The Truth About MLM One-Up Plans

First, let’s get one thing straight.  Any time you must rely on building a team to make you money, it’s an MLM.  If you cannot rely on entirely on your own efforts to succeed, it’s MLM.

Okay, what is an MLM One-up plan?  You come across a site: some guy sitting in a lawn chair at the beach sipping his cocktail.  The site claims limitless wealth is yours for the taking.  However, this opportunity is only for serious people willing to prove they’re worthy of this information.

How do you prove your worth?  You shell out $50 dollars from the get-go to “read all about it”.  One-up plans require that you first pay to receive information and/or enroll. 

I’ve already eluded to a prime example, Ty Coughlin’s “Reverse Funnel” system.  After you pay your initial $50, you discover that you are being sold a lifetime membership with the timeshare vacation company Global Resorts for only $2995.

The bait…you are paid $1,000 for every new membership you sell. Here’s why it’s referred to as the “One-up” plan.  Royalties on your first sold membership, skips you, and goes to your sponsor.  Every membership you sell thereafter goes to both you and your sponsor. 

“It’s Elementary, My Dear Watson…”

Now you’re thinking, “Wow! $1000 for each membership I sell, that’s pretty good.”  Hold on, do you believe selling $3000 memberships will be easy?  One-up plans have one big flaw, they are not duplicable.  In all MLMs, your ability to earn money is directly proportional to the degree in which the method is duplicable. 

Meaning, the greater the number of people who can copy exactly what you do and succeed equals the greater wealth you will all achieve.  A successful MLM will offer a product or service that the vast majority can easily afford and utilize.  You don’t want to sell to the top 10% and ignore the remaining 90%.  This is unreasonable and makes your job a whole lot harder.

Each member is required to set up a system website at a cost of $100.  They give you tools and services you need but it will cost you an additional $30 (very unimpressive and basic) up to $300 every month for the Rolls Royce version.

How are you going to get visitors to your site?  Advertise.  The Global Resorts Network  provides you with ads but that’s extra.  Effective advertising is not cheap.  You must budget a certain amount monthly for advertising.  Let’s go really conservative and keep it to $100 a month.

Ready, Set…Gotcha!

Okay, a few curious visitors pay the initial $50 for information.  What happens next? They drop out. They can’t afford the $3000 price tag and/or are just not interested in getting involved in a timeshare vacation program.  Again, it’s not duplicable if it’s too expensive.  In my research, I have not seen any mention of a refund.

Most people today have little left for luxuries and will not go any further.  Others will leave you behind, go searching for more information and find more alluring sites that offer them a little more than you do.  This will likely account for a good 75% – 90% of potential prospects.

I’ve been involved in timeshare programs before.  Trying to reserve one vacation week anywhere is very difficult.  As the number of members increase, availability decreases.   When availability decreases the value of the product also decreases.  Thus, the more memberships sold, the less they are worth.

Currently, there are at least three other marketing systems out there selling Global Resorts memberships.  Carbon copy marketing, I believe, is another one.  Since they are all promoting the same product to the same few who have money to spend, you are now competing against each other.

The Nitty Gritty

Now that you are better informed, how long do you think it will take you to sell two memberships (remember, you don’t get paid on the first)? Let’s say three months.  In your first three months you’ve spent:

·         $50 initial fee

·         $100 for the website

·         $3000 membership fee

·         $90 for the basic network fee ($30 x 3 months)

·         $300 in advertising costs ($100 x 3 months)

Your total expenses for your first three months are $3540.  Having sold your first two lifetime memberships, you’ve earned your first $1000, leaving you $2540 in the hole.  Of that, Ty has made approximately $540 from you.

Okay, give it another three months during which time you’ve sold another two memberships.  Add to your outstanding $2540, three months of advertising expenses ($300) and three months of network fees ($90) increasing your expenses to $2930. 

You’ve sold two more memberships and receive $2000, reducing your expenses to $930 but you still cannot claim a profit. On the other hand, you have added a grand total of $930 toTy’s bank account.

Three more months and you’ve sold two more lifetime memberships.  You’ve added another $390 to your expenses which totals $1,320.  Finally, after nine months you make a profit of $680. 

Congratulations! Your told now is the time to capitalize on your success!  If you really want to increase your numbers, spend more on advertising and upgrade your web site.  Where do you think that will land you?

In the meantime, Ty Coughlin is sitting pretty making money hand over fist on each person’s monthly fees and charges for using his system.  During your nine months of hard work, you’ve given him at least $1320.

I’m not saying you can’t make a profit with the Reverse Funnel system.  However, it’s not as easy as it sounds. Even if you do stick it out this far, statistically over 60% of those under you will not.  It’s also very likely that it will take your own recruits longer to build their network.

Notice, this example did not account for “Uncle Sam” which takes a big bite of out of your commissions, further delaying the time you finally break even. 

Biography:

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