MLM Business Tips: Dealing With The Pyramid Question.

Is that a pyramid?

How often have you heard that as a first response coming from someone you have just invited to take a look at your network marketing or mlm opportunity? What do you say to that? First of all I would suggest that if you are getting that question a lot you are not targeting the right type of prospects.  The right kind of prospects are people who have expressed interest in or have experience in mlm or network marketing. But more on the subject of  “Targeting The Best Prospects” in another post.

Lets deal with responding to the pyramid question for now.

You can respond to that question effectively in a number of ways after educating yourself first on the difference between pyramids and legitimate opportunity.  This is assuming you are not in fact the participant of an illegal pyramid scheme as I would think the majority of those who surf to this page are not.  The main thing to be aware of is that what really makes  a supposed “financial opportunity” a pyramid is lack of a real product.  If there is a product involved then the characteristic to look for that gives it away as a pyramid scheme would be the lack of sales to end consumers.

mlm business: legitimate mlm companies vs pyramidIn a pyramid scheme mainly money is passed from lower levels to higher levels.  If a product is involved it is only a ploy being sold to and purchased by participants in the scheme only.   It would not be a product typically sold to end consumers.  According to the FTC:

Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing. Multilevel marketing programs are known as MLM’s,(4) and unlike pyramid or Ponzi schemes, MLM’s have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits. -The FTC

Read more about FTC pyramid guidelines here

In dealing with the pyramid question you could let the individual know that that same question was your concern as well when you first heard about the opportunity. However, after checking things out you found that it was not. At that point educate your prospect on what a pyramid is and why your particular opportunity is not one.  Further assure them that as far as  pyramids go they are illegal according to the FTC and that you would never get involved with something illegal.  This approach should be all that is necessary to set an appointment to provide them a full detailed presentation on your opportunity.

However if necessary further inform your prospect it is certainly not the shape of an organization that makes it a pyramid.   They may have that misconception just as many do.

If the shape of an organization defined whether or not it was a pyramid then, for that matter,  our government,  including the armed forces, all corporations and sales organizations would be categorized as pyramids. To assume a organization is an illegal pyramid because of its shape and structure would to assume government officials including the president of the United States are running and operating pyramids and that would be ludicrous.

The fact of the matter is that legitimate organizations as well as illegal pyramids both share the common characteristic of having a  hierarchy of levels in the organizational  structure.  As we see below it gets narrower and narrower  as you go from the bottom to the top.

multi level marketing business structure
Although certainly not pyramid schemes the problem with the “pyramid” shaped organizations in the brick and mortar world whether it be corporate America or a governmental organization is that there are extreme limitations on “getting to the top”. In most cases to advance in corporate America you would have to have 3 elements working on your behalf, personal performance, politics(upper management likes you), and personal prestige(degrees, impressive resume,etc). All three working in your favor would give you a chance at promotion and moving up the levels. However, in most cases you would never even think about reaching the uppermost corporate levels.

At least in mlm and network marketing anyone with a good work ethic and who learns and applies proper marketing can get to the top positions. Degrees and politics would have nothing to do with him or her having the possibility of becoming their own “CEO” and heading up an entire organization. Besides having excellent advancement possibilities the risk of getting fired is all but eliminated since it is your business.  Also you enjoy creating a paycheck along with time freedom not possible in a corporate job.  For more reading on the pyramid question see MLM Saturation Myth Exposed.

  1. well, I did`nt know that…

  2. Me either, at least about the FTC’s real views on multi level marketing. I was surprised myself when I read on the FTC website that they actually don’t view genuine mlm opportunities as “pyramids” at all. We no longer have to side step the pyramid issue when asked. Its actually an opportunity to shine and really hook your prospect when they ask you that question. I’m just glad I can help shine some light on this issue that there is so much wide spread misunderstanding on.

  3. Great article describing the real state of “pyramids” and what it takes to be part of one. Also good to know the difference between a pyramid scheme and an MLM. :razz:

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