MLM vs. Direct Sales: How Would You Rather Get Paid?
If you are in MLM and haven’t seen Mike Dillard’s famous (or in some MLM circles, infamous) Coffee House Letter yet, you should definitely take a look. You may not agree with it all, but Mike definitely makes some valid points.
The Coffee House Letter has drawn some controversy from MLM loyalists. I read one blog post yesterday from someone who was incensed over Mike’s letter. His main argument was that MLM is stronger than ever, and the key to building a strong downline is in building relationships with your team.
I don’t think anyone can or would argue this point about building strong relationships, and it wasn’t the focus of Mike Dillard’s letter. Rather, it was the concept of residual income versus getting paid first (or GPT, as in Getting Paid Today).
I have been in both business models, so I think I can speak on this with some level of expertise.
During my MLM experience, it took us months to build a downline where we were receiving a decent residual income each month. And truth be told, over half of that income came from one consultant.
One month, this consultant just disappeared, apparently moving to another opportunity. This was exactly the scenario that Mike Dillard painted in his Coffee House Letter, and it was devastating to our team.
We are currently involved in a Direct Sales opportunity where the commission structure is much like that of the mortgage and real estate industries. Our main commission flow each month is from the direct sales of our company’s products, and we get paid UP FRONT for these sales.
There is also a one-level residual income built into this commission structure, giving us both direct and residual income each month.
The best part of this commission structure is that we get paid today, not waiting for residual income to build up. And we don’t worry about someone leaving our organization for another opportunity. If someone does leave (and this doesn’t happen often), we have already received the commission on his main product purchase(s) to gain entry into the program. If we lose the residual income from this person, it will sting but not be a major hit on our monthly income.
There are merits to both the MLM and Direct Sales business structures, but having experienced both and given today’s unstable economy, I would much rather get paid upfront, today rather than wait for residual income to build.
What do you think?
To your success!
Bob Clarke
November 11, 2008; Cresskill, NJ
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