Differences Between Pyramid Gifting Programs and MLM Business Opportunity

Differences Between Pyramid Gifting Programs and MLM Business Opportunity

The main ideology behind it is some worth like; the more distributors around, the higher the sales of the vacuum cleaners and the more money given to the distributors on the ladder.

In MLM’s, distributors are most times paid by way of commission. These commissions are derived from the sales they make. They also get a percentage of the commissions paid out to the other distributors recruited by them – recruited by them may mean either of those who signed up after them or where signed up by them

*Just so you get a clearer idea on the way multi-level marketing actually works, take for example we have a starter company – Jack Vacuum Cleaners – and this company wants to get into MLM. The first thing it’ll do would be to recruit its foundation distributors. These foundation distributors would be placed on a level – let’s call it level 1. The information above already stated says that MLM distributors are supposed to recruit other distributors; right? That is what’s going to happen here.

Any foundation distributor able to recruit another distributor would be promoted to level 2 and as a standard rule for Jack Vacuum Cleaners, any level 2 distributor is privileged to collect a certain percentage of its recruits earnings and as that distributor moves up the ladder, it gets to collect a percentage of the commissions of all its recruits and their own recruits. Just like a pyramid, as a distributor moves up from one level to another, distributors on a higher level are always smaller in number than those below. That’s the way MLM’s work.

Let’s now look at the way Pyramids work.

Pyramids are also commonly known as Ponzis. Ponzi is the name of an Italian man who was the first known person to have initiated the pyramid scheme by in the 1920′s. Pyramids work almost the same way as MLM’s but with a minor difference. Whilst MLM’s are usually based on the sales of a specific product, pyramids aren’t.

Pyramids are based upon a system, in which Peter signs up;

Pays $X to the pyramid company;

Convinces Paul to sign up with the same pyramid;
Paul pays $x as sign up fees to the pyramid company;
Peter collects a certain percentage of Paul’s sign up fees.

This process goes on and on with the promise of a usually high amount of money for anybody who is able to bring in the most sign-up’s and progress to the highest level. Once a person is able to get to the highest level, he cycles out and may get paid. Experience has shown that most Pyramids out there are fraud programs who hype-up themselves in other to get people to sign up.

*Please know that this information only contains a general idea on MLM’s. The Operations of MLM programs you encounter may differ slightly. Jack Vacuum Cleaners is a fictional firm.*

Colin Meunier is a Successful Home Business Coach and Mentor! To learn how you can use a breakthrough marketing system to become more successful in your home business online visit: http://www.WhoIsColinMeunier.com