8 Reasons Why Multilevel Marketing Will Be Back
The traditional model did not really work, with 99% of people engaged in these schemes losing money. The time has come to introduce an updated, technology-enabled, lightweight, and definitely less-exploitative version.
by Jon Bains
Posted on 11-05-2017
This article is part of CMO.com’s November series about commerce and consumerism. Click here for more.
MLM. Such a lovely three-letter acronym. What can you say about multilevel marketing that hasn’t been said before? Not a lot really, so I’m not going to dwell. But it is important to consider. When Avon ostensibly originated the practice to bulk resell deals to individuals, who would have guessed that it would turn into the multibillion-dollar industry that it is today?
But the old methodologies only work for those running the schemes, and 99% of the consumers engaged in them actually lose money, giving the whole system a pretty bad rap. In our customer-centric universe, it feels like the approach is ripe for positive disruption.
When thinking about retail, there are a few factors that suggest that MLM, or at least a softer, gentler, more positive approach, may indeed have some, if not a great deal, of value if used appropriately. These eight considerations will help you pave the way toward a new version of this approach.
1. Consider: The High Street
The shape of High-Street retailing has changed dramatically in the last couple of decades. Product choice is left in the hands of a relatively few major players, and unless you happen to be promoted and distributed by one of them, or have your own, then the likelihood of anybody finding your goods is slim.
2. Consider: E-Commerce
The internet is responsible for this decline and reimagining, and online shopping solves, to an extent, the “choice” problem. You can buy any variant of anything from anywhere. If you happen to live in the right country or catchment area, you may indeed be able to order and receive your wares within hours—or even minutes—as the fleets of drones descend onto our airspace delivering our much-needed consumer goods. We truly have entered a golden era.
3. Consider: Experiential
For new brands and new product categories, there may be a requirement to actually experience the product—in real life—before you commit to a purchase. This is, indeed, where Avon started. It’s highly relevant to cosmetics, perfumes, many kinds of fashion, health aids, and the like. That’s where pop-up retail and experiential marketing come into their own—if you happen to be fortunate enough, aware enough, and motivated enough to turn up when things start popping.
4. Consider: Social Media
One of the most important factors these days are those pesky reviews that we want everyone to write—as long as they are positive, helpful, and frequent. We need that social proof to convince others that our marketing blurbs are valid and the product in question is fit for a purpose—our purpose. This is all fine and well when you exist as one amongst many in a category that is well trodden. It’s substantially harder when you are being, you know, innovative, as consumers have nothing really to compare it to or may not have a particular affinity for the category in general.
5. Consider: Returns
A key advance in the logistics of e-commerce is timely, frictionless, quibble-free returns. Perhaps my favourite approach is one by Marks & Spencer and others, who allow you to package up and return via local newsagents. Whilst this may be yet another nail in the coffin for the humble post office, it does provide a level of convenience that is difficult to underestimate. This kind of service opens up new opportunities of experimentation and trial around new categories, helps build trust, but most importantly, reduces fear. Fear and commerce is bad. Don’t do it.
6. Consider: Loyalty
A common thread with brands is to turn their customers into loyalists, ambassadors, referrers, or advocates. Take your pick; they amount to the same thing. This manifests itself in many ways, from a humble share of a bit of content to online affiliate schemes that reward customers in a variety of ways.
7. Consider: The Lilies
OK, maybe not the lilies. Consider the new opportunity for direct resellers. The traditional model for multilevel marketing was buy in bulk and create your pyramid of resellers. It’s safe for those at the top—bad for everyone else. Ninety-nine percent of people who engage in these schemes lose money. Things don’t have to be like that anymore. You can now have a one-to-one relationship with an advocate that doesn’t involve having to move much product around. All they need is a few examples, the will, and a smartphone. The “show-rooming” of the High Street becomes the “living rooming” or “me-tail” of tomorrow.
8. Consider: Living-Rooming
It’s obviously not appropriate for all products. If you have anything that requires a tactile experience that can be shared, then it’s worth thinking about. I tend to see this more as the physical extension of social media and brand building than purely as increased distribution. The rationale for going down this route is building trust through experience and discussion; therefore, simply creating a new MLM scheme isn’t enough. Multiple layers of value are needed across the system.
Having a holistic approach to your KPIs is critical—it’s reach, reviews, and repeat, in addition to conversion. If you already have a reasonably sophisticated e-com setup (of course you do!), it’s relatively easy to set up.
Getting To The Point
It just seems to me, considering the points above, that we’re on the tip of a massive resurgence of this kind of approach—the evolved Ann Summers, Tupperware, and Avon model. Enabled by technology, lightweight, non-exploitative (well, less-exploitative), it can be the go-to method for product innovation and demonstration. Can’t it?
Topics: Creative Cloud, Insights Inspiration, Creativity, CMO by Adobe
Products: Experience Cloud, Target