The difference between network marketing and a financial pyramid. Pyramids hidden under MLM! How not to get pissed on the pyramids

It would seem how good it is to get "free" money! But it’s good when you manage to earn such money without your financial losses. But most often it turns out that Internet companies offer us a specific “investment” before receiving income, and then they safely fall apart. It is on this principle that another Internet scam operates under the loud name “financial pyramid”.

Such a pyramid exists mainly due to permanent attraction new members. As long as it is replenished with newcomers, it exists. But this newcomer, as soon as he gets into it, becomes a “hostage”. As soon as the rows of the pyramid begin to thin out, you can forget about your investments.

MLM pyramids

There is no unambiguously negative attitude towards MLM pyramids. This is a real multi-level marketing, on the principle of which many people work quite successfully. famous brands: Amway, Oriflaime, Avon, etc. The emphasis in such organizations is on the sale of a specific product or the provision of a service. This method of work cannot be categorically called bad, it all depends on the quality of the product or service being sold.

The problem is that MLM pyramids are often disguised as bona fide MLM companies, which in Lately attract Internet users into their ranks. The difference is that they actually sell air. They don't have any unique product or service to sell. The group of like-minded people at the top of the pyramid attracts newcomers, who in turn invite third-level newcomers, and so on, as long as there are those who want to join it.

Naturally, to join this scam, you need an entry fee. It is small, because clients receive the main "earnings" from newly arrived participants. But all good things come to an end. It is not possible to spend too long in empty attracting people and paying dividends from new contributions. Ultimately, the pyramid collapses.

The most famous financial pyramids

Typical Madoff scam

This man Madoff was unique. Although this can probably be said about any financial scammer. Entrepreneurial people, since they managed to involve so many people in their “brainchild”. So the pyramid of Bernard Madoff lasted about 50 years! More than three million deceived depositors for a total of 65 billion rubles!

At first, the scam did not bode well. A solid investment fund, a large number of investors, reputation, dividends for investors amounted to 12-13% per annum. When in 2008 a number of investors demanded that Madoff return their 7 billion invested funds, the company was unable to pay them back, because for the past 13 years it has simply not been investing!

The unfortunate swindler was handed over by his own sons, to whom he revealed the secret of his fraud. He used the Ponzi scheme known at that time to create his own pyramid. As a result - 150 years in prison!

Ponzi scheme

The Italian fraudster came up with his business scheme back in 1919. He created the SXC company, began to attract investors who, through his company, could make good money selling and buying goods in various countries. But he offered to invest in the securities of his company and in 45 days he offered investors to enrich themselves by as much as 150%!

Ponzi did a good job of fueling the heat of passion about his miracle firm in the newspapers. Thus, good publicity passed, and the people of Boston rushed to buy his papers.

In fact, the firm paid the money of new investors to old investors! A common pattern these days. And Ponzi himself, as the top of this pyramid, had a very decent income - 250 thousand dollars daily. After checking his company by the authorities, it became clear that this was a pyramid scheme. As a result - 5 years in prison.

America's Insurance System

It may seem strange to you, but the American insurance system, introduced back in 1935 by President Roosevelt, has a pyramid-like structure. At that time, she was called to fight poverty, pensioners and the unemployed could receive at least some money. And the proceeds came from the taxation of working people.

The system has undergone long years significant changes, but the meaning remains the same: old investors have the opportunity to receive "dividends" at the expense of new ones. Analysts believe that by 2018 such an insurance system will collapse. There are more and more pensioners in the country, and there may not be enough money for everyone.

How to recognize modern Internet pyramids?

Recently, casinos, sweepstakes have already flooded the Internet. Pyramids also began to look for their customers on the Internet. A tool such as a webinar helps a lot in this, where you can competently explain to citizens where and how to send money. And without them, there’s no way - you won’t get income, which beckons so beautifully on the pages of sites.

Experts have long unraveled the basic principles by which you can calculate the pyramid.

Often these companies do not even sell any product. They are selling levels of participation in the company.
It is impossible to go through such a pyramid from a beginner to the top. This is clear from the outset. The top of the pyramid will still receive all the main income! You will only be entitled to a certain percentage of the income of beginners.
The constant connection of newbies will not last forever! Again, because there is no product or service here. And keep in mind that when connecting newcomers, there is no guarantee that they will not turn out to be a weak link in the chain that you need to build according to the terms of participation.
A company that does not have an office in Russia, it is not officially registered as entity, then she has no right to engage in any activity at all. There are many foreign companies on the Internet, but will you go to the same America or Japan to sort things out with an unscrupulous payer, if he suddenly stops paying you bonuses?
You should be wary of high interest rates on income. High percent per annum is sometimes beyond the power of even a reputable bank. Pyramids also offer to earn income in a short time.
If you notice any psychological pressure on newly arrived people in the form of a mandatory purchase of talismans that guarantee success in business, miracle products, collective trainings, joint repetitions of special chants, etc. - know that this is also a scam.

There is a lot of scam on the internet right now. The most "enterprising" comrades are trying to swindle us all the time. In order not to become a victim of such a scam, you need to pay attention to even the smallest details in the activities of companies. Arm yourself with information, be smarter!

Is legal and permitted commercial activities. This direction is developing in many countries of the world and is very popular. Its task is to disseminate information about products, attract consumers, and sell goods directly.

A huge number of sales assistants come to the network company, and the network marketing scheme is pyramidal. However, what people used to call a "ponder scheme" is different from a business called "network marketing". Moreover, these two directions have significant differences. Consider the rules of work and the essence of companies involved in network marketing:

For work, before starting work, the founder is registered, selects the organizational and legal form, receives licenses and all required documents in accordance with the legislation of the Russian Federation.
The company resorts to the principle of chain sales. This is necessary for market coverage and maximum promotion of products.
Trading operations in the network company take place regardless of the influx of new consultants.
The company's turnover includes funds received from the sale of products (goods, services).
Each employee of the company receives remuneration for increasing turnover, there is a system of bonuses, remuneration, the prospect of growth in career ladder. With the help of a network company, you can build a business and pass it on to your heirs.
Network companies do not recruit people, attracting them with "fairy tales" about millions that can be earned. Their work is built on help, real financial support and training of partners for successful work in company.
Employees of the company work according to a clear scheme: the amount of personal earnings depends on the number of products sold.

Financial pyramids: hidden danger

Despite the similarities between the directions of the financial pyramid and network marketing, it is not difficult to identify their differences. The principle of operation of the financial pyramid is to constantly receive funds from its participants. The main difference between network marketing and a pyramid scheme is that a network company is based on a specific product that needs to be promoted, while the pyramid is based on the participants' money.

To understand, consider the principles of the existence of financial pyramids:

Such companies operate illegally, attract customers only via the Internet, and store funds in. V developed countries their activities are prohibited.
The pyramid does not distribute anything, its purpose is to recruit clients and receive money through their contributions.
Members of the company do not sell products, their task is to bring as many solvent customers as possible to the company.
There is no long-term perspective and development in the pyramid - money can be earned only at the beginning and not always. The participant receives bonuses for attracting new participants.
Such companies do not have . If there are no customers, the pyramid will cease to exist.
The task of the pyramid is to recruit a large number of "investors", for whom participation in such a company turns into fraud and lost funds.
In both network companies and pyramid schemes, participants must pay an entry fee. However, in the first case, a small amount of money is required for start-up materials, while in the second, a large investment is required when entering the company.
In the pyramids, there is a certain motivation for employees. They are persuaded that nothing needs to be done to receive "favorable interest" on their investment. Waiting for and attracting new investors are the main paths leading to "great wealth".
When joining the pyramid, the participant signs an "important document" on non-disclosure of information about the company. Information about the founder of the company is hidden.
The concluded agreement with investors is drawn up in such a way that in the event of the destruction of the company, they lose their deposits.

Conclusion

Perhaps, at first glance, network marketing and pyramids have similarities. But, if you delve into the situation and analyze the clauses of the contract, you can find significant differences and protect yourself from scammers.

No matter how many warnings exist, a huge number of citizens fall into the hands of scammers. By investing in dubious projects, a person not only risks burning out. Often, involvement in a large pyramidal system completely blocks the rights of a participant: he does not have the opportunity to voluntarily withdraw from membership, is under constant pressure and, as a result, may lose all his property.

Every now and then someone asks me what is MLM? What does this foreign term mean? MLM - what is the difference from financial pyramids?

So, MLM, Multi-Level Marketing, from English, Multi-Level Marketing, or Network Marketing (Network Marketing) is a multi-level system for promoting goods from the manufacturer to the end consumer.

MLM- this is a way to promote products from the manufacturer to the buyer of this product, while the manufacturer promotes its products through a network of independent agents, individuals. Agents, in turn, have the opportunity to recruit other people as assistants for more effective sales products, thus building your personal distribution network. Hence the second name of MLM - Network Marketing.

Do not confuse MLM and Financial Pyramids - these are completely different concepts. MLM is a way to promote a product, along with retail and direct sales. Financial Pyramids are illegal fraudulent structures, the only purpose of which is to quickly enrich the people who are at the origins of the pyramid.

Financial Pyramids and MLM companies have a similar structure and are easy to confuse. Therefore, it is important to understand what MLM is - the difference from financial pyramids and by what criteria it can be proven.

How to distinguish MLM from a financial pyramid?

First of all, the difference is in the product. If there is no promotion of a product or service, then this is a pyramid scheme. Indeed, if there is no movement of goods, what kind of marketing is it (marketing is the promotion of a PRODUCT OR SERVICE on the market)?

Also take a look at the product itself. Many pyramids are disguised as MLM companies with the help of goods that, in fact, do not carry any value. It can be plastic cards, some badges, cheap overpriced items, etc. home distinguishing feature legal MLM business - turnover. If you are offered to earn money by building a network at the expense of the contributions of other participants without visible turnover, you should know that this is an illegal pyramid scheme.

In the end, turn on the logic and pay attention to the earnings that you are promised. If you are promised bonuses from all levels of your network down to infinity - think about where this money will come from? A legal MLM company can only offer you a certain percentage of the real turnover, which it distributes over several levels of your network. Notice a percentage of the turnover of goods, and not a percentage of the contributions of other participants .

Financial pyramids and their differences

What is a "financial pyramid" (pyramidal scheme)?

Such a scheme implies a constant flow of money from new participants to those who are already at the very top of the pyramid in advance. If there are no new participants, the pyramid will fall apart. money is "earned" only from the sale of a place in the pyramid.

Need to know:

Participation in the "financial pyramid" is doomed to lose!

The organizers of the pyramids are real pros in psychology. In meetings where there are new members, they create an atmosphere in which group pressure and promises of huge excess profits act on people's greed and fear of losing the opportunity to make big profits. In a conversation, every effort is made to avoid unnecessary questions from the interlocutor. Many pyramid scheme organizers give their activities the appearance of multi-level marketing.

Multilevel marketing is a legitimate business that uses a network of independent consultants (distributors) to sell products. If a distributor helps others to start their own business, teaches, the company pays him a bonus from the sales volume of his business partners. Such a company is Oriflame (Oriflame): there are no initial investments, the company has been developing steadily on the market for 45 years, more than 3 million consultants around the world, the business is inherited, etc.

MLM - the difference from financial pyramids

1. Initial costs (how much do you need to pay / buy products to register with the company?) In Pyramids - to join, you must pay a significant amount (from $ 1000 to $ 10,000)

There is no need to purchase products and the cost of registration is max 149 rubles. (Online registration is generally free. And 149 rubles for a beginner's starter kit, with catalogs, reference books and necessary tools consultant) - paid in the first order.

2. Are the company's products intended for end users? In multi-level marketing, a product is sold to consumers. In the "pyramid" the product does not reach the consumer. Income of the pyramids - mass sales to new members of the pyramid (mandatory purchases to maintain membership status). And sometimes there is no product at all. In financial pyramids, for the money paid - to people - they give out some pieces of paper (a certificate, a voucher, a share, a receipt for a gratuitous transfer of money to the organization's fund and other worthless pieces of paper).

Oriflame is a legal legitimate business

At Oriflame, you do not purchase products, you receive a catalog upon registration, according to which your customers place an order. You only need to place an order and bring it to the client. You pay money for a REAL product that is worth the money. What is the product that customers need! Millions of women and men use Oriflame products every day!

If you are invited to a business meeting in a company, ask more questions: about the company, about the products, about the sources of income for distributors.

Be sure to check the company's status with the Direct Selling Association (DSA). Don't take risks! Choose an honest business! Write in the comments, what other differences do you know between legitimate mlm companies and pyramid schemes?

We figured out the pyramids, let's get back to MLM.

What distinguishes the MLM industry

Many people don't even realize how powerful an industry Multilevel Marketing is. The Network Marketing Industry, born in 1945, is developing by leaps and bounds. MLM is currently thriving in over 200 countries around the world. Japan has long had over 2 million distributors promoting products worth over $30 billion a year. The US has millionaires who have made their fortune through MLM.

Already today, many goods and services in the world are sold through mlm networks. And every year this number of goods increases due to right system marketing and demand quality products. I hope I convinced you that MLM today is a serious, stable and very promising business. And the key word here is business.

This is exactly business. Moreover, this is a business, both for the manufacturing company and for each individual distributor promoting the goods of this company. In MLM, you work only for yourself. This is your personal business with all the features and attributes characteristic of any business. And this business entirely depends only on you. You fully own and manage your business.

And this business is available to you just as it is available to absolutely every person on Earth, regardless of gender, age and nationality. MLM is today called a phenomenal phenomenon in the field of economics and the hope of the future. Think about your future. It may change in better side and you will be able to fulfill your dreams and plans. How did thousands of successful networkers around the world!

I hope the topic of MLM - the difference from financial pyramids for you at least a little cleared up? What else would you add to this or what questions you have - write in the comments!

The market today offers a huge number of opportunities to earn money. One such way is network marketing or MLM. In Russia, MLM is very biased, but there are reasons. In this article, we will objectively deal with the question of what MLM is, is it possible to make money on it.

Modern ways of earning: why MLM

MLM has a very interesting property, often succeed here ordinary people, who do not have a special education, these are also called "from the people." The whole secret of success lies in the ability to communicate with people. It is the factor of interaction with people that is key in direct sales. If you do not like to communicate with people, then it is better to try to earn money in another way. If you have other talents, then it might be worth trying to realize them, more about this is written .

MLM is one of the ways of doing business, it is not suitable for everyone, for the reasons described above. Perhaps you should try to open a more familiar business. Do you want to know what needs to be done, how to open a business with minimal cost? All this is described in the article.

What is MLM: Understanding the Basics

Before talking about network marketing, you need to understand what MLM is. Network marketing or MLM is a way of selling goods in which sales occur through a network of private, independent distributors or agents. In fact, MLM can be called direct sales from the manufacturer to the end customer using one link.

To understand the essence of MLM, it is worth considering a simple example. The price of any product increases several times before it reaches the final buyer. The final margins can be up to 1000%, all this happens due to an increase in the price at each stage of the resale of goods. Usually, the scheme for the sale of goods goes through several stages: from the manufacturer to the official distributor, from the distributor to a large wholesaler, from a large wholesaler to a small one, only then the product gets to the store, where it is purchased by the end consumer. The average markup at each stage is 10-15%, as a result, the end consumer receives a product at least 50% more expensive.

In the case of selling goods through an MLM network, there is only one link between the manufacturer and the end user - the sales agent. The main idea of MLM is the maximum reduction in the cost of goods for the end consumer. In addition, everything unnecessary is removed from the sales system: advertising, Information Support product. The output should be a product that, in terms of its consumer properties, many times outperforms its counterparts from an equal price category.

But for a complete understanding of what MLM is, you need to look at this matter from the other side - from the side of the organization and the distributor's earnings. Those who have ever encountered network marketing know perfectly well which postulates are the main ones:

Opportunity to work for yourself. What is MLM - work at a convenient time, so at least the trainers say. Is this true - partly yes, but you need to understand that if you want to earn decent money, you will have to work a lot. It should be borne in mind that some MLM structures set sales plans, which even experienced sellers are not always able to fulfill.
Building your own product distribution network. The whole principle of MLM is based precisely on attracting new sales agents to existing ones. For the organization, these are new people who will sell the goods, and for the attracting person, additional income, which over time allows you to climb the internal hierarchy of the organization.
Possibility to organize passive income. The organization of passive income is the main feature, the lure of MLM. What is MLM - the ability to organize passive income, lie in the ocean, while receiving millions. Is this true - yes, there are people who have been able to achieve impressive results with the help of MLM. The flip side is the number of such people, there are very few of them and, as a rule, these are sales agents who stood at the base of this network, but there are precedents when distributors in a developed network have achieved such success.
It is passive income that attracts most new network agents to MLM organizations. But it is worth noting that network marketing is far from the only way to organize passive income. You can read about other ways to organize passive income here.

If you look at this situation, it becomes clear that the MLM network is a sales system that is built through a multi-level referral system that provides agents with income from the turnover of attracted agents, and so on along the chain. If you invited three people, and they, in turn, ten more, then your income from the referral system will be built according to the following principle: a percentage of the sales of network members invited by you, a percentage of the income of those invited by them. The income from attracted referrals can reach such an amount that selling goods on your own will not make any sense. How to make money - organize your own network, but do not forget that you have to work very hard and not the fact that your network business will go uphill.

What is MLM from the point of view of companies: why is it profitable

We have dealt with the question of what MLM is from the point of view of a sales agent. But to complete the picture, it is necessary to analyze this issue from the point of view of the organization. Why this species distribution of their goods is beneficial for organizations:

Product competitiveness. This type of product distribution removes a significant part of the marketing promotion costs from the manufacturer. Thanks to this, it is possible to increase its cost by improving consumer properties. Or set a low price for a product, making it the main means of competition with store counterparts.
Exclusion of the possibility of falsification of goods. This method of product distribution almost completely eliminates the possibility of a fake getting to the end consumer, so the company's reputation will not suffer unfairly from falsification. And the buyer will always be satisfied with the quality of the goods received.
Employee motivation. The entire income of sales agents depends on two factors: own sales, attracting new sellers. They are very beneficial for the manufacturer, since only the goods sold will be paid for, and the network of distributors will expand itself, it will be enough just to make the first powerful impetus to development.

This method of distribution of goods is beneficial for the manufacturer from all sides, except for one thing - the trust of customers. MLM has been surrounded by scandals throughout its history. Only a few MLM networks were able to "make" a face for themselves, but more on that later. But this does not bother MLM organizations, how to make money - pursue an aggressive sales policy. Such precedents exist everywhere, which once again shows the misunderstanding of many agents of the basic principles of referral sales.

Basic principles of network marketing

We have dealt in detail with the question of what MLM is from all possible points of view, but let's look at what principles it is built on. this business whether it is possible to become a successful, wealthy person by distributing products by direct sales.

The principle of operation of such firms is quite simple: there are several factories involved in the production of products. Also in all major cities there are warehouses, a well-established logistics system. At the same time, there are no advertising campaigns and marketing campaigns that are familiar to a simple layman, which should help promote products on the market. Instead, MLM organizations rely only on direct sales.

How Direct Selling Works. The scheme of such sales for MLM companies is widespread everywhere, it works according to a single system:

Choose a city to open a new representative office, as a rule, large cities are selected. A small office is opened, which will deal with all organizational issues. There is also a staff consisting of several people, usually no more than ten.
After that, preparations for the first presentations begin. Premises, as a rule, conference rooms are rented. Usually, rich places are chosen: hotels, large business centers. Conference rooms can be rented for several hours, so even such organizations can afford several hours of presentation.
Search for the first sales agents. These people are found in several ways. The first is job search sites, this is the most “fishy” place for MLM firms, because people who need money are gathered there. The second is to conduct a marketing campaign with the help of advertising on the Internet, the media. MLM, especially young organizations, do not like to spend money on advertising, so this method of attracting distributors is not used very actively.
Conducting a presentation. The next stage is the presentation of the product to potential network agents, the presentation of the principles of the MLM system, the conditions for starting cooperation. After the presentation, as a rule, there is a small buffet table, "fixing" all the advantages of working with this MLM network. There are several such presentations over the course of a month or two. During this time, it is gaining required amount sellers to start full-fledged work.
Beginning of the work of the first distributors. The first buyers are friends, relatives, colleagues, then the word of mouth system begins to work - new people become members of the system.

All young MLM organizations begin to work according to this principle, but there are already old ones that have already been formed, they work according to a completely different system.

The work of large MLM companies in the modern market

The key difference between large network marketing firms is that everyone knows about them. Even a person who does not know what MLM is, probably used the products of such companies and was satisfied with their quality. The system of work is different, you can become a sales representative simply by submitting an application, but you should understand that cooperation with such firms will not bring you a lot of money, but it can add a nice addition to the budget. Let's take a closer look at the difference between such MLM firms:

Advertising campaign. Such brands do not need advertising, but they actively use it, promoting their products, attracting new distributors.
Much softer conditions for their agents. You can simply buy products for yourself, while you will receive insignificant, but still money.
Perhaps the key difference is a weaker referral system or its complete absence. Such MLM businesses no longer need to spread their network so aggressively, so the referral system is greatly weakened.

The “old men” who have conquered the market are much more reliable, but it will be clearly beyond the power of an ordinary man in the street to get rich with such companies.

The history of network marketing, how MLM began

Let's digress a bit and look at the history of network marketing. Everything related to trade, sales appears in the USA, MLM is no exception. The first company to distribute its products through a referral system was Nutrilite, a California firm. The production itself was founded back in 1935, when the first product was registered. But the very work of distributing products on the principle of recommendations began in 1945-1946. These dates are considered to be the birthdays of modern MLM firms.

Subsequently, seeing the effectiveness of the MLM sales system, new firms began to appear like mushrooms after rain. One of the first was the company "Amway", which successfully exists to this day, enjoying great popularity in the vastness of the CIS countries.

The MLM movement continued to gain momentum, by the end of the nineties it was possible to buy almost anything: cosmetics, detergents, Appliances, electronics, dishes. A huge number of the population was involved, everyone bought and resold goods, cherishing the hope of becoming fabulously rich.

It was then that a wave of major litigation against a huge number of MLM firms began. The first "call" was the 1975 case against the famous Amway company. Networkers were accused of organizing a financial pyramid. The trial essentially ended in nothing, but thanks to this lawsuit, the fundamental principles of honest MLM became known:

No big down payment. At the time, Amway was selling an agent starter kit for $15.60.
Product consumption. No more than 30% of the products produced must be consumed by the distributor himself.
Free exit. If the seller wants to leave the MLM system, Amway has pledged to buy all remaining products for 90% of the initial cost.

There were a lot of high-profile scandals and lawsuits, so in some US states a tough regulatory system of network marketing was introduced.

Direct sales came to Russia relatively recently - after the collapse of the USSR. And, as one would expect, MLM acquired its own unique hue, characterized by a particularly aggressive sales of many network agents, but more on that later.

Network marketing: business or financial pyramid

In our countries, most of the population considers MLM organizations to be financial pyramid schemes and a simple “divorce”. It is worth looking at the reasons for this opinion, because at its core mlm is an honest business.

Too aggressive behavior of network agents. The 90s were not an easy time, people seized upon legal business and went into all serious trouble, while MLM supported in every possible way, motivated such behavior with cash bonuses. Adding here the general poverty of the population of that time, we get a wild result. There are cases when doctors, instead of prescribing medicines, sold “miracle cures for all diseases” to patients, while being members of notorious MLM organizations.
The emergence of financial pyramids, hiding behind the guise of network marketing. Fraudsters also did not miss their chances to make money on the population. Luring money under the guise of MLM companies. And if we take into account that the companies themselves carried out quite aggressive presentations, it was almost impossible to distinguish fraudsters from sales agents.

Thanks to these two factors, there is a very biased attitude towards network marketing in our countries. Large companies are trying to rectify this by using TV advertising. And smaller organizations are stepping on the same rake, pursuing an aggressive marketing policy. Almost every one of us has acquaintances who were engaged in network sales, it becomes difficult to communicate with such people.

How to distinguish network marketing from a pyramid scheme

1996 was a key year in the development of the Russian MLM business, this year the Russian Direct Selling Association was created, designed to regulate the work of the network business in the country. The activities of the organization are quite controversial and some of the major players have already left it. The site has a list of honest network companies that are members of the association or associate members. But many organizations are not members or have left it.

Let's take a look at the main criteria by which you can distinguish an MLM organization from a pyramid scheme:

First installment. In MLM, it is minimal and rarely exceeds 1000 rubles. For this money, you get the necessary literature and the seller's starter kit. A financial pyramid requires a significantly larger amount, usually the entry price starts at $ 200-500. But here it is worth making a small remark. Even simple network firms have tiered suites. The price for which can be several hundred dollars. Marketers like to keep quiet about starter kits, suggesting starting with the most expensive ones.
Referral system. Honest companies build your passive income from your referral's turnover. Financial pyramids focus on the number of referred referrals.
The product itself. In honest organizations, goods are the main focus; for financial pyramids, this is just a cover. It is worth remembering that the fundamental principle of any MLM organization is that the distributor can keep no more than 30% of the purchased products, the rest must be sold.
All transfers of funds must be documented.: checks, invoices, invoices - you must be provided with a full set of documents, which says what you specifically paid for.
Quick earnings. Financial pyramids promise quick earnings and instant money, honest network organizations usually do not make such statements. But it is worth remembering about our coloring and the aggressive behavior of some marketers who can promise anything.

These points will allow you to calmly distinguish a financial pyramid from network companies. Unfortunately, some work literally “on the verge of a foul”, since sales agents themselves do not always understand what MLM is.

Earnings in a network company - the main sales tools

If you still decide to earn your first million with the help of MLM, then you should talk about the most effective sales tools. They are all entirely tied to online advertising, today it is the most effective method promotion of goods in terms of cost/benefit ratio.

But here it is worth making one remark: many organizations prohibit the use of any advertising, citing the fact that ordinary sellers simply cannot competently dispose of these tools, having spent a disproportionately large amount of money. These companies include the well-known distributor of NSP vitamins. If these rules are violated, all relations with the agent are terminated.

Let's look at the main, most effective tools that answer the question of how to make money in MLM:

Creation and promotion of your own website. Technically this is the most hard way which requires a lot of time and money. The only plus is that all financial costs are evenly “smeared” over a long period of time. But if you decide that the network business is your calling, then you simply need your own website.
Community development in in social networks. The method is faster and easier, but has the same high efficiency. What is the main mistake of such communities is the bright focus of sales of network goods. It is better to create a community of a general focus on earnings and self-development, so you can gain an audience much faster and start gradually promoting your product.
Use of contextual advertising. This is the most expensive way to promote a product, but it gives the fastest return. However, it is worth remembering that many MLM-related products are not moderated. Sometimes permits are also required. Not all MLM organizations have such documents, which can make it difficult to work with the rapid promotion of goods.

Of course, you can use the traditional method of direct sales, but its effectiveness is declining every year, as more and more people "go" to the Internet when buying a variety of goods.

Large companies in the Russian network marketing market

But let's touch on more specifics and consider the main MLM companies operating in Russia and the CIS countries:

Avon- one of the most famous cosmetic brands on the market today. It is very difficult to underestimate the influence of this brand. According to rough estimates, Avon occupies more than a third Russian market MLM. In 2014, the company left the direct selling association, stating that the association's activities do not cover all network marketing, and it is not interested in developing direct selling. There is a three-level referral system, the company does not promise endless passive income.
Oriflame- Swedish company, the main activity is the sale of cosmetics. Slightly inferior to Avon in MLM market share. According to experts, these two companies occupy about 65-70% of the entire network business in the CIS.
Amway is an American company that produces almost everything: cosmetics, detergents, household goods. The general catalog contains more than 450 items of various goods. In Russia, Amway is not very popular, but definitely everyone knows about this brand.
Herbalife- perhaps the most scandalous representative of the Direct Selling Association. There are too many scandals around this organization around the world. It was Herbalife's aggressive marketing that became one of the reasons Avon left this association. Sells nutritional supplements and products for a balanced diet.

This list of well-known companies can be continued for a long time. It is thanks to them that the whole world has learned what MLM is.

Starting Your Own Network Marketing Business: Pros and Cons

To be objective, MLM is just one of the varieties of doing business, which has its own advantages and disadvantages, let's objectively look at all aspects of doing business in this way:

The very opening of a business with network marketing looks much easier than the usual opening of a store. But it is worth remembering that during work you will receive a large number of failures, plus income will not grow as fast as we would like.
The quality of goods from large network companies is really very high. The price is almost always lower than the price of store counterparts. But often a multi-level referral system can create a huge markup up to several hundred percent. And in this case, the price will be unreasonably high.
Company reputation. The reputation of large network companies among the population is almost always very high. The goods of such organizations are loved and bought. The flip side is the overall reputation. Upon learning that you belong to the MLM network, many will simply refuse to contact you.
Ability to work over the Internet. Many companies help their agents by providing various tools for networking. By attracting your strengths and resources, you can get really big income without resorting to direct sales. But on the other hand, not all organizations allow the use of any advertising. The use of some tools is very difficult due to the specifics of the workflow.

If you like to communicate with people, you are not afraid of rejections, you want to earn big money, then you can try working with network marketing, but you should leave the opportunity for more usual earnings, since working with MLM carries an increased risk.

If you decide that you are ready to work with network marketing, then you should pay attention to a few key points:

Choosing an organization to work with. To choose better company, with products that you can comfortably work with. Also pay attention to the age of the company, the minimum threshold is 3-5 years, it makes no sense to work with younger organizations. Be sure to read the reviews about the company on the Internet, of course, they will be ambiguous, but you will be able to get a general idea of the organization. The company's products must be in demand, and marketing plans should be real and stimulating.
Be sure to leave yourself a financial airbag. You won't be able to make big money all at once. The ideal amount will be the amount that can provide you with an acceptable standard of living for 6 months or more. If your online business doesn't go well, you risk being left with nothing.
Your first sales will be small, but you need to try to make every buyer regular customer, and in the ideal scenario, a member of the system and your referral. It is advisable to look for people who want to build their own business. The best place for search there will be specialized communities in social networks that are dedicated to personal growth, self-development, earnings, starting a business.
Attracting new people to the MLM system is not so easy, it is worth focusing on the number of products, free schedule, payment terms, receiving bonuses, as well as the possibility of organizing passive income.
Be sure to evaluate the conditions for leaving the organization, they should be as mild as possible for the agent. As mentioned above, Amway buys up leftover products for 90% of the cost.

Choose a company wisely, take your time, chat with other agents, read reviews. There are a lot of MLM networks on the modern market and everyone will find what suits him best.

I want to tell people who are far from reality why I write articles about scammers. As you all know, there are few really sane people in our country. Therefore, everyone trusts any lie, thinking only about profit, but does not think about the consequences. Any MLM company is a scam. And its activity, first of all, financial.

MLM pyramids do not officially exist, they are not registered anywhere, no one knows who is the owner, where the company is located and whether it is located in any particular place at all. Or maybe the company is just letters on the screen? Any financial company that takes money from you must meet certain requirements. Are these claims nonsense? NO. They were formed for a whole century in order to exclude fraudulent schemes. After all, any scam is a threat to the state. It causes irreparable damage to the economy. How?

Imagine that people invested in some kind of scam. For example, MMM. The interest on liabilities exceeds the amount of money in the pyramid. 200 million Russians have invested all the money - and where to get more? Nothing is produced in the country, people are waiting for profit. For every 20 citizens there is 1 loaf of bread, each citizen has a million in his hands. How much will a loaf of bread cost? Roughly speaking - 20 million. Only those who have 20 million in their hands will be able to buy bread, because there is a shortage of goods in the country. Otherwise, global famine will begin. In this way, the economy saved society from general extinction and motivated other people to produce goods. talking plain language- made it work.

And now, the real requirements of any state to a financial company:

1) A certain percentage of the organizers' own capital. Ifthe founders of the company do not have their own money, then:

a) they will not adequately manage the money and will 100% let it go. They don't care about the risk, not their money. And if the company is notregisteredand zero responsibility - generally vseravno.
b) the organizers do not know how to manage capital, they do not have their own money, because they are not able to earn it. This is the main indicator. Do you think you can learn from your means? Do you want to take a risk?
c) financial company fraud. Why don't the organizers invest their money? Do they not want to develop the company or are they afraid of something?

2) Concluded contract with the client. Stupid pyramid lovers just give away their money, without guarantees, on an even word. Who are you going to demand money from? From scammers? Do they owe you? You yourself transferred money to them just like that.

3) Contracts, other documents and their copies must be stored in the manner prescribed by law. Or someone wants to use his documents? Think no one can? Do you know that some fakes are originals? Fraudsters use real wet seals, real information, and only remake individual elements. Trust me, this is not only possible, but easy.

4) Availability of own or rented premises. What for? Well, you do not need the Internet fools. And normal investors just need the legal address of the company, or at least just the location. Where will you go to control your funds?

The organizers of MLM pyramid schemes, exchangers, doublers, auctions and other dregs have long come up with many ways to mislead people: selling fictitious goods, working in MLM marketing, investing in mythical items, mutual funds, exchange offices, copies of real companies, etc.

The main features of a financial pyramid:

The presence of a pyramidal structure, the search for partners and the receipt of their profits, matrices, etc. for this.
For participation in the project require money.
Availability of levels, ranks, payment for being in the project, etc.
Buying mythical goods.
Auctions built on the principles of MLM marketing, in particular Scandinavian ones.
Absence state registration enterprises.
Non-payment of taxes, etc.

The psychology of a fraudster is to make the victim unquestioningly believe in any nonsense. Therefore, the creation of trusting relationships is its main task. As soon as the victim begins to believe, consider the scammer won.

Almost everyone who was deceived by scammers could not believe that they were scammers. The victim blames them last. Even when the pyramid is falling apart, about 60% of those who have lost their money believe the thieves to the last. They blame the fall of the project on the special services, the state, the CIA, the KGB, Santa Claus, Monica Livinsky and others who, in their opinion, do not want life common man improved.

Why is this happening? The reason is lack of education and ordinary stupidity. The person does not understand how the system works. For example, Mavrodi compares MMM with the work of a bank. He tells stories about the appearance of money out of nowhere. And after that it offers a fabulous percentage per month. There are a lot of materials on the net telling how MMM works, but investors do not want to believe it. They are already zombified.

A person believes what he wants to believe. He wants free money, he will find it in an MLM project or a more sophisticated pyramid scheme. Then, he will be robbed and he, like a ram, will put on a new owner and will allow himself to be sheared.

Who is a scammer? This is a strong-willed, self-confident person who has the gift of persuasion or inspires confidence. As people say, brother-in-law.

Fraud victim:

A person who wants to get rich quickly and effortlessly
A person who has a malleable character is led to any adventures and is not able to adequately assess the event in which he gets involved.
The man who, by virtue of his personal qualities endowed with faith in people and is not able to critically evaluate the offer of a swindler.
A person who is not able to make decisions on his own and does everything to please the crowd. Almost all MLM projects and HYIPs are focused on such individuals (I wanted to write loshkov here, but changed my mind).

How to understand that they want to drag you into the pyramid? Here are the signs of a pyramid:

I have never invested in any pyramid, MLM, etc. in my life, and I do not advise you.