WE HAVE THE HIGHEST PAYOUT RATE.

Most MLM companies claimed that they:-

a) Have the highest payout rate in the industry.

b) Are financially stable.

c) Have their own R & D centre with the best equiped Laboratory and highly qualified researchers.

d) Produced superior products.

These claims were echoed frequently by the MLM companies and repeatedly spread and publicised by the direct sellers in all their meetings, rallies, prospecting and selling encounters. Their role is to stir up the excitement of their prospects and the potential customers. They are trained to do this. They are equiped with glossy brochures and catalogues plus beautiful power point presentations. They would show you a few successful direct sellers (out of the millions of unsuccesful ones), if they want to recruit you, and testimonies of a few consumers that were "cured" by their "superior" products (but not those who spent thousand of dollars based on their claim and still died after consuming the products).

Yes, there are cases of consumers recovered from cancer and diabetes. But there is no scientific evidents that their recovery were purely attributed to those MLM products. Most of those desperate disease sufferers used a combination of various alternatives, traditional and modern medical treatments simultaneously.

There are only a handful of MLM companies with their own manufacturing facilities let alone R & D. Yes, some established MLM companies such as Amway has their own manufacturing facility and R & D on products. The rest merely purchased, contract manufactured or private labelled third party's products.

On the financial stability of MLM companies, just like any other busineses, MLM companies are not immuned to risks factors, be they economic, financial or political risks. Do you know how many MLM companies have gone bust over the past ten years? In some countries, like Vietnam, a MLM company must place a security deposit with the government before the direct selling licence is granted. This is to protect the direct sellers and consumers from being scamed by the MLM company. How many of you remember the Holiday Magic fiasco in the 1970s? Holiday Magic was a USA-based MLM company dealing in cosmetic and skin care products. It loaded the local direct sellers with products, collected the cash and disappeared overnight from the countries it operated in.

MLM companies wanted to outdo each other by claiming that theirs have the highest payout rate of commission to direct sellers. This is one of the areas where the some direct sellers are very gullible or they cannot comprehend the commission system (called the marketing plan) properly. Most direct sellers do not undertand the marketing plan fully.

The MLM companies do not pay commission based on the sale values. The direct sellers' commission are paid based on certain pre-determined points. They named these points by various terminologies.
Some called it BV (business volume), others called it SV (sales volume) . VP (value points), SP( sales points ) etc are also being used by some MLM companies.

The important matter here is that one point is not equivalent to one dollar or one ringgit sales value. The MLM companies have their own criteria for assigning those BV/SV/VP/SP points to each product item. Generally, the highly saleable products and lower margin products would be given lower points. The slow moving products or those with high profit margin items would be assigned higher points.

So, a MLM company that claimed to pay out 63% commission need not meant it is paying a higher commission than one where the payout is only 48% commission. Why? This is playing with arithmatics and the points.

Firstly, one dollar sale does not give you one point. Secondly, the value per point earned for commission calculation need not necessary be one dollar.

For example, Company A's dishwash liquid has a selling price of USD100 but the BV is only 80 and payout is at 48%.

Company B's dishwash liquid has a selling price of USD100 but the BV is only 50 with payout at 63%. Assumming the point value is USD1.00 for both companies.

Commission paid by company A is, 80 X 48% X USD1.00= USD38.40

Commission paid by company B is, 50 X63% X USD1.00 = USD31.50

So, the MLM companies that claimed to have the higher payout rates need not be paying you the higher commmision per dollar sales. Watch out for this misleading claims. Do some homework yourselves. Be wise with your choice and money.