
• “Get paid right away”
• “Start working immediately”

…minimal skills or risk

• “Anyone can do this”
• “No experience needed”
• “Low-risk, low-cost entry point”
• “No need to carry inventory”
• “Looking for motivated people who want to succeed”
• “Minimal investment”
• “100% satisfaction guarantee or your money back”

…feel better

• “Improve your health”
• “Your passport to a balanced lifestyle”
• “Make better choices for you and your family’s well-being”

2. Safety

What we are looking for: Job security

MLM companies promise the ability to:

…join an established brand

• “Work in a global $1 trillion [health and wellness] market”
• “The fastest growing market in the world”
• “We are experiencing explosive growth”
• “We have 25 years of proven success”
• “Our products are backed with science”
• “Over 200 patents and patents pending”
• “Debt-free company”
• “Our products are designed to last”

… spend less money

• “Get quality products at a great value”
• “Get out of debt”
• “Earn 25% to 40% off products”

…guarantee long-term success

• “Earn money while building your business”
• “Financial freedom”
• “Unlimited earnings!”
• “Passive residual income”

…be a business owner and have control

• “Opportunity to own a successful franchise-like business”
• “Work from anywhere”
• “You decide how far you go”
• “Own a business without the headaches of a traditional startup”
• “As an independent business owner, you don’t have to worry about manufacturing, order processing, shipping, or even payroll.”
• “Have total control over your income”

3. Belonging

What we are looking for: Social involvement and support

MLM companies promise the ability to:

…be included and embraced

• “Find lifelong friends”
• “Join a fun and social group of like-minded individuals”
• “Make new friends”
• “Our community will support you at every level”
• “Your success is important to everyone in our organization”
• “Join our tribe”
• “Join the movement”
• “Be part of an amazing community”
• “People always come first”

…get training and guidance

• “You’ll gain the support, training, and tools to help you succeed”
• “We provide you with the tools for success”
• “Our field leaders will guide you as you grow your business”

…benefit others

• “Our team is dedicated to spreading wellness across the world”
• “Have the power to help people every day”

…be a better person

• “Spend more time with those who matter the most”
• “Be present with your family both physically and financially”

4. Esteem

What we are looking for: Recognition, promotion

MLM companies promise the ability to:

…get attention for your achievements

• “We love celebrating YOU!”
• “Be recognized and rewarded for your success”
• “Feel proud of your achievements”
• “Get rewarded for what you do”
• “Stand on stage in front of cheering thousands at our global conference”
• “Show off your hard work”
• “Be the next success story”

…share your passion

• “Share the joy of [our products] AND earn money”
• “Build a business you can be passionate about”
• “Help friends and family make healthy choices”

…enjoy a luxury lifestyle

• “Earn free trips every year”
• “Let us spoil you!”
• “Get free product giveaways”
• “Open a gorgeous gift from our Home Office”
• “Earn discounts, awards, trips, cash, and free items!”

5. Self-Actualization

What we are looking for: Reaching full potential

MLM companies promise the ability to:

…become a legitimate business owner

• “Be in charge of your own business”
• “Enjoy the rewarding lifestyle of entrepreneurship”
• “No cubicles. No traffic. No boss.”
• “Make your own hours. Be your own boss.”
• “Start a business of your own”

…feel freedom

• “Replace your 9-to-5”
• “Develop a full-time business on the side”
• “Live your life without restriction”
• “Reclaim your time; build true residual income”
• “Design a career path that fits with your personal goals and desires”
• “Have freedom to do what you want”

…live authentically and generously

• “Be part of something bigger than yourself”
• “Do something that matters”
• “Make a difference in the lives of others”
• “Give back to the community”
• “Live an authentic life”
• “Build something that suits your lifestyle”
• “Do something good for your family, community, and the Earth”
• “Love what you do!”
• “Go on amazing adventures”

…decide how much you want to earn

• “Set your own income”
• “Income YOUR way”
• “A fun way to earn extra income”
• “Build your own fortune!”
• “Grow your income at a pace that meets your needs”

…be the best version of yourself

• “Use the talents and passion you already have”
• “Be the best YOU”
• “Achieve your goals”
• “Make good choices for the future”
• “Start living your dreams”

 

Final Thoughts

These promises sound really compelling, don’t they?

Unfortunately, they are all based on a faulty premise that the MLM business model is sustainable—when, in fact, it is not.

As with any investment, be sure to do research and determine the risks, as well as the “Devil’s Advocate” perspective on what could go wrong. Tens of thousands of people have lost tremendous sums of money because they believed promises like the ones above.

Take a look at my MLM experience.

Be wary, my friends.

When something sounds too good to be true, it usually is.

 

If were involved in a Multi-Level Marketing company, which of Maslow’s needs were the most compelling reasons to join? I’d love to hear your comments below.

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Can you think of any other MLM titles that aren’t on this list? Comment below or send me a message!

For more information about Multi-Level Marketing companies, check out these resources: