Have you ever come across a plan, a product, or an offer that sounds too good to be true? It’s probably because it is.
Pyramids are a well-known marketing strategy for multi level marketing companies (MLM) or networks, and similar to multi-level marketing in structure, the company profits from selling products at lower prices to new customers who are introduced at the bottom of the pyramid and make up most of their sales as they move up through the ranks.
This article will break down what is a pyramid scheme and how can you spot one.
Some background info
If you have any familiarity with internet marketing, you’ve probably heard about PPC ads or pay per click advertising. These ads cost money each time someone clicks on them – either your company or another advertiser pays when someone views the ad.
The idea here is that once people see your ad and know that your site offers something they’re interested in buying (a product), they will click on your link to go to your site where they can buy directly from you at a lower price than if they were coming from somewhere else that may not be as trustworthy.
You could say this business model has worked for many MLM companies over the years and since PPC ads pay based on how many times an ad is viewed or clicked on by potential customers, it makes sense why so many are quick to jump on the bandwagon as well.
So it is not unreasonable to be cautious about websites that somehow use a similar structure.
What is ClickFunnels?
ClickFunnels is a Software as a Service (SaaS) tool for content creators and internet marketers who are ready to enhance their sales strategies and revenue by implementing planned, and successful marketing strategies.
People tend to think that investing in software and tools to automate your processes is only for bigger businesses, but honestly, despite the size of your operations building a valuable marketing toolkit is something you must consider.
The level of expertise in software and tech related subjects is not an excluding factor either, because ClickFunnels (like most all-in-one suites) comes with a straightforward environment and simple drag-and-drop tools to grant a user-friendly experience.
The product can be beneficial for all business sizes, and it can be integrated into other tools so you can conduct your operations from a dashboard that adapts to your specific requirements.
Who owns ClickFunnels?
According to their website, joining ClickFunnels is joining more than 100,000 entrepreneurs who are already using the app, so you can say it is a popular and respected company. In fact, according to DecanHerald it is among the fastest growing SaaS companies, with over $100 million dollars annual revenue.
The founders of the company are Russell Branson and Todd Dickerson, two well-renowned and respected entrepreneurs. Their mission is simple, but powerful, helping businesses grow by providing the resources and tools to help them convert and scale.
With a tribe of over a million entrepreneurs following his steps, Russell Branson is a successful, entrepreneur, marketing guru, and published author who has popularized the concept of sales funnels.
He is the co-founder of ClickFunnels, the fastest-growing (non-venture funded) software company in recent history. He is passionate about sales, proof of his success.
- 2003 he sold his viral marketing tool Zip Brander.
- 2005 he launched his product “How To Create A Potato Gun”, An instructional course (DVDs format) with the option to buy his kit (an upsell).
- Selling merchandise (coaching, books, consulting, software, supplements, etc.) Russell gained his rock star status in some network marketing companies.
- In October 2014, he launched (with Todd Dickerson) a sales funnel software, what e know today as ClickFunnels.
He is an expert in marketing and software development who understands exactly how a sales funnel works, and that is why he is one of the co-founders of ClickFunnels. Since childhood, Dickerson has been passionate about the internet and everything related to how it works.
This passion for technology shaped his path into digital marketing and software development. After a respectable career in web design, he realized he wanted to do more and decided to start his own business.
ClickFunnels has a solid reputation to prove they are leaders in their sector. His professional experience and his technical know-how in marketing and customer service are to blame for his success.
What is a Pyramid Scheme?
I know you came here with one question in mind, but I would like to give some context before stepping into the legitimacy of the ClickFunnels software. First, let’s understand what a Pyramid Scheme is.
A pyramid scheme is a fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments. The scheme works as follows:
- A group of individuals is recruited into a pyramid scheme, in which they each invest a small amount of money.
- New recruits are often recruited at the base of the pyramid, who invest even smaller amounts of money.
- At the top of the pyramid are the scheme’s organizers, who profit from the small percentage of people who reach the top of the pyramid and contribute to their income.
- Because each new recruit must invest more money than what they bring to the table, a typical pyramid scheme requires an ever-increasing rate of investment from participants, in order to yield any returns at all. This leads to the shedding off of participants as they become incapable of putting in more money, and an ever-draining pool of funds.
Why is ClickFunnels suspicious?
It is understandable that some people think that ClickFunnels is part of a Pyramid Scheme, but most of these suspicions will quickly vanish if the public took the time to understand the basis of the product and some basic concepts of affiliate marketing and sales funnels process.
One of the factors that trigger the alarms is the make-money-quick image the platform has. There are abundant overnight success stories linked to using the platform, but they come from a deep understanding of affiliate marketing, sales funnels, and marketing strategies applied using the tools to software offers.
Another key factor that makes people think the platform is, but, a scam is the ClickFunnels affiliate program. I will explore their program in detail in the following section. Overall, many think that the platform offers money and results they cannot deliver, but the truth is they have the success stories and reputation to back their product.
Is ClickFunnels an MLM?
Another reason that leads people to misunderstand ClickFunnels is the suspicions of the use of a multilevel marketing strategy (MLM). This concept is not new, and oftentimes it is used by direct selling businesses to incentivize existing distributors to recruit more.
In Multi Level Marketing, participants receive a monetary incentive to recruit and sell inventory to other participants, the structure is somehow perceived as a Pyramid Scheme, and sometimes (only sometimes) it is.
The ClickFunnels platform promises excellent commissions and revenue, and this is associated with MLM model. But the is nothing to worry, ClickFunnels is not an MLM scheme.
ClickFunnels provides digital marketing solutions to improve online businesses, and the product and its concept are straightforward. To make your way to the six figures check, you must define and put in place an efficient marketing strategy and business talents.
ClickFunnels affiliate marketing program – How is it different from a Pyramid Scheme?
ClickFunnels affiliate program has a 2 tier system. Said simply, it means the original affiliate earns a commission from a buyer, and when the buyer becomes an affiliate and refers another sale, the original affiliate makes a small commission too. Less than the direct affiliate. Considering this system, ClickFunnels does not qualify as a pyramid scheme.
Their affiliate program attracts marketers because it pays up to a 40% commission to people who sell their software and training programs. And there is more! If you sell the One Funnel Away Challenge program, you will make a 100% commission.
It is a golden opportunity for affiliate marketers and knowledgeable entrepreneurs looking to make some cash promoting affiliate products. This strategy has been fundamental for the growth and success ClickFunnels has had, and their “Affiliate Army.” only continues to grow.
The reason why ClickFunnels is legit
When you market using ClickFunnels you sell a product or service, you do not sell smoke and mirrors like most Pyramid Schemes.
You can refer affiliates, but it is not mandatory. With ClickFunnels, you are not forced to recruit participants, which is elemental in Pyramid Schemes. It is your choice whether you are part of the ClickFunnels affiliate program or not.
Ultimately, ClickFunnels is a tool to create landing pages, market products, and services and increase the conversion rates of the online business. They are a 100% legitimate company.
But beware of scammers, remember that despite their best efforts, people could still use the platform to build fraudulent businesses, be vigilant of pyramid scams.
Is ClickFunnels Worth it?
Absolutely, if you are a digital marketer this tool has the potential to help you automate processes, increase sales, build sales funnels, tailor marketing strategies, and more because it has a tool integration for almost (yes, almost) everything that an online business needs.
There are cheaper alternatives, that is a fact. But considering all the benefits, ClickFunnels offers real value and your investment will pay itself shortly.
What are Ponzi schemes?
According to investopedia.com a Ponzi scheme is a fraudulent investing scam that generates returns for earlier investors with money taken from later investors. This is similar to a pyramid scheme in that both rely on the same underlying concept: an investment that pays regular returns to excited buyers who cede more and more money to the next person in the line.
The key difference between a Ponzi scheme and a pyramid scheme is that a Ponzi scheme requires the involvement of legitimate third parties rather than direct participants. These parties operate as a buffer between the initial buyer and the fraudster; they provide the initial buyer with false assurances of future returns (avoiding fraudsters’ need actually to produce any), and they administer payments to subsequent buyers, which allows the fraudster to keep the bulk of any funds he receives (avoiding participants’ need to actually produce any in order to receive funds).
Time to check on some of the infamously famous Ponzi Scams in US history
- Charles Ponzi – $15 million.
- Lou Pearlman – $300 million
- Gerald Payne and Greater Ministries International – $448 million
- Reed Slatkin – $593 million
- Scott Rothstein – $1.2 billion
- Tom Petters – $3.7 billion
- R. Allen Stanford – $7 billion
- Bernie Madoff – $20 billion
What is some famous pyramid scheme?
You have probably heard about at least one of them, this is the Pyramid Scheme shameful list.
- Koscot Interplanetary
- Holiday Magic
- United Sciences of America
- Equinox International
- Fortune Hi-Tech Marketing
How do you tell if a company is a pyramid scheme?
Sometimes, it can be difficult to identify a Pyramid Scheme, but according to the Us Security and Exchanges Commission, these six warning signs will help you identify a potential Pyramid Scheme.
- An emphasis on recruiting seems to be the most important requirement you must fulfill to participate.
- The product or service sold is not genuine, for example, it is part of a business value, an idea for a tech product or service, or a mass-licensed e-book.
- The promise of a high return on the investment in a very short time is known as the get rich quick scheme.
- Earn money or passive incomes, to easily attract the most vulnerable population.
- No proof of revenue from retail sales.
- A complex commission structure that is hard to understand, or does not make any sense.
Is ClickFunnels Safe?
The creators of the product are both experienced and passionate marketers, therefore they understand that leads are vital for any online business. For that reason, they do not sell your data or information, because it will a direct violation of the law.
Selling your information would lead them to face problems with regulatory authorities, like the Federal Trade Commission (FTC).
Not only do they protect your data, but they give you a 14-day free trial period to implement sales funnels strategies without expending money.
It is understandable why so many people think ClickFunnels is a Scam or a Pyramid Scheme. Not only is there misinformation or lack of understanding about the tool, but also about their business model and success stories, which trigger the alarms about Scams and Pyramid Schemes.
At a glance, you may think that the platform fulfills several aspects linked to Pyramid Schemes, but if you take some time to do your research, you find the elements that make ClickFunnels a trustworthy tool.
ClickFunnels is backed by the trajectory of its founders, the data used to develop the product, the solid performance of its marketing solutions, their growing army of affiliate marketers and the reputation that it has built among connoisseurs.
Like I usually say, the ultimate decision is yours. You learned that is not a Pyramid Scheme, nor an instant moneymaker, it is only a tool that, when used wisely, can make positive changes in your life and your business.
Share some thoughts with us in the comments section. Thanks for reading.