Today’s Myatt on Monday’s question comes from a CEO who asks: “I’m evaluating using multi-level marketing to accelerate my distribution Is there anything truly wrong with MLM?” Let me begin by disclosing that I am not involved in a multi-level marketing (MLM) and/or network marketing. Let me also be quick to state that in my opinion there is absolutely nothing wrong with the business model. In fact, the business model in-and-of-itself is rather brilliant. In today’s post, I’ll share with you where I believe the MLM industry misses the mark, as well as what it is that makes most of us shiver when we hear the term MLM

My personal belief is that MLM is like any other business in that there are very successful and credible companies within the industry and there are those to be avoided like the plague. In spite of whatever perceptions people may have, the fact is that companies like Amway, Mary Kay, Excel Communications, Primerica, PrePaid Legal, USANA Health Services, and many others have sold millions upon millions of dollars of products to a broad base of satisfied customers, many of whom are NOT also reps. As further proof of credibility, many of the world’s leading consumer products manufacturers have chosen to align themselves with MLM companies in diversifying their distribution strategies.

MLM is just a business model, and really amounts to little more than “micro-franchising.” Its upside is that it has a very low cost of entry, with the potential for exceptional revenue, and there are those who achieve that. So why is it that in the circles I tend to run in you might as well declare yourself a leper as admit to being involved with network marketing? The answer is that for the reasons mentioned above (low barrier to entry and large earning potential) MLM doesn’t always attract the best people. The reality is that most people that have a problem with MLM don’t really have a problem with the business model, but rather they have a problem with some of the people they have met over the years that have been involved with MLM.

Let me give you two personal experiences with MLM encounters at both ends of the spectrum: The first is a negative experience that occurred when my wife and I were a newly wedded couple just getting to know other young married couples in our neighborhood. We were invited over for a dinner at a neighbor’s house and were excited to get to know the couple better…that is until in the middle of a pleasant conversation the husband abruptly left the room and returned with a vacuum cleaner. He then promptly proceeded to demonstrate the vacuum by dumping a veritable plethora of disgusting materials on his carpet so that he could show the prowess of his shiny and way overpriced machine. We in fact were not potential friends, but rather just prospects that were subjected to less than professional sales tactics.

The other experience that I’ll share is one that was positive, motivating, and that is perhaps the definition of what MLM is all about. I had a workout partner for a few years that was at the highest level of the Amway hierarchy. When I met him he was three years removed from being a UPS delivery driver and was at the time making between $40 and $50 thousand dollars per month. He is an outstanding husband and father and works very hard for the income he earns. Since that time he has moved into an incredible home (he even has his own lighted baseball diamond) and his business and income have only continued to grow. In the entire time, I have known him he has never once attempted to “recruit” me. He has respected what I have accomplished while I have respected what he has accomplished and I count him among my friends.

The difference between the two examples mentioned above is that in the first example the people were in fact attempting to get rich quickly (while only working “part-time” I might add) by exploiting their friends and family. I certainly don’t begrudge anyone the opportunity to earn a living, I just prefer that I have the opportunity to make an informed decision as to the authenticity of someone’s intent. In the second example, this man treated what he did as a business. He worked hard, smart, professionally, and would have been successful in any business endeavor he chose to undertake regardless of the model or platform. It was his honesty, work ethic, and professionalism that made him successful.

Bottom line There is nothing wrong with MLM as a business model. But there are often times much that is wrong with the people it attracts and the tactics employed…it is all about the people. If an MLM organization attracts well-educated people who desire to build a company based upon solid business principles and professional practices it will thrive. If the organization recruits inexperienced people with unrealistic expectations as to what it takes to build a successful company then the organization, its associates, and customers will collectively experience less than favorable results.