Last night, the wife & I attended our first ever Multi Level Marketing (MLM) presentation. I have heard lots about MLMs over the years and decided it was time to investigate it for myself.
Multi Level Marketing is an interesting business model. There are some products to be sold, but you really begin to make money when you convince other people to sign up as representatives. Typically the products offered are things like nutritional supplements, health drinks, skin care etc.
The scheme we looked at is called Fortune Hi Tech Marketing (FHTM). FHTM are quite diversified with their product range, so in addition to the typical items mentioned above, they offer long distance phone service, cell phone service, Satellite TV though Dish Network, and more besides.
How it works
Basically if you sign up someone as a customer you make money. Now with companies like AT&T, Verizon, T-mobile and so on, it shouldn’t be too difficult to persuade your friends to sign up as your customer when they are shopping for a new contract. If they do, this will generate points for you and you will then receive customer usage points and you receive a portion of their phone bill every month!
Is FHTM the MLM for you?
But you don’t stop there. If they also are on nutritional supplements or skin care, try to get them over on to the one you offer. Then again you will receive a percentage of everything they spend.
Then there is your own spending. If you change your point of sale to your MLM company, then you are getting something back on all the calls that you make, or each time you pop a vitamin!
Where it gets into the big money is when you sign up your friends or customers as a business representative. This is going to cost them a few hunderd bucks, but you get a chunk of that right away. Then every time they sign someone up, you get a piece of that too. And for every customer they get, you get a percentage of their bill sent to you.
If you can build up a team of representatives, you could easily replace your income – but only if your representatives continue recruiting and aquiring points.
Is it for me?
The presentation I attended was in Canada, and while the principle is the same, I kind of felt cheated. The presenters kept talking about how everyone uses a cell phone and the benefits of having a percentage of their monthly bill given to you. HOWEVER, FHTM have no deals with any cell companies in Canada!!! In other words he was prepared to market something that is impossible to sell here. I found that to be quite deceptive.
FHTM do offer a long distance phone service in Canada, as well as a Voice over IP offering (VoIP digital phone service), but unfortunately these are not competitive. For example the long distance phone service would cost me 19% more than my current provider charges (and I don’t have a special long distance provider – I just use the company providing my landline). As for the VoIP service – it is $38 per month. Not very competitive…. Additionally the only internet provider they offer is dial-up. You’ve got to be kidding! What use is that in the city? The roadside assistance package will only tow you for 15 miles (24km) and costs a minimum of $191.40 per year. My current provider (PC Mastercard) costs $99.97 for both my vehicles and will tow up to 25 miles (40km).
When you break it down, the major advantage of being part of FHTM comes only when you sign up other people. Here in Canada that is going to cost the party who signs up $545 plus $65 month for 3 qualifying points (that they are not already using and cannot switch their point of sale to, so that $65 is an out of pocket expense, albeit a legitimate tax deduction if you are running it as a business). This obviously makes it very pyramid scheme like.
Can someone do well at it? Absolutely!
Is there any selling involved? Absolutely!
Although FHTM claim there is no selling, there is. You are basically selling a hope of getting rich through residual income. If the figures come out to be the same as any other MLM then 85% of the people that join will never acheive the dream being sold to them and for which they are paying $545 +$65 per month. According to FHTM’s own literature the typical income participants make is between $8.30 and $417 per month.
Now if a high end typical participant is pulling in extra $5000 a year income that is pretty nice, especially if it is residual. But most people are signing up in the hopes of replacing their actual income.
At the presentation there were probably a good few who have completely replaced their incomes as a direct result of joining FHTM, but these people are working hard at their new business. They certainly deserve to do well.
Am I going to sign up?
At this stage I don’t think so. Part of me would really like to as I think I can do well at selling (Dad always told me I could sell snow to the eskimos). I would love to get a bunch of people signed up and generating income on my behalf, great use of leveraging my time & energy. However the product lineup stinks. Even when the big retailers come on board, the discounts they offer are puny. For example I can save 2% at Walmart provided I do some part of the shopping online (i.e. order a $200 gift card for $198 + shipping). Same goes for Best Buy and a bunch of other retailers.
When I looked into their travel offering (FHTM Travel is powered by Travelocity) the prices were pretty close to other online retailers, but they wanted to bill in US dollars. For Canadians that means it has just become more expensive to use comapred to booking directly with the airline!
Now in the USA the deals are much better. The prices are lower all round (for joining up, lower monthly costs, and much more competative products) and so the potential for income is so much higher. If I lived in the States, I probably would sign up. If the Canadian offerings were to imrpove (by offering the 4 cell phone companies, a Satellite TV company – preferably Shaw Direct [formerly Star Choice], and phone calls at competative rates) then I would certainly consider it very seriously.
Conclusion
At the end of the day MLMs do make some people very rich. If you are good at selling people the dream of financial independence you stand a good chance. But with such a weak product offering in Canada, I don’t think I can put my name to it. I am not into getting people to sign up for services that I know are not the best options out there.
In my view, the US offering is the best, the UK offering is good, but the Canadian is a let down.
If you have any experiences with Fortune Hi Tech Marketing (FHTM) or any other MLM stories, feel free to share them via the comments!
