There are few things more distasteful to me than the classic MLM business. Having been a stay-at-home mom (one of the demographics most aggressively recruited by these companies), I’ve had my share of exposure. I have been invited to more “parties” for cosmetics, cleaning products, accessories, jewelry, and books than I can remember. I was even once invited to one that was hawking plastic surgery! On the flip side, I did a brief (and not entirely unpleasant) stint with a local publisher of gorgeous children’s picture books.

Though I’ve left that somewhat seedy world far behind me, I can’t help but notice the many similarities between a successful MLM and a successful social media presence. At their core, both the pyramid scheme and the Web 2.0 campaign are about bringing individuals together for a common cause and leveraging many small, personal transactions into one large payday.

Yes, social media “gurus” may say they are all about the cutting edge of Web 2.0, but they aren’t all that different than the Amway salesmen of yesteryear:

  • It’s all about the relationship: We hear how social media is “all about the relationships.” We know by now that it’s also about listening, strategy, execution, and ROI; but the relationship is undeniably a critical piece of the puzzle. In MLMs there’s a uniquely personal relationship between sponsor and recruit, a similarly family-like relationship between the company and their sales force, and the inherently personal relationships between individual sales people and their customers – typically friends and family.
  • The conversation is driven by influencers: In social media, influencers are the people with the biggest following, loudest voice, greatest clout, most impressive accomplishments, or some combination of all these things. In an MLM, the insights and tactics of top producing sales people are heavily promoted to new recruits and the struggling army of sales people.
  • Successful transactions require social proof: Web 2.0 has trained today’s buyer to seek out social proof when considering any purchase. With all the content and tools available, he can search for testimonials, complaints, and reviews. Likewise, MLMs have always relied heavily on written and spoken testimonials to move their products.
  • Evangelists are a key part of the strategy: Discovering and nurturing brand evangelists is a critical part of both Web 2.0 campaigns and MLMs. The “she told two people and they told two people…” concept has been around for ages. Web 2.0 speeds up those conversations, but the concept is the same as when the local gossip would spread news from door-to-door.
  • Participants feel like they are part of something bigger: MLMs have been compared to cults for the way they insinuate themselves into the lives of their members and encourage that “big, happy family” perception. Social media communities – whether members of a forum, facebook fan page, or twitter following – have a similar feel of people congregating around a common idea, product, or passion.
  • Word of Mouth is the holy grail: In social media, we call it “going viral,” in the MLM business it’s all about spreading the word through a kind of grassroots chit-chat – mom-to-mom, woman-to-woman, friend-to-friend. Both social media and MLMs depend heavily on the willingness of people to share the message with their personal networks.
  • The most successful operations use a soft sell approach: A cardinal rule of social media is to engage first and sell second. The same is true of MLMs where recruits are trained to create affinity with a target before putting the offer on the table. In both cases, the sales process involves a casual initial contact that then becomes the foundation of a future relationship. Even when an MLM sales person hosts an event, there is no obligation to buy. Often, the whole event is billed as a giveaway – a free makeover, style analysis, demonstration, or informational lecture.
  • The sales happen where the customers live: MLM events often take place in the home at “parties.” In social media, the contact, conversation, and sale also take place where the prospect “lives” – on various online venues. With social media, companies can now become part of your personal, digital landscape.
  • The whole thing is “social:” Finally, what’s more “social” than an MLM? Sales are made to friends and family in social, “party” settings, people are encouraged to get to know each other, have fun, and share stories about their experiences with the product. It’s not unlike the many brand communities in the world of Web 2.0 where people can meet to exchange tips, make connections, and often just be entertained.

Maybe it’s a classic case of what’s old is new again. Though it may be wearing a shiny, new suit; social media marketing owes a lot to the old-fashioned MLM. It’s just that the neighborhood got a lot bigger and technology increased the reach and speed of our conversations. In the end, it’s just a new way of using what works to build relationships and sell products and services.

What do you think? Do you see the similarities? What about differences?