A Blast against the Monstrous Regiment of MLM!
Or, Beware the “Dreamstealer”.......
I read with interest an article on multi level marketing (MLM, aka Network Marketing) in the June issue of that excellent new magazine “Latitudes”. In it, the writer recounts the chequered experience of some Bali MLM’ers flogging 24-karat gold 1oz (31.104gm) coins which they have to buy and sell on at over 200% more than the actual price of gold. These coins bear the imprint of President Sukarno, Princess Di, JFK, Queen Elizabeth II, or sacred places like Borobudur and the Ka’abah in Mecca. Icons designed to appeal and that, in the minds of the makers at least, justifies a premium of such staggering proportions.
Just to put it into perspective, you can buy an American Eagle or a Krugerrand, an Australian Kangaroo or a Canadian Maple Leaf, giving you an ounce of gold guaranteed by their respective governments and acceptable everywhere in the world, for anywhere between 1.5% to 7% over the prevailing spot gold rate from a reputable dealer, depending on how smart you buy and how many.
For example, given a gold rate of US$320 per oz you can buy a Krugerrand for a little under US$325.00 but an American Eagle would cost you a few dollars more. These guys are selling their coins at US$846.00 in Bali! I’ll leave you to come up with the appropriate word to describe such people. Mine are unprintable. Quite apart from being Right Royally stiffed and given that the coin contains what it says it does, do you really think you could walk into a bank and they’d give you their gold buying rate as they would for a Krugerrand or an American Eagle? Good Luck to you I say!
Fool’s Gold
“ Latitudes” says the company in question was founded in Hong Kong in 1998. Hardly co-incidentally, a short while before that an American MLM company called Gold Unlimited was launched in Hong Kong offering American Eagles and other gold coins. It was closed down by the HK authorities after the US courts judged the company to be a ‘pyramid sales scheme’ and hence illegal. All the newly signed-up punters lost their money and never got their gold. Not the people introducing the scheme to Hong Kong, mind you. I wouldn’t mind betting that some of the movers and shakers involved in that episode morphed into this “new and improved” version launched around Asia to bilk the credulous and the unwary.
In case you didn’t know Pyramid Selling is illegal in most countries in the world. It involves “front-end loading’, which is selling an initial raft of goods at inflated prices to people who then have the right to sign up others on the same basis. It is all about recruiting people who have to pay the front-end load, not about selling a worthwhile product. There is a very fine line between Pyramid Selling and Network Marketing. In China they can’t be bothered and ban Network Marketing outright.
What is it about MLM that is so sleazy and unappealing and how is it that apparently perfectly intelligent people are gulled time and time again into trying it? I am not talking here so much of the sharks that prey on the simple and the poor of their own countries, where there is little if any protection or regulation against Pyramid and Ponzi Schemes. No, I mean supposedly solid international MLM companies spreading their tentacles around the world with the “Independent Distributor Rampant” leading on the charge.
Here’s the Good News......
First off, I guess it is the promise of wealth and independence that is compelling for many people. You get to be your own boss, you work your own hours and you could become extremely wealthy. You can even retire and still maintain a huge residual income. In short, most people’s dream, total financial security. You get to meet some perfectly ordinary people, who have indeed become very rich. We are talking here of sums like $100,000 in the first year. Over $1.0m by year 3 and over $7.0m by year six with at least $2.0m p.a. thereafter, even if you sat on your butt and didn’t do another stroke of work for the rest of your days. If they can do it, why not you?
Next, there is little to stop you. You don’t need a separate office, you don’t have to make a huge capital investment, like you would in a franchise operation. You don’t need a college degree and you don’t need years of training or experience. What is more, if you’ve chosen your MLM company well, they will look after all the admin, storage and product dispatch for you as well as training both yourself and your downline. You are also among friends who totally support you and understand you and share the same compelling vision. Indeed there is room for little else.
Now if your horizons are less ambitious than that, you can still be your own boss, work at home and still hope to pull in US$4,000 per month without working too hard. You’ve still got the same support system working for you. If you got lucky with your downline it might be $7,000 a month. $40,000 to $80,000 p.a. for a little sideline business ain’t too bad is it?
And finally, if you just like the products which you can use in your own home and if by selling them to the rest of your family and friends you can not only pay for them but make some useful pocket money, say an extra $600 - $1,200 per month, that would be nice wouldn’t it?
What on earth is wrong with such a wonderful scenario?
Rather a lot I’m afraid.
What’s the Catch.......?
Let me count the ways. While all of the above is possible and does happen, except in the case of pin money, it happens to very few people. Some people get rich but it will hardly ever be you. The game is stacked against you.
For a start 85% of all MLM companies go belly up within 18 months. Even Blake Roney, boss of Nu Skin one of the most successful MLM companies ever, said 99% of folks in Network Marketing don’t make it. If anyone should know, he should. And these are the best of the bunch, we are not even talking about the 1,000’s of scams and crooks that are attracted to Network Marketing like flies to a toad’s doodoo.
Unless you are a brilliant salesperson with the hide of a rhinoceros and a natural gift for selling you simply are not going to make it. GET USED TO THE IDEA! Natural salespeople are very rare and the guys running the show know that. They know this is a numbers game, they will even tell you so. They need people like you to do all the canvassing until you come up with gold, that is the STAR SALESPERSON. Meantime they are happy peddling you the stuff which you buy every month and sell on, while they whip you on with tales of how rich you could become, if you only do it right. The real currency here is the downline, not the product. The only people who are going to get rich are the owners of the MLM company, the existing star salespeople with mature downlines who threw in their lot with the company at the outset and the future star salesmen, who either have or can create an effective downline and which you find for them.
How much rejection can you take, before you pack it in? Research shows that the average person can accept between 3 - 10 negative responses before they want to call it a day. The same research shows that the successful salesmen routinely accepts 100 negatives to get one sale. According to MLM experts to get anywhere at all you have to approach 30 people every day 5 days a week or 600 people a month for one year. Then, and only then, you may get to be on the bottom rung of the ladder. Are you really on for that?
Meantime, you have become an MLM monster. Every friend you ever had and every family member becomes a potential sale to you. You spend your time making lists of everyone you know so you can pitch to them. Every chance encounter with strangers is turned into a sales opportunity and every dinner conversation a sales pitch. You simply cannot have a normal conversation any more, your whole life is taken over. People will avoid you like the plague and quite right too. Yet if you don’t do this, your chance of success is zilch.
OK, so you want to remain a remotely acceptable human being and don’t expect to make a zillion dollars. You would be satisfied with earning say just $4,000 per month. Well, I’ve got news for you - that’s most people, and they almost never get there. Why, because that’s the bottom rung of the ladder and you’ll have had to have canvassed those 30 people a day to get there. And that’s only if you’re any good at it.
Wait! It gets worse. Just suppose you’ve worked hard and are just beginning to make a little headway. You’ve risen through the ranks by retailing product or bought your way to becoming the highest level of distributor by buying a whole garageful of product. What this exalted position means is that you can now get an override commission on the people you’ve signed up. It is only at this point that you can even begin to make any serious money. At this point on, if you have a bad month, get sick or something and you don’t meet a monthly personal and/or group quota set by the company you won’t be paid a thing. it’ll all go the the person who signed you up. Worse still, in certain circumstances they can take your downline away from you forever. It’s all in the small print, they can more or less decide to do what they want. Now in America you might be able to sue them if you thought it was unfair and if you had a spare million or two to spend on lawyers. Remember, they’ll have some of those too! In most Asian countries? I don’t think you’d have snowflakes chance in hell of any redress. Authorities there just might think you should have thought of that at the beginning and wonder why you were complaining now. They might have a point.
Here’s something else to know. Just say you got real lucky and signed up one of these real sales superstars. Do you think you could ride on their coat tails to fame and fortune? Whoa! Not so fast my friend! Often the small print will say, if someone below you sells more than you do they “roll up”, which means they go above you and accrue to the next person up the line who sells more than they do. That’s how the rich get richer, don’cher see.......
Even were that not the case, most MLM companies are structured so that you only get paid commission on each level of your downline if you have brought in new people and have developed other legs of corresponding depth. If after working very hard you get one or two legs working really well, you’ll still only get a fraction of the money. The balance will go up to the person above you. You will only be in the running when you have 3 or 4 legs working well. That’s like establishing 4 new start-up businesses, believe me!
It’s all in the compensation plan. This is a document that is as impenetrable and arcane as the collected works of C.G. Jung and only the senior members of the MLM priesthood know their way around it I can assure you. When you sign up you are fed information on a need-to-know basis. At no time will you be given the full picture so you can make an informed decision before you plunge in. The only way you are ever going to find out is by bitter experience as you struggle your way up the ladder.There are usually some nasty surprises on the way. Most people are lured in either by their friends, who may be as honestly at sea as you are, or by the sales superstars, who make it all sound easier and simpler than it actually is.
Then you come to the actual products the MLM company sells. If it is a product like gold or jewellery stay away. It either is, or is closer to being, a pyramid sales scheme. You are buying products that are overpriced and in the end the market becomes saturated and you are left with a roomful of stuff which you either can’t sell or you find is worth 25% of what you bought it for. The smarter MLM companies sell cheap items that people use all the time. That is why cosmetics, household, kitchen items and nutritional supplements are such popular items with them.
The theory is that by cutting out marketing and promotional costs these items cost less and can be better than what you’d buy in the shops. This is almost never true. The company buys a very cheap product and by the time all the commission levels have been factored in a cheap product is greatly overpriced for what it is. It works because there is a corps of true believers who have to believe it is the best thing since sliced bread because their livelihood and all their hopes for a better future depend on it.
Even the best MLM companies sell products that are average at best compared to any really excellent products on the market. A few companies may actually have a good product but it is invariably just one or two in a whole range of say 200 indifferent and overpriced ones.
Another unappealing aspect of MLM is the cynical use of independent distributors to spread anecdotal and spurious product claims. Particularly with health care products. All kinds of weird and wonderful stories are told of miraculous cures and amazing properties for various of the products. Research results are used, abused and misquoted and all the while the MLM company can hold up it’s hands in horror and say “we never, ever said that!”. And it will be true. They are very, very careful about what they say in print. It was the independent distributors what said it, wasn’t it? And, as we know, they are not employees and are free to say what they want. And they do, believe me. You should hear the stories they invent about other MLM companies if they think there’s even a sniff their rivals might jump ship with their downline behind them.
In my area of interest it is with nutritional supplements that I come across MLM most often. As I say, in all my experience to date (and I’m open to being proved wrong) even the best products are average, overpriced and often both. Most of them are not worth any consideration at all. As a result I find it particularly questionable when doctors and other health practioners go into the MLM business. Speaking personally, I don’t want to go into business with my doctor, let alone be part of his downline. I would like to think that their decision on what dietary supplements they recommend I take would not be swayed by whether they were going to make their sales quota that month. I want to believe that they select the best product for the purpose. No one supplier can do that, and almost never an MLM company.
Me? I’m not Predjudiced & I Can Prove it!
In case you think I’m prejudiced, let me just tell you I my very self am an Independent Distributor of the highest order, a Director no less. I buy one particular MLM product because it is the best formula for the purpose of its kind I can find. To buy it at a reasonable cost though, I had to become a distributor and buy a roomful of the stuff that lasted me and my partner 2 years. Only now can I re-order the stuff at a reasonable cost and in a sensible quantity. Which I have done. So there!
To my dear, dear friends, for whom hope springs eternal as they move ever onward from one ‘opportunity’ to another I hope one day they find their Grail. A perfect product, of amazing healing properties, which makes them rich beyond their dreams. And, if they ever do, I’ll not only eat my hat, I’ll sign up under them. Meantime, I am what the MLM companies would call a “Dream Stealer”. Coming from them, it is a badge I wear with pride.
Even Blake Roney, founder of Nu Skin one of the most successful MLM companies ever, says most people are never going to make it in Network Marketing. If you bought a lottey ticket you’d have as much chance & you’d still have a Life.
Paracelsu
Comments or queries
ParacelsusAsia@yahoo.com
