You’ll see a lot of offers on the traffic exchanges lately with headlines like, “I’ll pay your way”.

The whole “pay it forward” fad is designed to lure people into systems that they aren’t sure about. The idea is that your sponsor pays for your to get into the system, placed people under you, and at some point you take over payments. That might be at the second month, or at some other time.

This sort of scheme typically doesn’t work, but it’s worth looking at why.

Think about the sort of person who is going to be attracted by a pay it forward scheme. Someone who doesn’t know how to market, because if they knew how to market they wouldn’t need their sponsor to place people under them. Someone who has a low amount of disposable income, because otherwise they could afford the $10 or $20 a month for membership. Someone who is either gullible enough or desperate enough to believe the hype of the system.

In short, your recruits are not being qualified based on their willingness to stick with a system, their need for the product the system offers, or their ability to recruit others, which are all valuable qualities in referrals.

The money doesn’t work out, either. The sponsor will always come out behind in a legitimate pay it forward system. Say they pay $10 for you to be a member. They’ll get some portion of that $10 back, but it’ll typically be a small portion. Most of the pay it forward systems seem to use GDI, which pays the sponsor a whole $1 per referral. So the sponsor loses $9 per month on you.

Normally the sponsor offers to pay for your first month, as a trial. The idea for them is to immediately put one or two people under you. That gets you hooked, because you’re making a couple bucks a month from those referrals. Then, when the second month comes and it’s time for you to pay your $10, you stay in because you think your sponsor will continue putting people under you.

But they’ll have moved on to the next new person, trying to hook them. You’ll be mostly on your own, although you’ll probably get another referral now and then to show you that they’re still working on your behalf. They want you to stay in long enough to pay them back what they paid for your first month’s membership. But it takes a full ten months for that to happen. How many of you will pay $10 a month to earn $2 or $3 a month for nearly a year?

The reason that MLM payment schemes such as GDI work at all is that each person is expected to do recruiting. As your downline grows, so does the number of prospects being shown the sign up page. If the entire downline waits for their sponsor to get referrals, though, the number of prospects the sponsor can get remains the same as the downline grows. They simply cannot keep up in the long term.

Now, if you were looking to get into one of these programs, and you knew how to market and intended to do your own work, joining through a pay it forward scheme would make sense. Just don’t rely on your sponsor to do all the work to get you into profit, because it probably won’t happen.

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