Why multi-level marketing works for some and not others

6 months 6 days 9 hours ago Thursday, February 08 2018 Feb 8, 2018 Thursday, February 08, 2018 7:20:00 PM CST February 08, 2018 in News
By: Megan Judy, KOMU 8 Anchor
loading

JEFFERSON CITY - There’s a social media trend blanketing everyone's Facebook feed - women calling themselves “Boss Babe,” “Mom-preneur,” or selling their “side hustle.” There are companies galore - Rodan and Fields, It Works, Lip Sense - the list goes on. Multi-level marketing seems to be everywhere.

The Better Business Bureau defines multi-level marketing as a company that encourages distributors to build their own sales force by recruiting. Distributors then earn a percentage of the sales from their sales force. If it’s reputable, a multi-level marketing set up can be a great secondary income; if it’s not - it could be a pyramid scheme.

Erin Clark, a Jefferson City resident who quit her corporate job five years ago to start an It Works business, said the business has "tons of moms."

"It’s a ton of women," she said. "What a cool way to make an extra income with your kids.”

Clark said the freedom that comes from running her own business was a really attractive quality. Her husband, Aaron Clark, said he was supportive when she started her business, but he had no plans of joining her until he saw how successful she’d become.

Aaron Clark stepped away from his job as an undercover police officer for the Kansas City Police Department once he saw the success.

“I saw that we didn’t really have to have our full-time jobs anymore,” he said.

The Clarks had some years of success with It Works, but their business flat-lined.

“It was no longer growing even though we were working harder,” Erin Clark said.

After dabbling in a few other multi-level marketing companies, the Clarks have transitioned out of that business model.

Erin Clark said, “It wasn’t ever the product that’s the problem. For people like us, this is what we do for a living so we have to be able to build a sustainable income on product sales, not on your team of people religiously ordering - that is a pyramid scheme.”

The Clark's big beef with multi-level marketing is how misleading the hype is.

Erin Clark said some people may have earned a $100,000 bonus, but they may have spent $30,000 to get it.

"What do you do with $30,000 of vitamins or face cream or wraps?” she said.

Aaron Clark said it's not the easy work some people might think.

“The image that most people in this industry paint for those who are not in it makes it seem like it’s a dream. It is a lot of work. In my opinion, you don’t have more time because it’s not a traditional 9-5.”

Sherry Mariea, a business law and ethics professor at MU, said multi-level marketing models could easily be mistaken for a pyramid scheme.

“The main thing you’re looking for is - how much of the independent agent’s revenues comes from the direct sales of product vs. how much comes from their recruitment and commissions of the sales of those you recruit,” she said.

Mariea said Missouri has taken steps to regulate multi-level marketing companies by modifying existing deceptive practices laws.

Mariea thinks the model can work, if done correctly. 

“I think because we have such a high percentage of the workforce looking for better work/life balance that these types of models have some value to them,” she said.

A few weeks ago, KOMU 8 News posted to Facebook asking if any local moms have started selling products. Within about 12 hours, we received almost 100 responses and only a handful were negative.

A significant number of positive responses referenced Rodan + Fields. According to a company press release, R+F has become the #1 skincare company in the United States. Forbes reported the company boasted $1 billion in sales in 2016.

Most people responding said a key reason for taking on a multi-level marketing enterprise is a need for work/life balance.

While the Clarks aren’t working within a a multi-level marketing company anymore, Erin Clark said she still wants to empower other women. She and her mentor do a Facebook Live on Sunday nights called #mlm-exposed.

“It has to be a legitimate company that already has its kinks worked out, that has a plan that takes care of its customers, isn’t built on hype, doesn’t always dangle that next carrot that gets you through the next month,” she said.

Mariea suggested people resist the temptation to get in on the ground floor of a new company. The safest bet is to join a multi-level marketing company that’s been around for awhile and has proven it's making money off sales, not its people.




More News

Grid
List
COLUMBIA - Columbia City Council members said the city has reached a financial tipping point and now they have until... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 2:21:00 PM CDT August 13, 2018 in News
JEFFERSON CITY (AP) — Missouri Democrats have voted to ditch a recently added tenet aimed at welcoming anti-abortion candidates. ... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 2:05:07 PM CDT August 13, 2018 in News
MEXICO - Gov. Parson is traveling through the northeastern part of Missouri this week and he started his travels in... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 1:44:00 PM CDT August 13, 2018 in News
MISSION HILLS, Kan. (AP) — A couple from a Kansas City suburb alleges that a $90 million billing scheme found... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 12:03:00 PM CDT August 13, 2018 in News
COLUMBIA (AP) — Missouri taxpayers may be covering $884,000 in legal fees for a Columbia church's U.S. Supreme Court case... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 11:28:00 AM CDT August 13, 2018 in News
JEFFERSON CITY (AP) — A ballot measure attempting to limit union powers helped drive Missouri's largest voter turnout for a... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 11:20:58 AM CDT August 13, 2018 in News
(CNN) -- The FBI has fired Peter Strzok, an agent who was removed from the Russia probe last year for... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 11:11:24 AM CDT August 13, 2018 in News
(CNN) -- President Donald Trump said it's "great" that consumers might boycott Harley-Davidson if it moves some motorcycle production overseas.... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 11:07:39 AM CDT August 13, 2018 in News
ST. LOUIS (AP) — A new state law aims to reduce the number of Missouri residents driving vehicles with expired... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 11:02:50 AM CDT August 13, 2018 in News
CAPE GIRARDEAU (AP) — A 10-week-old Missouri girl has died after being left inside a hot vehicle. The Southeast... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 10:56:06 AM CDT August 13, 2018 in News
COLUMBIA - Officials say a house caught fire Sunday afternoon because of improperly disposed smoking materials. Three people were... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 10:20:00 AM CDT August 13, 2018 in News
(CNN) - One winter afternoon last year, Duane Engebretson sat in his stepdaughter's hospital room at the Mayo Clinic in... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 7:43:29 AM CDT August 13, 2018 in News
KANSAS CITY, Mo. (AP) — A fleeing Kansas City driver has been charged with manslaughter in a deadly crash. ... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 7:35:39 AM CDT August 13, 2018 in News
ST. LOUIS (AP) — Authorities say a 9-year-old boy is hospitalized after nearly drowning at a St. Louis hotel. ... More >>
3 days ago Monday, August 13 2018 Aug 13, 2018 Monday, August 13, 2018 6:59:25 AM CDT August 13, 2018 in News
ST. LOUIS (AP) — A 35-year-old woman and a 12-year-girl drowned over the weekend in a deadly stretch of the... More >>
3 days ago Sunday, August 12 2018 Aug 12, 2018 Sunday, August 12, 2018 10:04:00 PM CDT August 12, 2018 in News
CAPE CANAVERAL, Fla. (AP) — Embarking on a mission that scientists have been dreaming of since the Sputnik era, a... More >>
4 days ago Sunday, August 12 2018 Aug 12, 2018 Sunday, August 12, 2018 8:24:37 PM CDT August 12, 2018 in News
BOONE COUNTY - A three-car crash at the 122nd mile marker of I-70 eastbound set two cars on fire, responders... More >>
4 days ago Sunday, August 12 2018 Aug 12, 2018 Sunday, August 12, 2018 8:08:00 PM CDT August 12, 2018 in News
(CNN) -- Omarosa Manigault Newman, the former "Apprentice" star and estranged aide to President Donald Trump, claimed on Sunday that... More >>
4 days ago Sunday, August 12 2018 Aug 12, 2018 Sunday, August 12, 2018 7:45:30 PM CDT August 12, 2018 in News
Columbia, MO
Broken Clouds 84°
9pm 83°
10pm 82°
11pm 78°
12am 74°