Have you ever been asked when talking to a prospect, “Is this one of those pyramid scams?” Chances are you have and if not, you will and it will happen often. If I had a dollar for every time I’ve heard this question, I’d be able to buy groceries for at least a week.
If getting this question has ever had you stumbling over your words and not really knowing how to overcome this common objection, you will be able to by the end of this post.
More Resources:
Setting Expectations In Network Marketing
What Is A Pyramid Scheme?
First, it’s a good idea to know what a pyramid scheme even is. As stated in it’s name, a pyramid scheme is structured to look like an actual pyramid.
It will start with one person known as the “initial recruiter” who is at the top of the pyramid. They will then go out and recruit someone who has to “invest” a specific amount. In order for that second person to make his investment back, they would have to go out and recruit more people who will also have to invest money. The person who recruits is the person who gets to keep the money from the people they personally recruited. Make sense?
In a pyramid scheme there is NO exchange of any product or service! The idea is that if a person invests money and then recruits 10 people, they will not only get their investment back but they will make a profit. The deception lies in that people are told that if they give money, they will make money. However, no wealth has been created and no products or services have been sold.
This is also illegal and is not a legitimate business model.
Is Network Marketing A Scam?
You may hear a couple of different names associated with Network Marketing such as MLM (Multi-Level Marketing) or Direct Sales but it’s all pretty much the same thing.
Direct Selling is a retail channel in which brands will allow individuals to market and sell their products to consumers instead of them being sold in stores such as Wal-Mart, Target, Grocery Stores, etc. These individuals work independently but are affiliated with a company that uses the channel. Some big names that come to mind are Rodan+Fields, Mary Kay, Avon, Tupperware, Thirty-One, Pampered Chef, and Plexus (just to name a few). By allowing individuals to market their products, they will earn a commission when products are sold (instead of paying that commission to those big stores you shop in daily).
Watch the video below for a short overview of the Direct Selling Business Model.
In this business model, you are not required to recruit anyone. A person can come into the industry and only sell the products to others without ever building any type of team. If a person does decide to build a team and they go out and sell products, it does allow you to earn additional income. Just keep in mind that you do not get paid for simply recruiting someone. You will only make money if products are sold by you or someone on your team.
Additional Tips When Hearing This Objection
It’s important to note that many people you talk to will not have a clear understanding of what a pyramid scam actually is and will automatically associate it with anything being sold by an individual. Therefore, never get defensive!! A good idea is to simply ask them what they think it is and then educate them on the differences.
If someone is negative or nasty, just let them go. I wouldn’t suggest ever trying to convince someone because it’s simply a waste of your time.
The Tools I Use to Build My Business:
- My Toolbox – I have been asked quite a bit about what tools and resources I use so I’ve put together this page just for you! Enjoy 🙂
Did you find this helpful? If so, I would greatly appreciate if you commented below and feel free to share it with anyone who might benefit.
txt me @ 731-926-6412
Email: Sherri@SherriBrownCoaching.com
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(731)926-6412 (call/text)
P.S. Don’t forget to Click Here to Get My FREE Top Earner Success Guide.
Also, if You Aren’t Generating Leads Into Your Business and You Don’t Have An Online Marketing Strategy In Place, Click Here for Access. (Unless you have too many leads already)
See Ya Next Time!
Great post. Getting more clarity on network marketing and direct sales is a definite need in this industry. Thank you!
Thanks George and you are right!
Very well done on breaking things down in to simple terms. You have clearly outlined the differences and it is easy for anyone to follow.
Well done
Thank you Mike, I appreciate that.
It’s the best business model out there in my opinion… thanks for sharing this great post Sherri…
I’m there with you Ron! Thank you.
Very cool post Sherri, and I am sure there are many people that need to know the truth about attracting people towards you 🙂
Thank you David!
Sherri,
Great post. People think there is a difference, but it really is not.
Thank you Artreice
Nice breakdown. There are so many programs out there, it can be hard to tell what is legitimate network marketing, and what is a pyramid scheme. I feel more comfortable distinguishing the two now, especially where people get compensated for simply signing people up with no goods or services exchanged. Great value Sherri!
Thank you Kay! You’re right, there are so many things out there so you have to do a little research.
Thanks for sharing Sherri! You’re absolutely right, most people don’t really know what a pyramid scam is, so it really does pay not to get defensive. 🙂
You’re welcome Kim and getting defensive doesn’t help anyone in the situation. Thanks for your feedback.
It gives this space such a bad rap…not everything is a scam! There are some great people in the space and nothing else like it.
You’re right Linda and that’s why educating those who do want to make a difference in their lives is important.
Wow…what a great post!
Some of the greatest entrepreneurs came from these “scams” – LOL
Does the industry work? Ummm…YES!
Dr. Lisa
Thank you Dr. Lisa! Yes, the industry can be life changing to those who work for it.