Multi-Level Marketing Is Shaped Like a Pyramid…
MLM’s triangle shape makes it a pyramid, so MLM is a scam, right?
Sometimes uninformed people think the shape (polygonal base or triangle) of an MLM company makes it an illegal pyramid scheme. This is false.
Many organizations are pyramid-shaped without being a pyramid scheme: for example. Your family tree is shaped like a pyramid. The US government’s organizational chart is also in the shape of a pyramid - it is called the chain of command. Even traditional business organization is pyramid-shaped - it’s called management.
The reason almost ALL organizations are organized in a pyramid shape is that a single person can only manage a finite number of people before they become overwhelmed and need other people to do some of the work.
Picture this: if you run a daycare center, how many kids can you keep track of before you become overwhelmed and need to hire an assistant? If you hire two assistants, that becomes the shape of a pyramid (triangle). In MLM, a person enrolls a handful of people and trains them to sell products and to enroll others. This is because a single person can only handle so much activity before they require another person to lessen their workload.
The pyramid shape of an MLM compensation plan does not mean it’s an illegal pyramid or scam.
Does this look like a pyramid? Click it to find out if it is…
Multi-level pay plan
Sometimes uninformed people think that if a company pays “multiple levels” then it’s an illegal pyramid. Not true: many franchise companies pay multiple levels. In typical sales organizations, managers get a percentage of what the sales reps sell. This is multi-level marketing, whether it’s called that or not. The fact that an organization pays on multiple levels does not make it an illegal pyramid scheme.
Recommended next page: Are people at the top of an MLM company making all the money?
Loading ...
this is great info. thank you.
Tim, I think education is freedom and the lack of education concerning this shape robs people of a great experience in this industry! Thank you! I hope everyone will click on your example and read it in full-size!
I never thought of “regular” companies being a pyrmaid shape. But you are right! Thanks for the information.
good info.
Knowledge is power! Way to put out great knowledge for people to obtain great power…
I use similar examples all the time to help others understand how they can change their lives. The Department of the Treasury is a great one. The real power of the shape comes when anyone in it has the same ability to succeed with the right amount of effort.
Great info!
Bill Gates, Alan Sugar and other CEO’s run corporate pyramid companies. Good example!
If you take a good look at just about any company, you would see just how true this is - there are usually many bosses!
‘Education’ using clear logic with integrity is Tim Sales’ hallmark. Conventional sales and marketing sells people using the power of ‘emotion.’ So does ‘hype and hope,’ unprofessional CattleClassMLM. In professional/FirstClass MLM we distributors are looking for long-term business partners and so we must remember that ‘those convinced against their will, are of the same opinion still.’ Education such as here cuts through the hype. Finally, despite the very best education and will in the world, MLM is not for everyone. I admit that I sometimes have difficulty remembering that.
It seems to me people don’t bother to ponder their surroundings and are then vulnerable to “street” talk. You have done a great in showing us the truth in business structure and it’s rationale. How novel to think so many people don’t know what structure they are working within!
Great information! Thank you, Tim.
Good graphics, thanks, I’ll use this one for sure.
Thanks Tim!
It is an elemental structure of our society, ever heard of ‘follow the chain of command’? Our own military forces are organized this way.
This is just the explanation I needed to help me to clarify the position for my future customers and associates. It ties in nicely with the Brilliant Compensation video, too. It will be helpful in stopping negativity in its tracks!
Thanks for the example. Keeping it simple really helps to explain to others.
This is one of the best things I have ever read. It has helped build my confidence when talking with prospects and has even helped in my marriage! My husband felt all MLMs were pyramid-schemes and I could not get him to drop it - until I shared this with him. He is still not 100% on-board but he is mor eopen-minded, and no longer so cynical and doubtful. Thanks!
Eye-opening!!!
Well there you go… Tim this is great! I love this explanation and I’ll be sure to share this with anyone who gets confused about MLM. Thank you
Excellent information that most people don’t know, please continue to keep us informed.
Thanx again for such great info!
this is great- i can FINALLY stop wrestling with the notion of whether my business is a scam or not, I’m going to show this to everyone i know who doubts me!!
Very good information,it covered just about everything you could want to know about the MLM business,
Again this is BS.
In mlm all the people in the piramid do the same thing.
In a real organization the people add value differently. Not all are salesmen.
Hi Tim, I found out about this great site while listening to your Mastermind session with JMF. So many people don’t understand the importance of critical thinking and finding out facts BEFORE they make a decision.
And in response to Kees, in my organization many serve as business coaches, mentors, teach advertising techniques, work as personal trainers to help people overcome their past, while others help people understand their product line better as well as sell. The real difference is that in a good network marketing company, the compensation far exceeds what you’ll ever get in a traditional business.