MLMs: Pros, Cons, and Magic Insights - Ep. 22

In this episode of *Money & Magic,* your host Chey, the WitchyBookkeeper, dives into the world of MLMs (multi-level marketing) and network marketing. Have you ever received one of those "Hey girl" messages from a long-lost friend? You know the ones we're talking about! Chey unpacks the structure and tactics behind these companies, sharing her own experiences with various MLMs like Pure Romance and Hempworx.

Explore the pros and cons of network marketing, including the harsh realities many face and the reasons why 99% of people don't actually make money in these ventures. Chey also discusses the unique, and sometimes manipulative, marketing strategies targeting specific groups such as stay-at-home moms and religious women.

If you’re considering joining an MLM, currently involved in one, or just curious about alternative ways to make extra income, Chey offers invaluable insights and practical advice. From affiliate marketing to starting your own business, find out how you can leverage your skills and networks without falling into the MLM trap.
Tune in for a candid and enlightening discussion that blends the mystical and practical aspects of financial wisdom. Plus, get a sneak peek into our next episode, all about the pagan holiday Lughnasadh.

Money & Magic — where your financial journey and magical life intersect.

Buy Me a Coffee

Connect with me on Instagram and TikTok @witchybookkeeper

Learn more about how we can work together by visiting my website

Check out my Money Alchemy 101 course HERE

Transcript

0:03

Welcome to money and magic, the podcast that combines the mystical with the practical to help you navigate money in the muggle world. I'm your host, shy remote bookkeeper and judgment free money coach. I hope this podcast helps you create a harmonious relationship with your finances that empowers you to lead your truly magical life. Lets get started. Hey magical human. Welcome back to money and magic. This episode is going to be so fun for me. If you have ever gotten that dreaded hey girl message from from a high school friend that you haven't heard from in like a decade, then this episode is definitely for you. This is gonna be a fun one. All about mlms, or network marketing, whichever you prefer to call it. So let's get into it. So I'm sure most of you are aware that network marketing, or MLMS is a way for people to sell things. But what a lot of people don't know is how it works is called pyramid selling. Now this is different from a pyramid scheme, but pyramid selling is pretty much just a system of selling goods or services in which each salesperson recruits further salespeople. So it results in that hierarchy in which the member receives compensation for any of the sales that those underneath them make. So think Mary Kay, Avon 31 a new one that has popped up around my area recently is herbalife, but they're doing it in stores, so that's kind of interesting. Some others are pure romance, pampered chef, any of those type of companies that do like the home parties or are constantly trying to sell you things, they are not making their money from selling you the product. While they might make a little bit, they are mainly trying to recruit you. And that's the issue that I have with these types of setups. Before we get way too deep into this topic, I want to share with you a little bit of my experience when it comes to mlms. My first MLM was right out of college, or actually while I was still in college, and I sold pure romance. Of all of the mlms that I've been a part of, pure romance was probably my favorite. And that is because as a consultant, we got certain discounts on products. So in my case, I had worked my way up, and any product I ordered, I paid 50% of the price. So then I was able to go to parties, sell those for even 25% off, and I was still making money. If I never recruited any single person, I could still make money by selling those products. I ended up getting out because life went a totally separate way. But that was probably my favorite MLM over the years, I sold 31, I sold Scentsy, I sold lipsense, which was like this lipsticky stuff, but it was kind of like lip gloss, which was very interesting for me because I was not a makeup person. So that was fun. And then the most recent one and the one that I finally ended my MLM career with was Hempworx. And so I have sold a lot of different things. Some of these I joined just as what they would call a kit napper. And that's someone who buys the kit to sign up, but doesn't actually have any intention of growing a team, maybe not even selling the products. They just wanted the discounted products to begin with. So after Hempworx, I honestly thought that I would be in Hempworx for a really long time. I worked my way up a little bit. I was one of the higher ups, and I saw very quickly the separation between the highest up and those of us that are measly little people on the bottom. And so I personally was never able to make a living with any of these mlms, but I did enjoy the environment and the community, and I learned so much. When people say, oh, yeah, I own a business and they're in an MLM, they're not wrong, but also they're not right either. As someone who owns a business now and has done mlms, there are huge differences. But I will say being in those mlms taught me a lot about running my business now. And that actually leads us right into some of the pros of MLM or network marketing. And that is that you kind of learn how to run a business, you really learn how to network, and it can be an additional source of income. Other than that, there aren't a whole lot of pros when it comes to network marketing. There are, however, a lot, a lot of cons. And it's so funny to me that this episode is coming out now because just a few days ago there was an announcement where some bigger MLM companies around me are moving to affiliate only. So the people that have been building these teams and have been building these businesses for so long are pretty much losing all of that and they're getting pushed to only sell the product. And a lot of these people don't even use the products that they sell because most of the time their products are shit. So this is gonna be very interesting to watch unfold. But I. One of the biggest cons, and one of my biggest issues with mlms and network marketing is that most people don't ever actually make money. They end up spending money and losing money. The studies show that 99% of people never make money when they do an MLM or network marketing. 99%. But yet people still do it. They still do it. Companies continue to push it even though most of these people never make money. Now, you might be thinking, oh, well, I made money in my MLM, so let's talk about that. When I say make money, I don't mean that you're just selling or that you're just getting deposits into your bank account. I mean profit. At the end of the year, you are taking everything that you spent and subtracting that from everything you made. Most MLMs or network marketing companies will have you join with a join fee or a kit purchase or something to get into the business. Most of them require you to pay some sort of money or purchase so many products or do something monetarily to keep your place in that organization. So that's why when I say most people don't make money, it's because they're actually spending more money than they are making. And in the end, it doesn't even out. Another issue that I have with mlms is they're not sustainable. No one talks about how much money, how much time money is well, but how much time goes into working an MLM. This is not something that you make a post on Facebook once a day. This is something you are constantly working out. That's why you get those DM's. That's why you have those friends from high school that are in your inbox because they are trying so hard to sell their crap that that's their last option. They don't know what else to do. They are taught to do these sorts of sales tactics. And for some people it might work, for others, it definitely does not. So I have a little story about someone that I sold hemp, works with, and she was the star of the show. So let's talk about her. When I joined Hempworx, there was a person around me, let's call her Elle. And she was like the first person to join. At that point, CBD was still illegal in my state. So we were kind of selling it under the radar. I was the first person to join her team. I loved the product. I loved that it was new. The company was kind of innovative. In comes another affiliate and let's call her Dee. Dee is an incredible saleswoman. So she instantly, boom, skyrocketed to the top of all of the leaderboards because she is naturally a saleswoman. Before this, she had done a couple other network marketing, things she had done, like telephone sales for some kind of company locally. Now that she has left the MLM game, she is the head of sales for a local roofing company. So Dee was. She's a salesperson at heart. She's a fantastic salesperson. So the MLM worked for her when it came to making money. But she soon realized the amount of effort that was going into it was horrible. The constant turnover that she had on her team made working even more difficult. And it was like each time she hit a rank or she hit the next level, it was, oh, I have to hit the next one. I have to hit the next one. It was always more, more, more, more, more. And so she got burnt out. She left. She's doing great now. But if you're not a natural salesperson, MLMs aren't gonna work for you, most likely because you're selling. You're selling the lifestyle, you're selling that community. Yeah, you're selling products, but that's not where you make your money. You're selling to the people that you want to join your team. And unfortunately, when it comes to Mlmsen, most of the time, those sales tactics target lower income families, stay at home housewives, stay at home moms, and oftentimes religious women. Now, when I say religious women, I mean Christian. And I say that because there are a bunch of companies out there that stand on a principle of, oh, we're a christian organization. You can become an affiliate of ours and get closer to God, and it's a community of other women who love God. And so they try to reel those people in. They try to reel in the lower income people by saying, make more money. Make more money. You need money, come get the money. One thing they don't tell you is that it's going to cost a lot of money upfront, that you're going to have to put in a extra work. They forget to tell you all of those things. Now, I'm not telling you that if you are in an MLM that you should quit. I'm not telling you that you cannot make money being an MLM. I'm just saying you need to think wisely, be careful, know what you're getting yourself into. If you are joining something like pure romance, like I did in college, and you're joining it because you get 50% off of the products, well, then, hell, yeah. Like, you go join that MLM. If you want to kidnap just to get the discounted products all for it, you do you. And ultimately, if you want to sell anything MLM style or network marketing style, then go for it. I'm just wanting you to make sure that you're aware of what may or may not happen and that you're most likely not going to make money. Now, before I move on to some alternative income sources outside of mlms, I wanted to mention something that I have found very interesting over the last several years. I want to say, I don't know what year it was. I think it was like Covid times, but this little health drink shop opened up in my town, and they had this deal. I've never been, but people swear by them. They have these, like, mega teas, and you can go in and get like this energy shake with a shot of aloe and all these fancy energy drinks and healthy drinks, and everybody's like, oh, this place is great. Come to find out, they are selling you herbalife products. In order for you to go purchase these items, they make you sign up to be a customer. Anyone who works there has to sign up to be an affiliate. And while this seems kind of sketchy to me, I also think it's kind of genius, because you are putting an MLM product in front of people that prefer to go to a brick and mortar store. So it's kind of the best of both worlds. In this case, the people that work for, you know, they're signing up to be affiliates, and they're probably gonna make money, because people are constantly coming into the store. Now. It's the people that are signing up that I'm not sure if they're aware of exactly what's happening, but I think it's a very interesting way to skirt the thoughts and feelings that most people have when it comes to MLMsen and network marketing and stuff like that. So you can think outside the box. And I'm not saying that all mlms are the devil. Just buyer beware, if you will. I could honestly rant and rave about mlms and how toxic they are and how they target lower income families and yada, yada, yada, but we only have so much time that you want to listen to me, Rantin. So if you are in an MLM and you're looking to get out, or you're just wanting to figure out how to make a little extra income without joining an MLM, let's talk about a few different alternatives. Something I really enjoy is affiliate marketing, which is what several of these MLM companies have switched to recently. And pretty much what that is, is, oh, I like this cup of coffee so much that I want to tell everyone about it. I want to tell my friends, my family, my podcast listeners. Every single person needs to know about this amazing cup of coffee. By selling this cup of coffee using a link that I have, then you are going to help me make a little bit of money. Normally that's like a few percent. So the money for affiliate sales is very, very low compared to the money that you would make in network marketing if done correctly. However, it takes a lot less effort. And in my opinion, the only time you should choose affiliate marketing is if you enjoy the product. Like if I was talking about this cup of coffee, you would understand how much I truly love this cup of coffee. I'm actually an affiliate for a few different things. On our homestead, there are a few seed companies I use, a few tool companies I use, and I thoroughly love them so much that I have a code that I give people, and when they order, I get a little bit of money back. Now, it's not a whole lot, but it's better than nothing. Another alternative is to actually start your own business, especially if you've been on mlms. You have a following, you have a network. Figure out what you can do to make money with your skills and your assets, because that is directly going to correlate to what you know how to do, and you're the one in charge. And then there's always just the traditional ways to make extra money. You can go get a part time job, get a second job, go mow the neighbor's lawn, figure out if you can do yard work for an elderly neighbor. There are so many different options when it comes to trying to make extra money. But if you have been an MLM and you are like, okay, I really still want to continue to make money, but MLMs are sketchy and I don't want to do this anymore, you already have the knowledge, you already know how to sell. You already have the people watching, the people listening. So take that and spin it somehow. One thing when it comes to affiliate marketing is if I'm going to try a new product, one of the first things I check is, do they have an affiliate program? And the reason I check that is because if I absolutely love this product, I want to know that I have the ability to make a little bit of money of promoting it. If you are looking for a way out of your MLM or you're looking for extra ways to make money, definitely reach out to me because I would absolutely love to help you with that. Also, if you have any thoughts on MLMs or any stories anything you'd like to share, I would love to hear it. This could be horror stories. These could be success stories. It could honestly be hey shy, you're wrong. This is totally wrong. I completely disagree. Great. Fantastic. Shoot me an email. Find me on socials. I would love to hear your perspective of mlms and network marketing and what do we think the future of that looks like? Especially now that I'm seeing a lot of them shift to the affiliate method. This is going to be very interesting to watch and I'm kind of excited to see how things play out of regardless of how you choose to view mlms, I hope maybe you learned something in this episode or you were rallying there with me on the toxicity of mlms. Either way, I hope this was a good episode for you. In our next episode, we are talking about Lunassa, which is another pagan Sabbath coming up on August 1, so it will be all things Lunassa related, how you can celebrate and all that fun stuff. So I will see you then. And that's a wrap for another spellbinding episode of money and magic. I hope you learned something that can help you navigate money in the Muggle world. If you have any questions, topics, or even your own money and magic story that you'd like to share, reach out to me on social media. I'd love to hear from you. And if you have found this show insightful, I'd truly appreciate it. If you could take a moment to subscribe, leave me a review and share money and magic with your friends and family. Think of it like casting a spell to help others on their financial journeys. As always, stand tall, shine bright, and stay grounded. I'll see you next time. Sadeena, you.