Having discussed the advantages now let’s explores the darker
part that is the disadvantages of multilevel market-ing. Here
is the list:
• COMPLEX COMPENSATION PLANS:
It is important to note that the compensation or commission
plans are usually not a simple as they sound. Most of the times
companies to keep the MLM financially viable set a number of
targets either sales based, performance based or standard
based and you are only paid once you achieve these targets.
For example few companies pay only if you recruit a specific
number of reps to generate future sales, if you fail to achieve
this you will not get anything from your sales.
• FINANCIAL COMMITMENT:
Few companies trap marketers by asking a number of hidden
charges in the form of registration fees, training fees or even some
times they charge for the material or marketing tools they provide
44 CALVIN CLARKE
(for example CD’s, broachers, manuals etc) to the marketers for
training them about the product and it features and about the company.
Most of the times, you will have to commit to purchasing a certain
volume of product each month in order to remain eligible to participate
in the program. This makes is difficult for you to remain profitable and
hinders your long term existence in the industry.
• DEMANDS EXTENSIVE MOTIVATION:
Remember that MLM is all about leveraged income. You can
only survive when you earn money from your own sales plus the
sales generated through your downline. Hence it is crucially
important to keep your downline motivated and focused. Also
you need to train and recruit more and more people in order to
generate more income. Hence MLM requires continuous efforts
and hard work for future survival.
• SEVERE COMPETITION:
As MLM business does not require any professional degrees
or skills, plus it relatively has no start up or entry barriers, it
fosters severe competition. Any one can enter in the market and
take away your prospects. This is the reason why to assure
longevity; a serious MLM marketer has to really work hard as
there are lot others out there ready to work with your sponsors.
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