The pros and cons of multilevel marketing programs (MLMs).
When you hear the term “multilevel marketing” (or "network marketing"), what is your first response? Do you want to turn and run? Or are you immediately ready to plunk down the startup cost and begin selling and recruiting?
Most people have their own opinion of MLMs. Some of these assessments come from personal experience, and some are based on preconceived notions. This article will explore the nuts and bolts of MLMs and will offer insights and opinions from fitness professionals on both sides of the fence.
MLM Defined“Traditional MLMs are known as ‘buyers’ clubs,’ as they primarily sell to distributors,” explains Kristen Horler, CEO and founder of Baby Boot Camp LLC and qualifying national marketing director for Juice Plus+®. “This means that the business model and profit center for the corporation are driven primarily by sales to distributors, not customers. Oftentimes, the retail cost of the products is inflated to the point where paying an annual distributor fee to ‘buy in’ and become an independent distributor makes the product more affordable.”
Horler notes that most MLMs have monthly order minimums that distributors (which would be you) must purchase in order to receive commission checks. “MLMs typically also require distributors to make startup purchases and seasonal purchases to remain active distributors.”
Examples of health- and fitness-related MLMs include Isagenix®, Beachbody®, Melaleuca®, Herbalife, Pangea Organics® and ViSalus™. Fitness pros join MLMs for a variety of reasons. Some join because they’ve experienced good results using the products; most of them want to supplement their day job income.
“I was presenting at a fitness conference, and another professional recommended the products I now use and sell,” says Sherry Catlin, 2004 IDEA Program Director of the Year, from Boston. “My body was changing, and I wasn’t happy about it. I looked around the conference and noticed many other fitness professionals weren’t getting the results they wanted from exercise and healthy eating alone, either. Within days, people saw the change in my body and wanted to know what I was doing. The business avalanched from there, and I haven’t looked back since.”
“My significant other and I joined for the product line,” recalls Tara Ballard, a certified personal trainer from Clemmons, North Carolina. “The company provided the clean, pure, organic, non-GMO nutrition that we desired. It wasn’t until we fell in love with the products that we considered sharing the business opportunity with others.”
Improved Client Experience
Elena Brower, owner of Virayoga yoga studio in New York City, joined an MLM after she and her family had used the products for more than 10 years. “For fitness pros, this is an incredible and natural extension of what we're already doing. We have our students nearby all the time, and they're always wanting to learn about how we care for ourselves as inspiration for their own self-care. When we're really taking care of ourselves, we can share that authentically with them, and in my experience, they're always grateful. It's a beautiful exchange of information.”
A Revenue Boost
Danielle Thompson, co-owner with her husband of The Training Ground in Bakersfield, California, says they fell in love with a particular product line. After studying the MLM’s compensation plan extensively, they realized it could help supplement their income. “The health and wellness field can be lucrative, but it is competitive. In personal training, if you don’t have an edge of sorts, you are grouped in with all the others. This company has helped separate our business from the rest because the products give amazing results and lead to a happier and more satisfied clientele.”
“The reality is, whether you’re a bikini competitor, power lifter, personal trainer or indoor cycling instructor, your options are limited,” observes Thompson. “Most positions [in this industry] pay incredibly poorly. By creating an additional source of income, one is able to have options. We are currently making a multiple six-figure income after just two-and-a-half years. This is a result of a generous compensation plan that pays out on 100% below us. We sign others up, sell product, and help others achieve financial freedom. Our income is more than worth our time invested.”
“I would absolutely recommend running with it when you find the right products, company and compensation plan,” advises Catlin. “Get past any biases or misconceptions. It’s simply a business model based on networking and sharing, much like how we already build our businesses. If you treat it like a business, it can complement what you are doing now and provide the financial security that is so lacking in our industry.”
Catlin says that her business has been profitable since the second month of MLM. “With network marketing you do put more time in at the beginning as you build your business, and less time later as your business grows and income increases.”
Not everyone believes in jumping on the MLM bandwagon. Tony Davenport, MS, certified spinal cord injury recovery specialist at Project Walk in Atlanta, has tried several MLMs in the past. He needed the extra money—desiring to create an income stream he could retire with—and he wanted to offer his clients a quality product he believed in. While he did find products he liked and he felt better after using them, he never made money from sharing what he found.
“We all have busy schedules,” he observes. “MLMs take more time than is stated to develop. And if you don’t have a large client base or high turnover, then making profits becomes difficult. I also had to redirect funds from my budget to meet minimum spending requirements in order to get paid via the MLM.”
“My dislike of MLMs has several concerns,” says Charlie Hoolihan, personal training director at the Pelican Athletic Club in Mandeville, Louisiana.
Hoolihan feels that the products sold through MLMs are of no higher quality than what can be found in stores. “[But they promote them as if they were], which opens the door to friends, relatives or acquaintances to purchase a ‘starter kit,’ which will be overpriced compared with what is available in stores. Then the promise of riches obtained while selling an average product will lure them into purchasing larger amounts of the product in hopes of luring their friends, relatives and acquaintances to do the same.”
Lack of Secured Longevity
Hoolihan believes that there may be some good products in the MLM world that deserve greater exposure. But they are few and far between, and they seem to take advantage of people’s weaknesses rather than their strengths. “The sad irony of all this is that only the very few individuals who get into an MLM early are the ones who make the high dollars and only if the product has legs to last for more than a few years.”
MLMs: The Nuts and Bolts
There is usually a modest initial investment of about $150 and up. “My initial investment was around $300,” Catlin remembers, “but I got to eat it and deduct it.”
She explains that you’re paid a commission for opening accounts for clients and introducing them to a product. You receive a percentage of ongoing wholesale and retail purchases. You also get paid for advancing in rank and helping others advance in rank. In addition, there are incentives and contests.
“I reached six figures the first year,” says Catlin, “and multiple six figures each year since. My income is a direct result of the number of people I’ve helped along the way.”
While there is no guarantee of how much you’ll make with an MLM, what you get out of it is usually a direct result of how much you put into it. It is not a get-rich-quick scheme, and it does require effort on your part, especially in the beginning. Making residual income from products that you believe in and that will help your clients reach their goals can be doubly satisfying.
“Fitness professionals are the most dedicated, talented and hard-working group out there,” concludes Catlin. “The passion and commitment to helping others is staggering. Yet, at the end of the day, for many in this industry it’s a challenge to make a decent living and provide for a family. Job security can be tenuous and political, and it can be very hard on your body. Everyone needs a Plan B, so keep an open mind. If there is something that will help others improve their body and health, we owe it to ourselves and our clients to put skepticism aside and take a look.”