If you are a Social Entrepreneur chances are that question is all too familiar.
Interestingly enough a pyramid is entirely illegal, so what gives? Not only is Social Selling alive and well, but it also continues to grow by leaps and bounds. It is resilient even in the toughest of economic times. In fact, as of 2015, it’s revenue exceeded 36 Billion annually in the U.S. alone, with a 4.8% increase from 2014. All that being said, ask any Social Entrepreneur if they get asked if their business is a pyramid?
In all industries, unfortunately, some companies do not always act ethically. But these are the exception, not the rule. Many reputable companies elect to participate in organizations such as The Direct Selling Association which hold companies in our industry to a DSA code of ethics.
Wikipedia even notes “a pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment.” Simply put, there are no real goods or services exchanged.
FORBES Magazine even weighed in on this hot topic, stating that “Legal multi-level marketing (MLM) involves being recruited in order to sell a product or service that actually has some inherent value. As an Independent Distributor, you can make a profit from the sales of the product or service, so you don’t necessarily have to recruit more salespeople below you. While you may be encouraged to recruit other salespeople whose sales would give you more profit, you can stick to just selling the product directly to the consumer if you choose.”
Interestingly enough the reference to Pyramids in Social Selling is almost opposite of the way it truly works. When someone signs up with a company, it is their immediate upline (the individual who brought them in) that earns the higher percentage of commission off the sales of product or services that they sell. The higher and further up the upline is, the lower their earnings off that sale will be.
In fact, when we look at the structure of pyramid you could certainly classify our government and corporations as exactly that. For example, most corporations have One CEO, a few Presidents, a few more Senior VPs, several Executive Managers, and tons of employees. Does that sound familiar? That is the exact structure of a PYRAMID!
Just remember, this business is full of great companies, amazing products, and success stories that span over a century! Knowledge is certainly power! So the next time you hear someone ask if your business is a pyramid, simply understand the question is not a rejection to your business but instead an inquiring mind that wants to keep the conversation going. What a perfect avenue they have given you to fill them in on the wonderful world of Social Selling!
ABOUT THE AUTHOR
Twenty years ago, Melissa Thompson stumbled her way into the world of Social Entrepreneurship. After signing up with a beauty company, she fell head over heels for the business, the people, and the mission. She has had the privilege of working in a variety of roles, from executive corporate positions within the industry’s largest organizations to helping startups launch their businesses from scratch.
Melissa is passionate about Social Entrepreneurship! She loves that it gives people, from every walk of life, the ability to significantly enhance their worlds.