Multilevel Marketing - Nightmare or the American Dream

Multilevel Marketing- is it the realization of the American Dream or a nightmare that's costing people thousands of dollars? One thing's for sure, it's making the chief executives of multilevel marketing companies very rich. Unfortunately, the same can't be said for the thousands of people who invest in it with the hope it will change their lives.

The success of multilevel marketers lies in their keen understanding of human behavior and their ability to paint a real life picture of the American Dream and get people to buy into their vision of it.

Horatio Alger, a popular American novelist in the mid nineteenth century, is credited with creating the whole ideal of the American Dream. Alger wrote over 100 "rags to riches" stories whose popularity rivaled those of Mark Twain. Each story focused on the plight of simple people who were poor or down on their luck. They were decent ordinary Americans who through hard work, integrity, ingenuity and perseverance, overcame insurmountable obstacles to become wealthy and successful.

Alger's heroes and heroines and their families enjoyed money, security and peace of mind - all as a direct result of their hard work and ingenuity. Only in America where people enjoyed freedom from the tyranny of monarchies and the oppression of the landed aristocracy could this type of miracle ever happen. This notion that hard work and integrity would lead to wealth and happiness quickly became the "American Dream", a belief so strong even the Great Depression of the 1930's or two world wars couldn't shatter it.

Multilevel marketers are spin doctors of the modern American Dream. They've taken Horatio Alger's simplistic dream and given it a completely new twist.

Through their web sites, infomercials, seminars and promotional materials, multilevel marketers offer the potential of unlimited wealth to everyone - regardless of their education, experience, background or current financial situation.

Million dollar incomes, luxurious homes, exotic sports cars, mega-yachts, lavish vacations, jewelry, designer clothing, parties with beautiful people - it's all part of the "New American Dream." Sounds just like a Horatio Alger story- only with a few minor modifications.

In pursuing the new American Dream, hard work, integrity, ingenuity and perseverance don't count. Only fools go to the office and work long hard hours, hold down two jobs or invest in mutual funds as part of their quest for prosperity

Now, by simply following any multi-level marketer's fool-proof formula anyone can make millions and by only working a few hours a week. Best of all you can work from home, your yacht or even a beach in Bora Bora. Many multilevel marketers even promise you'll build up lifelong residual income, so after a few years, you'll never have to work again.

That's the magic of multi-level marketing. Just follow the advice of some self-appointed guru and you'll be rolling in money in no time.

Multilevel marketing certainly make the executives who start the companies wealthy. Every month, millions of people search Google, Yahoo and other search engines looking for the kind of income-producing opportunities multilevel marketing promises. Being smart marketers, they've seen a need, created a product people will buy and they know just the "hot buttons" to push to make them spend thousands of dollars to buy it.

Greed is the major hot button. Everybody wants to make as much money as possible - raising kids and sending them to college costs money, taxes keep going up not down and there's nothing wrong with wanting a nicer house, a newer car and having more money than bills at the end of the day. The high six figure and million dollar incomes multilevel marketing promises can sure take care of that.

Speed and Ease are the next hot buttons. There's nothing wrong with wanting to make a lot of money quickly and exerting as little effort as possible in the process. Investors make millions in the stock market every day without breaking their backs.

Then of course, there's freedom and independence. Calling the shots and being your own boss is the way most people want to work. Nobody likes a boss breathing down their back.

Finally there's the emotional hot button of having more time to spend with your family and loved ones. For many young couples raising families and over-extended working moms, this becomes the strongest motivating factor of all.

So with a fool-proof plan and all these great benefits, why does multilevel marketing work for only an extremely small percentage ... less than 3% ... of the all the people who try it.

In any business, lack of sales is the primary cause for failure. Multilevel marketing is no exception.

People generally don't like to sell, and most people can't sell effectively. That's why multilevel marketing programs promising "no direct selling", or "automatic self-closing systems" have such great appeal.

Many multi-level marketing scenarios don't involve direct selling - at least not in the strict sense of the word. In some programs, directors don't have to make sales calls and sell products. They still however have to be excellent sales managers and recruit, train and motivate "down lines" who are the source of their future earnings.

In other words, multilevel marketing involves convincing prospects to spend thousands of dollars to sign a contract and join a company's program, so the director and the company can make money. That sure sounds like sales to me.

Newcomers very often fail to realize this before they invest in a multilevel marketing plan. They don't realize that building a down line is really plain old fashioned selling and their success depends on it. The more down lines they "sell", and the more their down lines in turn "sell", the more money everyone makes. That's the entire premise of multilevel or network marketing.

A growing number of multilevel marketing companies are introducing "sales centers" help directors recruit and close new down lines. Working with these sales centers usually requires making an additional investment in a co-op advertising program and paying the center an additional fee or rebate on each new down line they recruit and close.

Other Multilevel marketers claim to have a "self-closing" Internet sales process that they claim requires no selling or closing. What people don't know up front is that for most of these "self-closing processes" to work. They have to invest in extensive advertising to produce new prospects to feed into the "self-closing" system. Very often, after investing thousands of dollars to join a multilevel marketing program, people don't have thousands of dollars more to invest in advertising.

Another misconception is that multilevel marketing doesn't require investing time and effort to succeed. While it's true that multilevel marketing is not a 60 -70 hour a week executive office job, it still requires a major investment of time and energy in order to make it succeed. Like with any business, you need to put time and effort into it, in order to get something out in return.

There's a great deal more to multilevel marketing than meets the eye. Multilevel marketers' websites and infomercials make it appear deceivingly simple.

All programs require a minimum initial investment ranging anywhere from about $1000 up to $20,000 or even higher. Many also charge extra fees for web site hosting, advertising and lead generation software and other services as well. Compensation plans can also be complex with their multiple levels and various incentive programs.

Before investing a cent, you need to research any multilevel marketing opportunity very carefully. Start by searching the Internet. Be sure to read the all the bad things former directors of a company have to say about it as well as all the good things the companies' web sites say. Also check with your state attorney general's office, the better business bureau and similar agencies to check for law suits and complaints. If they're a publicly traded company, check their stock market performance and the background of the company and its top executives.

Be sure to talk to people who are currently with the multilevel marketer or who had a previous relationship. If the person recruiting you claims they made $500,000 last year ask them for written proof. You have a right to know. After all, you're giving them thousands of dollars of your hard earned money. If they refuse or can't provide it, find another multi-level marketing company.

On paper, all multilevel compensation plan matrices show potential earnings of hundreds of thousands of dollars or more. Possible? Sure anything's possible. Probable? No. In fact almost 98% of the people don't. The few who do succeed are top-notch sales people who can build, motivate and manage a sales force of down liners and make ongoing investments in advertising and lead generation activities. They're the type of people who would be a success working for a large, more traditional corporation too.

Unfortunately, multilevel marketing companies have become very controversial. There are companies with integrity and a solid reputation and there are very mediocre ones as well. You'll also read about some multilevel marketers who are complete frauds. Do a lot of research before you make a move or invest.

When it comes to multilevel and network marketing - caveat emptor - "let the opportunity seeker beware".