Part X - Others
By Leonard W. Clements (c) 2005
Anti-MLM Zealots are rare. For an industry that's been around for over half-a-century, composed of over 2,000 companies and with well over ten million participants in the United States alone, you would think there would be more. Especially considering how many "victims" have been so ruthlessly abused by us, at least according to the Anti-MLM Zealots. But the fact is, there are really only four. Robert FitzPatrick, Ruth Carter, and Jon Taylor have all written books on the subject, and I've included Dean Van Druff in this list only because, thanks to the internet, the one little anti-MLM article he wrote fifteen years ago has probably been read by more people than the other three subjects combined. There arguments against MLM, although sometimes well dressed, stand up poorly to scrutiny, and virtually across the board are focused on the same two or three companies (the easiest targets).
Readers of this column have asked why various other anti-MLM types have not been mentioned in this series. First, the four I have featured have, to varying degrees, caused some damage to the standing and credibility of this form of business. The others I'm asked about have not. They are little known outside of MLM circles - and I'd like to keep it that way. No sense giving them more attention than they are already not getting. Not that their case is any stronger. In fact, that's the better reason why I've ignored them - for the most part they just parrot Fitzpatrick, Carter, Taylor and Van Druff. It's always the same, tired, arguments, over and over.
There is, however, a fifth relatively vocal MLM nay-sayer who does deserve at least some attention - Dr. Stephen Barrett, a prominent medical doctor well known for his anti-quackery campaign. Dr. Barrett's MLM related criticism is the most frustrating to contend with because it is, for the most part, the most valid. His concerns are well founded and his targets well chosen. The only criticism I would have of his work is that it creates the illusion, perhaps unintentionally, that the entire MLM industry is guilty of outlandish, over-the-top product claims. In fact, you will find a small but vocal minority of MLM participants on Dr. Barrett's hit list. Nonetheless, the list should certainly be smaller, and this is a challenge that does need attention. However, being limited by law as to what we can say about the benefits of our products certainly does not suggest many of those benefits are untrue or overstated. Certainly some are - many are not.
There have been numerous negative other articles about MLM in various magazines and newspapers over the years. The vast majority were not written by someone I would classify as an "Anti-MLM Zealot," they were more like one-hit-wonders. They took one hit, and I was left wondering how professional journalists could have been so inept at researching their subject matter. In most cases, it was obvious they just didn't know what they were talking about. Again, not to say there are not many aspects of MLM that deserve criticism. This industry, or more specifically the way some people practice it, is far from perfect. But the legitimate concerns are rarely the target of the hit.
The epitome of this is an article by Rhonda Abrams, a syndicated small business columnist. I'm only picking on her because her views are so typical of the MLM-ignorant journalist. They pretty much all say the same thing.
In her article "Don't Get Taken By MLM" (Nov. 2002) Ms. Abrams suggests we should "Never, and I mean never, sign up for a multi-level marketing (MLM) program." Why? Well, according to Abrams, "All MLM programs share the same fundamental flaws." Which she lists as follows:
1. Recruiting your competitors: If I'm in sales, the last thing I want is more salespeople competing with me. But in MLM, your goal is to get lots and lots of competitors. Why would I want to do that?
About five paragraphs previous to this statement, Ms. Abrams defines MLM as follows: "In a multi-level situation, I make money off my sales and also the sales of those I bring in to the organization." So, did she forget what she just wrote? Does she really have that little understanding of the most basic, fundamental concepts of MLM? Or, is she so desperate for a negative argument that she has to invent one?
2. You pay to be a customer: Overwhelmingly, buyers of MLM products are MLM salespeople. A legal counselor to MLM programs advises that a mere 20% of sales to outside consumers is high enough to avoid legal scrutiny. Can you imagine any other business where 80% of sales are made to employees?
Abrams apparently doesn't understand that the majority of MLM programs today have distributor enrollment fees so low (many are free) that any wise retail customer will sign up just to save money on their products. If her findings are accurate, that would mean 20% of all customers are voluntarily choosing to pay full retail when they could simply call an 800-number or visit a web site, sign up as a rep and get 25-40% off. I'm surprised it's as high as 20%!
And Abrams comparison to "employees" is grossly flawed. Imagine if Ford allowed customers to simply fill out an employment application to get a 25% employee discount on their cars. They never actually had to do anything, just apply. I bet over 80% of Fords would suddenly get sold to "employees," wouldn't they?
3. You'll pay far more: Expect to be required -- or pressured -- to buy samples, marketing materials, training courses and tapes, seminars, etc. You're very likely to spend far more than you'll ever bring in from sales.
She's just wrong. No MLM company operating in the U.S. today "requires" such purchases as a prerequisite to becoming a rep. Pressured? Well, I suppose that's true to varying degrees. If someone wanted to start a successful MLM business I would strongly suggest they get marketing materials, product samples, and some training. Is that really unreasonable? Too much pressure can occur, but once again, that's a problem with the individuals you're working with, not the MLM model.
Note that Abrams doesn't say that "most" MLM participants spend more than they bring in, she says you very likely will. How could she possibly know that?
4. Your products are priced too high: No matter how good the quality of your products, consumers are likely to be able to find better deals elsewhere. Just think about it - all those middle layers of salespeople and commissions means higher prices to the consumer.
Yet again, Abrams, like so many of her peers, demonstrates an utter lack of even the most basic MLM concepts. MLM companies don't have advertising budgets. Their products are marketed by word-of-mouth, and the millions they likely would have spent for advertising and promotion is instead used for commissions to pay those who talk up their products. Furthermore, MLM companies greatly reduce the number of "middle layers" between the manufacturer and customer, because the reps are their distribution system. These facts have been among the most openly and widely promoted benefits to the MLM distribution model for more than half a century!
Having said that, are some MLMed products priced too high? Are some jacked up just to support a better paying comp plan? Absolutely. Is that a valid reason to avoid "all" MLMs. Absolutely not.
5. You turn your friends and family into "prospects:" MLM programs typically suggest you sell to - and recruit - people you know well. Do you really want to be constantly beseeching those closest to you?
How did we go from selling to those we know well to "beseeching those closest to you?" Not only do you not have to even sell to those you know (there are numerous alternative lead generation systems available to MLMers today), but why not offer your product or opportunity to those you know, and if they are not interested, don't beseech them! In fact, most MLM training today advocates exactly the opposite approach. If someone says No thanks, you say "Next!"
6. You face group pressure: One of the positive sides of MLM groups is the support given to those who spend a lot of money or who try hard to succeed. The flip side is that those who don't spend as much or believe as strongly in the program are likely to face strong negative judgments from the group.
It amazes me how those who "investigate network marketing" always seem to assume that the way a minority of those involved with only a few of the largest, oldest MLM companies is the way we all do it. Personally, I encourage and motivate, but I don't "pressure" anyone to do anything - and I'm not alone.
Abrams concludes her article with this: "Personally, I recommend you NEVER sign up for any MLM program. I believe most of them are unethical, many illegal, and all of them a waste of money." There are over 2,000 MLM companies operating in the U.S. today (have I mentioned that?). I admire the years of research she must have put into her article that allowed her to make a sweeping judgment like that about all of them. And I sure wish I had taken her advice 15 years ago. She could have saved me from a life of sleeping in 'till 9:00 am every morning, taking a week off when ever I feel like it, and paying taxes on a six digit annual income. Jeez, if I had only known they are ALL a waste of money!
The common theme throughout most all anti-MLM propaganda centers on six issues. One being the product benefit claims made by over-zealous distributors, which, again, is a valid criticism and deserves no rebuttal. The other five crumble easily under the weight of historical precedent, practical experience, and common sense. The final installment of this series will address these issues head on. They include: Market saturation, exploiting relationships, why "Most distributors fail", the allegation that success in MLM requires extraordinary talents and skills, and of course, the "Pyramid" issue.
I've saved the best and most definitive response to these issues for last. Don't miss part XI!
Click HERE for Part XI
Since 1989, Leonard
Clements has concentrated his full-time efforts on researching and analyzing
all aspects of Network Marketing. He is a professional speaker and trainer,
and currently conducts "Inside Network Marketing" seminars throughout the
world. Len is the author of the controversial book "Inside Network
Marketing" (Random House) and the best selling cassette tapes "Case Closed!
The Whole Truth About Network Marketing" and "The Coming Network Marketing
Boom." He is a court recognized expert in the field of network marketing.
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