What Type of Person Belongs in The Reverse Funnel System
What is a funnel scheme?
A funnel scheme, also referred to as a pyramid scheme, is a form of Ponzi or chain promotional scam where the model typically includes offering products or services at "cost" to the general public in order to recruit new participants. The original product offering is called the "top of the funnel", while any subsequent commissions earned by those who recruit others into the company are known as their "bottom of the funnel". The higher on this pyramid an individual participates, payouts become smaller and smaller in relation to initial investments. Imagine yourself standing at ground level with nothing but air above your head. There used to be thousands of people on top of you but now there's only one person left. Their promised income is the only thing that stands between you and total collapse.
The first question that arises from people when they understand the concept of any funnel scheme, is why people fall for it. The answer is simple: human greed.
In a normal investor's mind, if one has just invested $100 in something and expects a 40% return per year on their investment, then this same investor would be disappointed with a 30% return on his/her investment if he/she left the money in a traditional savings account. So, it's not really about the money so much as it's about that person having to ensure that their investment was worth it.
Most importantly, the person's ego is on the line.
How does this relate to MLM?
The reason that many people in MLM fail is that they are playing the role of a "marketer" rather than a salesperson and their primary goal is to recruit other marketers, not to sell product. Their "bottom of the funnel" is all about recruiting other people rather than selling product. In other words, they are not trying to fill up an empty bucket (i.e., selling product), they are trying to create a funnel that consists of thousands of buckets and then hoping that every single bucket will fill with money before their own bucket fills up with water. Most importantly, the person's ego is on the line.
An example of this is a "pre-funnel" that most people will fall for. Once they realize they have been scammed, their first thought is that they should go back to the person who purchased from them and tell them exactly what happened so that the next time they do business with that company or person, that person can no longer use them as a "marketer". But this action in itself is foolish because what they did was lose money for themselves by not getting paid (as potential recruiters) and then lost an opportunity by not being able to earn compensation in order to buy product from them again. Worst of all, they also destroyed the opportunity of others whom they could have possibly recruited themselves.
In the following examples, I will explain three different roles that people are typically able to play:
1. Marketing – This role is where you are buying product from a distributor so that you can earn some money in order to purchase more product from the distributor and hopefully earn even more money by selling it to others who are interested in your products. For example, someone who buys MLM "starter" kit on a website like Amazon or eBay pays $200-$300 for the kit. They then tell their friends and family about the wonderful new program and sell them a starter kit with their own return address, etc.
2. Sales – This role is where you are selling the product to the person who recruited you so that they can earn money in order to purchase more product from the distributor and hopefully earn even more money by selling it to others who are interested in your products. For example, someone who buys MLM "starter" kit on a website like Amazon or eBay pays $200-$300 for the kit. They then tell their friends and family about the wonderful new program and sell them a starter kit with their own return address, etc.
3. Recruiting – This role is where you are purchasing product from the distributor so that you can sell the product to others in order to earn money to purchase more product. For example, someone who buys MLM "starter" kit on a website like Amazon or eBay pays $200-$300 for the kit. They then tell their friends and family about the wonderful new program and sell them a starter kit with their own return address, etc.
Example 1 – Marketing
Let's say someone buys a "pre-funnel" kit similar to this:
So they show up at your door and you see that you need at least $1000 dollars worth of product in order to start earning commissions from this person. You then decide that you have no money to put into this, so what's the next best thing?
You suggest that they buy a product of your choice and then offer to sell it to them at a large discount. So let's say you choose Oil of Olay Wrinkle Cream since you've seen some testimonials on their websites with pictures of some old lady who's looked 10 years younger ever since she used their product. They buy the product from you and then tell their friends and family about your amazing business opportunity and how rich they are going to be if they join.
You make $100 selling the product for $99 cents instead of for $100 dollars. This might not seem like a huge deal, but it's much better than making nothing at all. The people who buy the product from you are usually just hoping to make money for their first month since they don't know how to sell personal care products and you've already done all that hard work for them. This also means that you have a $29.99 credit sitting in your back office that can be used to purchase more product in the future.
Example 2 – Sales
Let's say someone buys a "pre-funnel" kit similar to this:
So they show up at your door and you see that you need at least $1000 dollars worth of product in order to start earning commissions from this person.
Conclusion of Example 1 & 2
In both cases, you (as the person in the marketing stage) are filling up your own bucket with $100 worth of product, whereas in a traditional sales job, you would be expected to earn $100 worth of commissions before your boss sees any return on his/her investment. It may not seem like much at first, but this is actually good for you because it means that you get to do a lot less work and hopefully get paid twice as much! In a traditional sales job, you're probably going to work harder but make less money.