As a software designer I quite often have to look at a system in the offline world and ask my self how would I implement that in cyber space.
Today I will take a look at how I would implement a multi level marketing strategy in cyberspace. To implement a successful MLM system we need three things, a product, lots of marketeers and lots of customers,
The first thing we need in any good MLM system is a product. As this is cyberspace, I think the best product would be a virtual one. No manufacturing costs, no delivery costs, in fact no actual product at all! Just an entry in a database. Perfect. All we need now is a catchy name for our virtual product. I know, lets call it a LENAP.
The next thing we need in an MLM system are lots of people to sell our LENAPs. The easiest way to attract people to participate in our scheme is offer them a fantastic rate of return if they can sell on our wonderful LENAPs, and get their friends and family to sell them too.
So lets tell them they can sell them for a 100% markup and keep all the profit. That should tempt them in. With social media, this could go viral and I’ll be quids in.
Now we need just one more thing, customers to buy our LENAPs. As a LENAP is not a real product, and serves no purpose, so that might be difficult!
In a conventional MLM system, a lot of the products are purchased by the actual marketeers themselves, or their downline. I remember my mother having a cupboard full of Amway cleaning products. That might be a little difficult with virtual product as it can’t be used to clean the carpet!
So a little smoke and mirrors is now needed. Lets charge our marketeers a “monthly fee” and use that money to purchase the products, that way they are buying the products from themselves without even knowing it.
We can also use a proportion of the monthly fees from the marketeers downline to purchase their LENAPs as well. The more people they recruit to sell LENAPS, the quicker they will sell their own and the more money they will make. Best of all they won’t even realize they are indirectly selling our useless LENAPs products to their friends and family!
Greed will convince them the system is great and they will continue to convince all their friends and family to “invest”. Better make sure it says they can’t use the word “invest” in the terms and conditions. Cover our ass for when the regulators come calling.
Bells and Whistles
A couple more thing is needed to complete the system. If a marketeer has no downline, it can take some time for the “monthly fee” to “buy” all their own LENAPs . They might get bored and leave. So I’ll give them a way to speed the process up and purchase their own useless LENAPS. Lets call it a CIFFART package.
Now as the only money coming into my system is from the marketeers themselves I need to stop them taking the money out. So we better have some bigger and better LENAPs for them to buy once they have sold their first one.
Perfect. Just one thing left, I need to make money from the system. As all the “purchasing” of LENAPS is done using the monthly fee, I decide exactly how much is paid for them and how much of that I slip into my pocket. It only needs to be a small %, so it does not significantly effect how long it takes a marketeer to sell all their LENAPs. As i control the system, and no one knows how it works, I can always adjust the percentage and increase my profit at any time.
There are a couple of small problem with my system, but I will have made my money and gone before anyone notices.
It requires an endless supply of marketeers. As you buy bigger LENAPs, you need more friends to sell them to. If you can’t recruit enough, you will end up buying the LENAPs youself, with your fees. Now because I pocket some of it, your fees don’t cover the cost and you will loose money. And because you were greedy and went for the biggest LENAP available, you will loose the most. Probably more than you had made already.
The Cover Story
Another small problem. All the money to fund the system comes from the marketeers and in some countries that might be illegal. So I better hide everything in a private company and put up some more smoke and mirrors. Now what other business has no physical products. Just words on a screen and a number in a database. Hmmm…. Online advertising, the perfect cover story.
This article is just an explanation of how I would set up an online MLM scheme and is not meant to represent how any company is doing it.