Have you ever wondered what the
difference is? MLM operators claim they're not operating a pyramid
scheme. Matrix and "forced matrix" operators claim that
what they have is better than MLM. So what are the differences?
Pyramid Schemes:
Pyramid Schemes are illegal in the USA, and probably abroad. We
all know how these schemes work, or at least get the jist of the
idea. A person (the originator) starts by sending a message to
several people. Usually people he/she knows.
The message in some round about way, will
tell everyone to send him $5 or so...and then send the message to
someone else. All the while adding names to the list, and each new
recipient must send money to the first person, second person...etc
There are a million variations of the Pyramid Scheme, but the main
attribute that define a pyramid scheme ( also known as chain
letter) is that there is no product, it's just people sending
money. The term "Pyramid Scheme" is derived from the
fact that it starts with one and the size of those involved
increases as you move towards the bottom. On paper, it looks like
the shape of a triangle, or pyramid.
Multi Level Marketing:
How is MLM different from a pyramid scheme? After all, on paper
any MLM looks like a pyramid in reality right? The differences are
very simple. In MLM there is a product being sold. Income is
generated from "commissions". It's actually a pyramid
scheme, except that the participants get something
back...regardless of whether the people they refer actually pay
for something...
In MLM, the participant always gains from their investment. The
catch is in the value of the product that the participant receives.
This is the reason that MLM is so big on the internet. Because,
information can have a monetary value, and it cost the distributor
nothing. So ebooks, software, newsletters...etc... these are the
most common products used in MLM. MLMers have added tangible
products as well, and home products were the first to use MLM as a
primary marketing strategy.
The Forced Matrix:
With so many MLM programs on the market these days, originators
have tried to make their programs more desirable than others.
Hence the forced matrix idea. In a regular MLM program, your
monetary gains are based entirely on how good you are at marketing
the program. However, most people arent' very good.
So it would benefit the less talented if
they had help from the talented. Basically, if the number of
people who can join under you is limited in any way...then it's a
forced matrix. The idea being, anyone else you refer extra..will
go under someone else. The best implementations put the extra
person under one of the people YOU have under YOU. Hence it helps
the person under you, which helps you too.
The term is tossed around a bit, and sometimes not used at all.
However, that is what defines a forced matrix. Sometimes numbers
are used to describe a forced matrix more thoroughly....like
"4 X 4 forced matrix" for instance. Which might mean
that you can only have 4 people directly under you and only 4
people under those 4 who you recieve commissions from.
There is a hibryd idea that has become common now, where by a
person can deliberately place a referral in another line of their
choice. A sort of traffic control attribute that helps originators
get their referrals interested. This has been an attempt to make
regular MLM more appealing, and it has worked. In fact, forced
matrix MLMers have even implemented the option in their own
programs.
The benefits of either are about equal. With a forced matrix, you
stand to earn an income faster, but increases in income are slower
because your referrals get forced further down the line from you.
With regular MLM you have a stronger base, and sustaining it is
generally easier...but first profits can be slow. If you want a
little income faster, go with a forced matrix. If you want BIG
profits and are willing to work a long time for it, go with
regular MLM programs.
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