Sunday, January 2, 2011

MLMs - My Final Verdict

This article has been a long time in coming. I have hesitated to write it for fear of hurting the feelings of the many I know who are engaged in Multi-Level Marketing.

Before you "get your back up" and defend your product, program, scheme, whatever as being different, understand that I am only presenting the conclusion that I have come to, and do not presume to decide for you. Also, call it what you will (multi-level marketing, network marketing, referral marketing, direct marketing, ad infinitum) - it's all the same to me.

My first introduction to this form of sales was in 1976, when I was asked to participate with friends in a wine "gifting" pyramid that would potentially net you 28 bottles of wine, with a cost of only 2 bottles. As easy as it sounded, I don't know of anyone who got their 28 bottles of wine, although many did make a profit. Of course, in order for some to make a profit, it's easy to see that there had to be many more who lost. Because it was friendly, and the most anyone lost was two bottles of wine, nobody got their feelings hurt.

My second brush with MLM was through a neighbor who was selling Amway products. In the stereotypical way, we were invited to dine with them, and were ambushed with a sales presentation. While we had already used some of Amway's products, and actually liked the results, we were not interested in selling Amway. Again, stereotypically, our declination ruined our budding friendship with our neighbors.

And thirdly, my wife actually became a distributor for Forever Living Products, an MLM selling Aloe Vera products. The reason she became a distributor was because she liked the products, and by being a distributor she could purchase them at a substantial discount. She could also sell the products at retail and produce a modest income. Unfortunately, the primary method of profiting in an MLM is by increasing your "downline", thereby profiting from the sales that others make as well. I say unfortunately, because my wife began receiving increasing pressure from her "upline" to start producing more profits for them, and also participate in the frequent "hype-filled" motivational meetings designed to keep the ball rolling.

The picture above is an example of how multi-level marketing is supposed to work. However, as depicted, it is a pyramid scheme similar to the wine pyramid. Pyramid schemes are illegal.

Save your breath if you are about to tell me that MLMs are not pyramid schemes. I've heard it before. I only submit this definition from Wikipedia as evidence: A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud. The operative word here is primarily. Now I ask you, honestly examine your MLM. What is the primary means of supposed "wealth building", signing others up to the program, or selling the product? For many, a more realistic depiction of how an MLM "works" is shown to the right.

Were it only the pyramid connection, I would probably have little or nothing to say here. I would simply choose not to participate, and look the other way. What makes me angry about this insidious formula for getting rich (admit it, they promised you'd get rich) is how it strains and destroys relationships.

Getting in early helps considerably with MLMs, but beyond that, in order to be successful, you must build your downline. And in every case I am aware of, you are taught to "leverage" those who trust you, namely, family members, friends, coworkers, neighbors, etc. I speak not only from statistics here, but from personal experience. Too often this zeal to grow your downline becomes unwanted pressure and "arm-twisting", resulting in relationship damage.

As a real example of this, I include the following facts, that are the real impetus for this article.

Since November 20th, a friend of mine has sent me 24 emails promoting an MLM that he is a part of. Since the emails come "via the MLM", it's obvious to me that I am not the only one receiving these messages, and it must be a method of "selling" people on the system advocated by the MLM. Though I have not once responded to one of these emails, I keep receiving them. And though I have been warned several times now that my time is running out, I keep being given another opportunity. Perhaps I should let my friend know that I am not interested, but, then again, he might have asked.

What irks me about this is that I very rarely (if ever) hear from this friend, and now, suddenly, I am being bombarded with news of this great opportunity ostensibly because he cares about me. Another egregious example of this is another friend (one with whom I also have little or no communication) who called me up when he found out I was having chest pains, and feared heart trouble. I was touched until I found out he wanted to sell me an MLM product he thought might help me. Maybe he really did care, but if that's the case, why has he never called back to see how I was doing?

I feel like I need to apologize to these two friends now, because some readers may discern who they are, and it's not my purpose to expose them. My indignation is directed at those who con people into believing that this is a viable means of becoming wealthy, and teaching people to use those who love them in order to become so. Add to it the idea that you can build your own kingdom while at the same time build God's Kingdom, and I find it reprehensible.

Finally, I restate my purpose: To make my opinion perfectly clear, once and for all. I am in no way passing judgment on those who choose this method of making a living. I hope you are successful, not only financially, but I hope you are successful in building relationships at the same time. And if you think I might be interested in becoming a member of your downline, please, just ask me.

My answer will be, "No."

2 comments:

  1. Well said! I am against sales of any kind that use pressure or even strong arm tactics. And to milk your relationships is hurtful, as well as damaging.

    I think we could all tell stories. One of my favorite is Robin's (you might remember her from junior high). As a beautiful young woman, she had a man ask her out on a date. He stressed the importance of her dressing up as the date was going to be a "very nice" one. She got stuck sitting through a 3 hour Amway lecture. Needless to say, that was the last date she had with the young man; and as she is a choice person, he lost out more than the contact.

    Sad to think that in the pursuit of riches or even a small amount of money that we would risk losing something more dear; the fellowship of others.

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  2. Well said indeed, and very poignant! I have a story from an accounting perspective to share with you... Years ago I came from Vernal with an Accounting team to the Little America for the Next Year's tax training with over 500 plus accountants around the state. In one meeting we were sitting in the huge lunch room and the speaker asked "How many people have Amway clients" and nearly every hand in the room shot up. Then he asked "How many are making a profit" and only one hand remained. A pretty telling story!

    We are so interested in making the almighty dollar that we have forgotten that it is the making of friends that it really is about. If anything hurts a relationship... to me... it is not worth the effort. The dollar will go away at the time we cross the finish line... the friends, God willing... will be there that we nourished and fed and learned from!

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