Lesson 3. The real story behind Multi-Level Marketing

Multi-level marketing originated from direct sales, but it has turned into a completely
different kind of product promotion. It is said that the pioneer of multi-level marketing
 was Carl Rehnborg, who set up his company in the USA in the 1940s.

Carl himself thought that he would make it into the history books as a scientist who created products to help prevent
a number of health problems, but we remember him primarily for creating the system which has changed the lives
of millions of people.

«I would rather have one percent of the efforts of a hundred men working for me than one hundred percent of my own efforts.»

John Paul Getty

Multi-level marketing’s financial success is based on the absence of intermediary traders within
the manufacturer-consumer chain. Product and service manufacturers and providers save considerable amounts
on the cost of promotion. Therefore, they can concentrate on developing a high quality product.

Success is also determined by the fact that when describing the product in multi-level marketing, consumers should
be motivated by the product’s performance as well as the advantages which they obtain by using the product. One may say that the money obtained by the consumers earlier is finally accrued for those “active” consumers and invested
in the development of product quality which, in turn, attracts new customers.

But the success of the main system is a social one. Prior to the development of multi-level marketing people had no way of gaining access to one of the world’s most profitable spheres – marketing – without big money, social links or special knowledge.

In multi-level marketing, major expenses such as customer services, delivery and payment are left for the manufacturer to absorb enabling a typical wage earner to set up his own business.

«You will never be able to sell freely if you are always worrying about how much you earn per hour. You may get $100 per hour, but you have to always be under stress to give your best and work each and every hour when you are working
in this manner. When you work for an employer or are involved with direct sales you are constantly at the beck and call of your boss to carry out any task he demands. If your boss wants to see you at your desk at nine a.m., then you had better be there. If a customer has an appointment with you somewhere in Latin America early in the morning, then it is imperative that you do not miss your plane and arrive on time. It's almost equivalent to slavery. Every minute and hour of your working day is supervised and controlled by your boss.»

Jerry Rubin

By using Rehnborg’s system, millions of people all over the world have obtained the opportunity to control their most essential resources: time, money and power. These are the resources which give you the chance to master your own
life and set yourself free. Isn’t this a social aspect?

The advantages of companies using multi-level marketing include not having to employ a large number of staff,
not having to rent spacious privately-owned sites, not having to arrange retailing and sales to support a system
of warehouses or waste tons of money on useless advertising campaigns. Instead, by using multi-level marketing, companies’ profits are spent on the development of technological operations, new innovations and promotion
and motivation aimed at “active” consumers.

Based on my own experience, I can say that companies applying multi-level marketing have a quicker response
to the appearance of everything new involving state-of-the-art technologies. It may come as a surprise, but often
multi-level marketing companies have lower prices for a better product than companies using traditional retailing
for product distribution. This is due to considerable cost cutting.

«The richest tycoons in the history of mankind have always aspired to avoid linear work. They did their job employing the time and energy of other people releasing their time for development of strategic plans, setting up new business or enjoying their lives to the fullest.»

Richard Poe

But in spite of its progressive nature and success, multi-level marketing arouses misunderstanding from many people. This misunderstanding arises first of all, because the people confuse this system with direct sales and pyramid schemes, which imitate successful multi-level marketing systems. Direct sales are disliked for one simple
reason – very few people are eager to perform the role of a “begging seller.”

Pyramids are looked upon as suspicious and people generally try to avoid anything which may resemble
a pyramid system.

The truth is that many people are skeptical of multi-level marketing because they do not know anything about it.

If they had learned the truth about its advantages long ago, they would have started to consume products through these systems. Only by providing information explaining how MLM works and the actual mechanisms behind its functions can we end these doubts. The more information that is provided – the less doubts remain.

In order to expedite product distribution, the product should not be sold by you. It is crucial to find people who want to buy directly from the manufacturer and it's imperative to tell others about this buying opportunity. Multi-level marketing allows many of its consumers to utilize the product for free or get some monetary benefit from doing so. This is very attractive and very encouraging. In multi-level marketing, we are looking for soul mates in helping to develop consumer networks. This is the second factor distinguishing multi-level marketing from direct sales.

That will be all for today. In the next lesson, we will return to our discussion of pyramid schemes as opposed
to multi-level marketing.