Network marketing, is it like mlm?

Network marketing, does it have the same weakness as mlm sales or Pyramide schemes ?

Our answer to that question is, no it has not, However, some elements, even when it comes to network building and marketing, must be checked out.

The key issue when a plan is classified as a Pyramide scheme, are if you earn your commission directly by recruiting new distributors as opposed to earning your commissions on the sales or activities generated by this distributors. However, at the same time it is fully accepted in the world of affiliating to pay for recruiting....

Building networks using the pyramide scheme is usually prohibited. The reason is that plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people -- except those at the very top of the pyramid -- lose their money, that is if they have paid in a substantial sum to the system to gain the right to recruit.

If you have paid in a substantial “entry-sum” under the promise of doing big business by recruiting and selling, you will feel cheated when the scheme crashes.

MLM or network sales has proven very successful for many organizations, like for Herbalife, Amway etc. The principle there is that new members have to buy a starting pack and then gain the right to recruit new distributors, usually organized in a matrix system and thereby building a so called downline, from which they earn commissions, that is from the sales done by the members of that downline.

There has been a lot of criticism of mlm or network sales. Rightfully they are being criticized for two reasons.

The same weakness as a pyramide scheme. When no more distributors can be found, the system punish the newcomers that have paid in to recruit and earn commissions from the sales in their downline. The lack of limitations set for the number of distributors, often convert the seemingly promising plan to a disappointing situation where you to work have to sell overpriced products. Overpriced, to carry the burden of all the commissions being paid upwards in the system.

The-global.biz concept is built to avoid, and at least minimize, the weaknesses of the mlm network plans:

Our incentive plans have 3 different types of rewards and profit-sharing. The incentive built on the mlm-type downline commissions will clearly reach a level, where it makes no sense to go on. From the start we have set a limit of 20.000 core members that will fit into our present plans for the UK and Portugal.

Our concept also have a “manager” plan apart from the “main” plan with the 6 level deep downline. In the manager plan a person signs up to recruit and organize up to 200 members. We have set the quota such that as long as those members recruited through the manager plan is within the 20.000, those recruited will have the status as CM2's and thereby share some of the rewards in the profit sharing scheme.