A lot of home based businesses are marketed as Multi-Level Marketing (MLM) companies. MLMs (also called ‘Network Marketing’ companies) have a somewhat checkered reputation for success rates. Statistics are difficult to come by, but generally a very small percentage of people who enter MLM programs (something like 3 percent) ever become successful at it.
There are perhaps a lot of reasons for this low success rate, but one is certainly the differentiation factor. In the typical MLM business, you have a direct upline. An upline is supposed to be something akin to a mentor, but in many cases they turn out to be like a boss. And those uplines have uplines who have uplines and so on.
The person entering into an MLM arrangement will receive lots of ‘training’ — much of it directly from the upline but also some of it from carefully crafted seminars and courses. But that training usually has the effect of that new person ending up doing things in the very same way as his/her upline and that upline’s upline, and so on.
In addition, bringing one’s own ideas and vision into an MLM organization is often discouraged or even outright disallowed. In my last encounter with an MLM (back in 2003) I had my own ideas on how the products might be marketed, but none of my ideas were ‘allowed’. Instead I was supposed to go around to local businesses, give presentations of the product and of course, pedal the product to my circle of influence (friends, family, etc.)
The concept of differentiation doesn’t fit in very well with most MLM/network marketing companies. But here’s the rub – truly successful businesses don’t become successful by doing the same things everyone else does. Differentiating themselves in the marketplace is the main ingredient to success in any real business.
If you’re considering a network marketing company, how much will you be able to apply your own ideas in the organization? I think this is a key question to ask when sizing up such companies because as I learned, you can’t get anywhere by doing everything the same as everyone else.
Here are some other selected AllBusiness blog posts on the subject of Network Marketing and MLM companies: