Asked on 19 Jun 2019
I know of someone who seems to have taken the hit by some sort of MLM embroilment (think flaunting her Mercedes AMG to deleting defamatory comments on her own social media). Can anyone spill the beans about how MLM works, how they afford luxuries after JUST graduating, and why do they often change company names or call themselves entrepreneurs?
*Disclaimer: Long post ahead, I am purely sharing my one-off personal experience and this does not fully represent the industry as a whole.
I have been introduced to MLM by a school senior many years ago. Back then I was doing a holiday job before entering university and my senior was already in university and doing MLM at the same time. Many MLM companies tend to promote health products and supplements but it is really up to you whether you actually believe that the products will work for you.
When I was approached, I was brought to the office premises where there are many tables of people promoting the company's products and at the same time, pay a "membership fee" to be part of the team. Basically the person that brings you in manages to convert you successfully, you will be under that person's team, which is also part of a larger team. I would say the team structure has similarities to insurance and property agencies. Through that, they earn referral fees/commission just by bringing new people into the team.
What my senior did was to try to find people with similar background (e.g. same school, same CCAs even though different schools), to try to convert me into one of their members. They also have a thick folder that showcases the products of the company and also the many successes of various people (mostly with swanky cars, my senior also had a Mercedes back then at age 20/21?). They often promote themselves as entrepreneurs/business partners, even though they don't own the business which I honestly don't understand why till now. People in MLM also tend to play on your greed for money to attempt to convert you, stating that it is one of the fastest ways to earn quick and big bucks and become successful in life.
To me, why I did not buy into the idea despite the aggressive sales tactics was really because I did not believe in the products they were selling and really did not believe in the way things are structured to the extent that it actually helps you make big bucks. To really be able to earn in an MLM scheme, you have to subsequently sell to your own network of family and friends which really, wasn't something that I was comfortable with. It was as though you are living off your circle of family and friends to afford a luxurious life, especially if you don't believe in their products. I would think that if the products were really good, they should sell for themselves rather than having to resort to such marketing schemes to sell.
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In 2013, I was a tourism student during my poly days trying to fund my graduation trips. Intrigued at a gumtree ad that posted a travel related job specifically after office hours “7-10pm”, I met this guy at Starbucks for an “interview”.
He sold me concepts through videos and drawings. He became my upline (the distributor above me) as I was sold into the multi-level marketing (MLM) idea to sell discount travel and holiday products. I joined this MLM and got 2 friends in. Within a span of one month, I pulled out. This is my story.
Reasons why I pulled out:
Success stories are biased: The seminars they make you attend shows many success stories. However, when you get to understand how the system works – that you need “3” downline on your right, and “3” downline on your left to start earning money, you’d realize that the bulk of people in this system, especially those who join at a later stage… are probably not earning much money from this. The rich gets richer, the poor gets poorer.
A) When I began in this line, I was quite afraid to “present” to my friends and my upline promised that I wouldn’t need to do any presenting. One random day, he turned his back on what he said.
B) My upline mentioned that my friends are his friends and that he would help me/help them if they needed help. 1 of the friend I brought in asked all her friends and none were interested. My upline turned his back on her and said that “this kind of people exist, you just got to drop them” – which was totally different from the help he offered at the start
C) Office space: My team raved about the new office that came to Singapore. During my process of pulling out, I visited this office...To my horror, this office shares the same address as about nearly 50 over companies and there is only 1 tiny room with 1 table and 1 chair. Some office indeed.
They made me lie and that did not sit well with my conscience: It was quite uncomfortable as my team taught me to lie to my friends about the seminar selling. They gave you a script that it is to meet-up with your friends, but in the end invite them for some seminar. A sure way to spoil friendships.
The travel product they sell is flawed (imo):
The discounted “Dreamtrips” have a discount because many MLM representatives around the world will bulk buy. For example, they buy the rooms from a whole resort for the week, thus keeping cost low. However, when you really think about having a holiday, would you want to have a holiday with a bunch of people from the same “company”? I rather not.
The system that they use to book “discounted” flights is flawed (imo) – I’m pretty much a budget traveller and I realize that LCCs (low-cost carriers) e.g. Scoot are not within the system. When I realized this, it was not as attractive as it sounded.
Questions to ask yourself before joining:
Is the cost of membership (one-time/yearly etc) something I am willing to pay?
Do I have a network of people who might potentially be interested in this?
Do I believe in this product that I am representing?
How do I know this upline? Can I trust this person and his/her mentorship/success etc?
What you MUST know:
There is a 14-day free look period in Singapore by CASE Consumers Association of Singapore. If you change your mind within these 14 days, you're entitled to a full refund of your membership fees. (which was around $500+) - not sure if it's still 14-days as of now, or if it only applies to minors - can someone confirm?
As the information of having a 14-day free look period was omitted to me, I lodged a case to the upline of uplines in Singapore and eventually got my money back after a long tussle. In my first 2 weeks upon joining, I approached many friends and families to the seminar selling and found it hard to recruit people for this idea. I wanted to give up. But I did not know that option was available to me.
In conclusion, MLM is NOT for everyone.
If you do not suit its structure or do not like representing their product, it’s best to refrain from joining.
And just like joining any other company, I think it’s good that you evaluate for yourself if you are a good fit for their culture and vice-versa.
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I almost joined a particular MLM scheme (not gonna mention company name) back when MLM was new to me. The company did not change its name frequently, and they call themselves entrepreneurs as they are officially called IBOs (Independent Business Owners).
In most cases, how MLM works is as follows:
You'll be invited by someone to a motivational seminar.
During the seminar, if you decided to join the scheme by paying a joining fee, you'll be recruited under someone's downline in a LOS (line of sponsorship).
After you're recruited, there is a compulsory minimum monthly purchases you need to make to keep yourselves in the rewards systems and accumulate some points. The points will "expire" if you do not do so, so you need to purchase more to keep the points alive. The prices of the purchases are usually marked-up at least 2 to 10 times so that the profit margin will be used to distribute incentives to the LOS.
Your upline will encourage you to recruit as many people as you can, as your downline by having them do steps 1) to current step.
The LOS is structured such that, the higher you are in the LOS, the more overriding incentives you will get over time.
Very few are at the top of the LOS such that the passive income in the form of incentives is sustainable to afford a luxurious lifestyle. By Math, if you managed to have 5 downlines, and each of your downlines has 5 downlines recursively from level 2 to level 7, the total strength is already about 1% of Singapore's population. Not many are able to recruit and build that number of people in their LOS.
Regarding the flaunting of expensive cars, you will never know if the car is:
owned or rented,
paid in full or with mortgage.
One can easily staged this by renting an expensive car and engaging a professional photographer, to create a FOMO effect while spending less.
In my case, I was introduced to MLM as a consumer. For the groups that are more focused on getting customers as oppose to getting people to join them, there is less of an issue you’ve highlighted above. With the exception of bad sales service, & hard selling to get people to buy more, by appealing to their greed (more discount) though.
The upline I’m with would frequently describe how hard it was at the start and it was some time before it pays off. So affording luxury immediately is definitely not possible unless they have been doing MLM for sometime before graduating. *edit: I’m still a loyal customer after 10 years, and Friendly with the upline, so you can say I’m the positive example on this post? XD. Always remember 一种米养百中人.
I actually read that MLM has bad name overseas because it was considered as exploiting salespeople cause they don’t get paid a salary and have to buy the products before selling. But if you think about it, isn’t this how franchises work as well? Unfortunately most people who join, don’t judge (or don’t have the capacity to judge) the product to see how profitable it is before joining, hence all the complains.
Below is my attempt to answer your questions;
With regards to affording luxuries, you don’t need to be with MLM to “show off”. There are lots of people out there who rack up debt just to “live the life”.
entrepreneur sounds nicer than free lance. Think about all the “xxx managers”, “xxx ceo“ out there. Housewife can also call household logistics manager.
I assume change company name refers to the “group” not the product brand. If it’s the product Brand You should quickly run in the other direction, and never get involve with it.
There’s actully no particular wrong reason to change the name. It might be that they’ve changed their base of operation and join in with another group, hence change of name.
I was actually approached by a Grab driver about a year ago. As my pickup location was in my school, the driver started the conversation by asking about my plans in the future. Honestly, I didn't really want to talk as I was really tired with my projects in school, but it would be rude of me if I did not answer.
I answered his question and he told me that he used to be working in a similiar industry that I am interested in, and said the working life was really tough and dirty etc. I simply nod my head and answered "Oh..", "I see.."
Then he asked me if I have heard of this MLM company, and I said yes because the office is actually near to where I live. So he started telling me about he knew this poly girl who worked really hard while she was studying and owns a VW Beetle at the age of 20. And she is just one of the example in the company. Again, I simply nod my head and gave a forceful smile to him...
When we reach our destination, he continues with his talk and pointed to the energy drink that was on his car dashboard. (Yes, he stick the energy drink using a blu-tack) He even told me that this energy drink will take on the big brands in the supermarket in 2 years time... I simply smiled and said "Ohh really?". He wrote down his name and gave me his contact number and told me to contact him when I'm interested in joining the company. I threw the paper away as soon as I was at my lift lobby...
Honestly, I don't mind if drivers share their experiences they had in their life. But to me, taking advantage of being a cab driver and attract young adults who are still studying really kind of disgust me.