Strategy India shares a document on Slideshare explaining the basic difference between single level marketing and Multilevel marketing compensation plans.

1. Word of Mouth
Used and Abused –Where the Consumer/Investor may be aVictim or/and a Perpetrator

2. Points covered
 Understanding the fine differences between different types of
operations using Word of mouth - Single level and MLM
compensation plans
 Common features in various operations using the word of mouth
publicity
 What is direct Selling ?
 Identifying un viable operations
 Way ahead
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3. Some popular
Economic
crimes exposed
in India
 Stamp paper – Rs.32000 crores
 Satyam – Rs.7200 ( as per Additional Director CBI )
 National Spot Exchange – Rs.5600 crores
 Travel Ventures International /TVI Express (deploying MLM compensation
plan) – Rs.6000 crores
 Saradha Group( using single level compensation plan – agent model as
insurance ) – official figure not known – Under Investigation – Possiblity of more
than Rs.3000 crore
 Speak Asia (deploying the MLM compensation plan) – Rs.2460 crores
 Ketan Parekh Securities – Rs. 1,250 crores
 Aryarup / A.T.C.R (deploying the MLM compensation plan) – Rs.1200 crores
 Stock Guru India (deploying the MLM compensation plan)– Rs.800 crores
 KBC Multi Trade ( deploying the MLM compensation plan) – more than Rs.
200 crore
These scams make up for the tip of the iceberg while some have not got
exposure in the media and more are waiting to be exposed .
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4. Scam India
turnover in
calendar year
2013
About Rs. 11,100 Crores*
* As per the data of WOM operations ( deploying the MLM compensation plans) available with Strategy India http://www.strategyindia.com/blog/scam-alerts/
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5. New
operations
starting in this
domain per
week in India
25-30 *
* As per the data available with Strategy India of various
operations deploying the MLM compensation planswww.strategyindia.com 5

6. Some
Commonly used
terms among all
types of WOM
operations
 Direct sellers/ Distributors/Agents/Affiliates or Similar
 Compensation plan – Single level(SL) and Multi level(MLM)
 Incentives/ Commissions
 Events –Trainings / Business opportunity meetings
 Products/Services
 Website and Online/Offline software
 Crypto currency – Virtual currency
 Customers/Investors
 Rewards/Awards
 Foreign tours
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7. Single level
Structure
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Important Points :
• The agents are also be known as distributors/ associates/ direct sellers
• The agents may be employed by the company ( salary and incentives) or may be working
with the company for commissions only
•This types of structure is also preferred by un viable operations to keep their activities
under the radar
• the cost of acquisition of customer/ investor may be tuned anywhere in the range of 5-70%
•This type of structure is more common in India

8. Multi level
Structure
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Important Points:
• The agents are also be known as distributors/ associates/ direct sellers
• All the agents work on commissions earned on sale by self and their teams
• Despite of the structure being multilevel may use single level compensation plan to incentivise
the agents ( where the agent earns on basis of sales done by him and his personally introduced
agents only)
•This type of structure is preferred to increase distribution network fast
• They commonly deploy the multilevel marketing compensation plans to incentivize the
network of agents

9. Genuine one ?
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10. Under UV
light ?
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11. Genuine ?
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12. Guidelines by
the Reserve
Bank of India
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13. What if ?
Guidelines for WOM operations are notified by the
Central Government which would help people
differentiate between the Genuine and the Fake
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•Save millions of people from getting Scammed
• Save the country from corruption
• Save thousand of man hours of the law enforcement agencies
• Reduce the circulation of Black Money
• Reduce the chances of money being siphoned off the country

14. Different (WOM)
operations deploying
the Single level (SL)
&
Multi level (MLM)
Compensation plans
1) Viable operations – Product/Services – Direct Selling
2) Un Viable operations– Intentional Scams – Naked Pyramids
promote commitments of returns on investments
3) Un Viable operations– Un Intentional Scams
4) Un Viable operations– Un Marketable Product/ Services -
Product/Service based Pyramids
5) Un viable operations– Product/Services highly priced – Offer
Returns on Investments
6) Un viable operations - Help/Donation plans – Offer ROI
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15. 1) Viable
Operations
Promote
Product/Services
 Products promoted have established market value and therefore
purchased by people not related to the company
 Direct seller/s earn their commissions only when the products or
services are purchased for consumption or for retail to others.
 The amount committed and therefore distributed in the
compensation plan per product sale is fixed and is generally lesser
than 40% of the commissionable value of the product
 Performance based payouts which are fair & reasonable and not
skewed.
 Focus on sales of products/services and therefore have good amount
of product trainings
 Cost of entry is quite low
 Offer satisfaction guarantee on products
 Have an exit option
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16. 2) Un Viable
operations
Intentional
Scams
 Commonly known as Ponzi Schemes ( Naked – where only
commitments of returns are given)
 Claim to generate money from sources like Deposits / Investments
- in / for / in form of- Stocks, Shares/I.P.O, Debentures, Gifts / Help /
Assistance / Support / Donations, Currency, Preferential shares, Forex
Trading, Plantations, Farming, Infrastructure projects, Resorts,
Trading in commodities, Crowd Funding , Birds (Poultry, Emu, Quail,
etc), Livestock (Rabbit, Goat, Sheep, Cow, Buffalo, etc), Media and
Real Estate, Currency ,etc
Buy in to earn - to click, to give surveys, to watch advertisements, to
receive SMS and to receive emails and to invest in advertising
medium, etc .
 Compensate their distributors on investments bought in against
commitments.
 Start with money circulation and then move on to generate their
own virtual currency to survive longer
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17.  They are unviable because they commit payout which soon exceeds the
amount of investment they manage to collect .
 They are well connected and organized
 The real promoters operate from the background and have access to
other scamsters and their resources
 Maintain real time intelligence on corrupt political leaders and
government officials who are used to stall Complaints/investigations
 Have database and access to brokers and advocates
 Operate 2-3 sites simultaneously
 They have consultants who help them design the compensation plans ,
prepare software and set up offices with bank accounts abroad
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18. 3) Un Viable
operations
Un Intentional
Scams
 Initiated by novices( First timers)
 Copy the business model of the scam without understanding the
viability
 Generally operate in open as directors of the company
 20% close down in first 3 months
 Maximum graduate to become full time-intentional scammers to
pay off earlier committed amount to investors or sell the database of
investors to other companies to make money
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19. 4) Un Viable
operations
Un Marketable
Product /
Services
 Known as pyramids (product/services based)
 Claim to be like other direct selling companies
 People enrolled at the beginning earn the most
 People buy in the opportunity to earn and not the products/services( which
are unmarketable or not of any use for them)
 Products promoted generally are online courses , e-learning packages , e-
zines , quiz packages , online marketing tools , web space , Bid
coupons/Vouchers , Discount coupons/vouchers , Holiday vouchers, Time
shares, etc. or any other high priced low value tangible products.
 Start up cost range can be anywhere between INR 100 – INR 15,000
 Focus on recruitment of new members only because no retail viability
 Start generating virtual currency once their income is lower than the
amount committed as per the MLM compensation plan
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20. 5) Un viable
operations
Product/Service
s highly priced
& Offer Returns
on Investments
 Commonly known as Investment/Growth plan companies
 Advanced types of Ponzi schemes
 Products/ Services are offered at over inflated cost to discourage
people from asking of deliveries
 Higher ROI is offered to people not opting for products
 Products and Services are shown to conceal intention therefore escape
scrutiny
 Start generating virtual currency to sustain which makes if difficult to
gauge size of the scam
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21. 6) Unviable
business
models
Help/Donatio
n plans - Offer
ROI
 Newest type of Ponzi’s to avoid PCMC(B)Act 1978
 No company exists
 Money changes hands among the agents directly
 Promoters offer ROI on various amounts invested
 The promoters short change investors by sending their account
details to collect maximum investments
 Promoters claim to be victims once the show ends
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22. Direct Selling
Type 1) Viable
operations
promoting
Product/Service
s
 Type of retail model – like the Traditional brick and mortar ,
ecommerce , etc with added features where consumers have the
opportunity of buying the products at a discount and selling it to
others.
 “Marketing and Retailing of products/services to people in
places other than fixed retail locations”
 Individuals join the direct selling company to consume the
products at a discount or to earn by retailing the products/services
to the people they know .
 They also have the opportunity to earn when the
products/services get retailed for consumption by the people in
their team .
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23. Common
misconception
s about Direct
Selling
 Its an un viable business model – Money rotation /Money circulation
 More the levels more the payout and therefore un viable
 Person who joins earliest earns the most – easy money
 Products/Services are purchased by Agents/ Direct sellers only and
not people outside the network
 All operations using single level / multi level marketing
compensation plans are direct selling operations
 Products are overpriced
 All operations deploying the MLM compensation plans are the only
scams robbing our countrymen
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24. Interesting
facts about
Direct Selling
 Promotes Self employment , Skill development and
Entrepreneurship
 Ensures performance based payouts which are fair & reasonable
and not skewed.
 Does not require people to migrate to other areas and therefore
gives a chance to work from home without putting stress on life
and finances.
 Creates markets for new product concepts (as personal guidance
on usage and benefits from known person instills greater
confidence in products rather than off the shelf purchases)
 Gives fair opportunity for people from all walks of life to have a
chance to learn to earn a decent income without investing a
fortune.
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25. Identify
Type 2),3),4) 5) &
6)
 No genuine/marketable product or service. Exercise caution if there is no
underlying product or service being sold to others, or if what is being sold is
speculative or appears inappropriately priced.
 Promises of high returns in a short time period. Be leery of pitches for
exponential returns and "get rich quick" claims. High returns and fast cash may
suggest that commissions are being paid out of money from new recruits rather
than revenue generated by product sales.
 Easy money or passive income. Be wary if you are offered compensation in
exchange for little work such as making payments, recruiting others, reading
SMS/Emails and placing advertisements.
 No demonstrated revenue from retail sales.
 Buy-in required. The goal of a direct selling program is to sell products/services.
Be careful if you are required to pay a buy-in to participate in the program, even if
the buy-in is a nominal one-time or recurring fee (e.g., INR 100 or INR
100/month).
 Complex commission structure. Be concerned unless commissions are based on
products or services that the direct sellers sell to people outside the program.
 Emphasis on recruiting. If a program primarily focuses on recruiting others to
join the program for a fee, it is likely a pyramid scheme. Be sceptical if you will
receive more compensation for recruiting others than for product sales.
 Early bird rewards . Be extra cautious if earlier you join , the more you earn is
buzz word
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26. Scam Alerts updated weekly - http://www.strategyindia.com/blog/scam-alerts/
Report scam - http://www.strategyindia.com/blog/report-a-scam/
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