Do You Assign The Phrase “Pyramid Scheme” To All MLMs?
If You Do, Then It Should Be Pointed Out That There Is A Definite Distinction Between A Pyramid Scheme And An MLM.
A Pyramid Scheme Is Illegal While An MLM Is Bonefide Business Model!
The term “pyramid scheme“, was used to generally describe network marketing concerns in a recent conversation I had. It prompted me to write this post with the following video regarding the term. Specifically, I don’t get enthusiastic when the phrase is used to describe the MLM business model. At the same time, I am aware as to why individuals may well connect the term with these sorts of businesses. First of all, allow me to point out that pyramid schemes are against the law!
Now it is true that they may appear to be the forerunners for multilevel marketing concerns. Plus there is no argument when it comes to the similarity factor. However, there is a distinct difference. The legality factor constitutes one of these distinctions. Another key aspect to consider is that pyramid schemes are, and have always been, money exchanges. In other words you will never see an associated product. That factor alone prompted the illegal designation.
A Pyramid Scheme Is What It Is Because Of The Following Criteria!
As indicated, the framework of a pyramid scheme is very similat to that of a network marketing platform. But, as also highlighted, there is a subtle difference. What many individuals overlook is the following factor. Folk are automatically forced into the spots that are open below the top ones in a pyramid scheme. To put it another way, as individuals become members they fill the next open position automatically. The system operates on a first come first serve basis and it is of no consequence which person does the enrolling!
In the image highlighted above, it doesn’t matter if individual “A” or “B” enrolls person “C”. That person fills up position “C3” in any case. The matrix will continue to fill in a left to right manner. Person “D” will automatically fill position “D4” regardless of the enroller! This points out why people towards the top benefit the most monetarily. It also clarifies why MLMs are frowned on. Lots of individuals avoid them because they have lost money in various pyramid schemes. They are misinformed!
Now Consider Why An MLM Is Quietly Different From A Pyramid Scheme!
This isn’t the scenario with multilevel marketing. Simply because you happen to be at the pinnacle doesn’t mean that you’re going to earn more money than the people who sign up below you. In this case, the individual that does the enrolling and assists their team in duplicating the process, is rewarded. To state it another way, the person who performs, benefits. The people that don’t work, don’t earn. In life, that is fundamentally correct.
This means that you can have a scenario where the individual a couple of levels beneath you is earning considerably more income. You definitely have the potential to benefit as a result of volume of people underneath you. However, you would need to develop a power team on the opposing side to begin earning. That simply boils down to deploying the required work ethic! In essence, a multilevel marketing program is just a different way of distributing a product or service!
Now That We Have Defined What A Pyramid Scheme Is, Review The Following MLM Facts:
