This will likely be one of my longer blog posts, I almost didn't include it here because it's not so much about kindness. But the fact is if it wasn't for this I most likely wouldn't be doing what I am today, creating this web site and promoting kindness.
For over thirty years I have been in MLM otherwise known as Multi-Level Marketing, or Network Marketing, I in fact have made more money in Multi-Level Marketing than I have doing anything else.
Over that time I have been frustrated with the direction I have seen the industry go and I have long had a love hate relationship with it. That ended with me writing an article on why MLM fails, and my dropping out thinking I would never return.
While I still agree with what I wrote about MLM's failure, I have also remembered why MLM succeeds, and why in fact it does something very important that no other method of marketing can.
So here I will present two sides of MLM from my perspective, why it fails AND why it succeeds. I will point out first that why it fails is the same reason a lot of other things fail too (such as, for example; our government), people get greedy so they pervert and abuse it.
Why MLM Fails
The attraction of Network Marketing is very understandable, life is changing all around us. The industrial revolution is over, the middle class is shrinking, the disparity between the rich and poor we see now is absolutely obscene, jobs are being outsourced overseas or replaced by new technology. People need hope and options and the promise of building lasting, long term residual income through relationship marketing is extremely attractive and appealing.
But simply put MLM does not work and can not ever work for most people. Now that can actually be said of everything, there is nothing out there that can or will work for everyone because we are all different. But the problem is that MLM is often presented as something that can make anybody and everybody rich. And actually it does have to potential to make anybody rich, but it can never make everybody rich. The math just doesn't add up.
If you have been in MLM I bet your thinking “Don't tell me it's because it's shaped like a pyramid, corporations are shaped like pyramids, churches are shaped like pyramids, the military is shaped like a pyramid. A pyramid is the most solid structure known.”
And you are right, it's NOT because it's shaped like a pyramid, corporations, churches, the military, etc. are in fact shaped like pyramids, and yes pyramids are very solid structures. They work very well when they have one thing the internal consumption model of MLM does NOT have.
An external foundation to be built on.
Now what the heck do I mean by that?
Notice here the contrast between external and internal here, that is extremely important! The basic premise of internal consumption model of MLM is that everyone can make money simply from the self consumption of products and services, even if you never sell anything to a retail customer, who is not in the opportunity.
To that I have to say, NO - that is impossible, and federal regulators are rightly shutting MLM programs that are built on an internal consumption model down.
Corporations succeed because they have customers buying their products and services that are not on the staff of the corporation, if they did not, if they relied solely on internal consumption they would fail. Churches succeed because they have congregations giving them money to pay their staff and other expenses, if they did not have that they would fail. The military succeeds because it is supported by the government and tax payer money, if it did not, it would fail.
Come on think about it, if you had a doodad business and never sold to anyone but yourself how long could you stay in business? You simply couldn't you need retail customers. For MLM companies and their top sales leaders the mass of distributors hoping to also get a piece of the action are in reality the customers, but the problem is they don't realize they are customers, they are buying products not just because they want the products but because they where told that's the way they could make money too.
This can never work.
Let me give an example, lets say we have a product that we make a $10 a month commission on and our goal is to make $60,000 a year. And lets also say this is a basic, needed, repeat service like electricity, or food, or something, so we make a sale once and keep making money month after month. The math is pretty simple we would need 500 customers. That actually works very well and effectively in a regular business.
Ah, but this isn't a regular business, it's the internal consumption of MLM and those 500 customers aren't retail customers, they are “business partners” and they ALL have been sold the dream and want to make $60,000 (or MUCH more) a year too!
So lets say they all get 500 each that comes to 250,000. OK that's doable. But those 250,000 have ALL been told they can make money too and they all want at least $60,000 a year 500 “customers” for each of them comes to 125 million. Lets even say that's still possible but everyone is still being told that they can make money too, not by getting retail customers, but simply by getting business partners in this wonderful opportunity.
So can they? Let's see.
For 125 million people to get 500 business partners each would come to well over 62 billion people.
Houston, I think we have a problem there aren't nearly that many people in existence!
I'm sure you're objecting “but wait, it doesn't work that way”, “You don't need to personally recruit 500 people, just a few to get 500 and more on your team through the magic of duplication.
And you're right the illustration is simplistic, but still valid. And your objection is part of the slight of hand illusion that keep so many believing in the internal consumption model of MLM.
The problem with internal consumption model of MLM, the major reason why it fails and why it is in fact unethical is that EVERYONE recruited in to it is sold a dream that THEY TOO can make money, that's why you buy the products and services here instead of where you normally would. No one (or very few) are buying the products and/or services as a retail customer just because they like the products/services better than what they can get elsewhere. They are buying them because they are told that's how you make money or maybe some do to support friends/family who are in the “opportunity”. Very few people buy these MLM products and services strictly as retail customers, and THAT is a MAJOR problem.
Why MLM Succeeds!
OK, now that I have trashed MLM let me go on to explain not only why it succeeds, but why in fact it is important, why it does something no other form of marketing can. Why most corporations that make most of the products that you buy in retail stores are threatened by it, and hopefully you will see why that alone is a good reason to support it as a customer or even as an MLM distributor.
First let me explain that the internal consumption model of MLM that I attacked above is NOT all MLM. It is again a perversion of the power of MLM, driven by greed that has been corrupting the industry for several decades.
A good model of MLM recognizes that retail customers are a vital and essential part of the success of the company and it's distributors. Furthermore a good MLM opportunity is driven unique and/or high quality products or services NOT by compensation plans. Most compensation plans will pay out roughly the same, so that is not what drives a good opportunity, it's all about the products and services.
So what is this important thing that MLM can do? I have already given a clue above, now lets get into it.
First, I have to explain something that you very likely already know. That is most corporations that sell products in most retail stores do not make products that are the highest quality or that are best for consumers or the planet. They make and sell products that maximize profits for themselves and their shareholders.
This often means that the products are often bad for you and the planet, or even worse (often in the case of food products) they are addicting AND bad for you and the planet.
And a huge problem is that better quality products are not going to succeed on store shelves next to products designed to maximize profits.
This is where MLM really shines.
Let me give an illustration, back in the 1960's the box's of laundry detergent you could buy in retail stores where much larger than today and you put a cup of it into every load of laundry. Not a small scoop like you do today, but an actual 8 oz or larger cup. This cup was largely fillers such as detergent covered wood shavings, that weren't very good on your clothes.
Several MLM companies started coming out with "concentrated" detergents where you could do a whole load with just a small scoop.
Now imagine a small more expensive box of detergent sitting on store shelves next to these cheaper and bigger box's. How well would they sell? They wouldn't!
But through MLM and people telling other people about it directly, explaining the benefits and value they did sell. They took so much market share in fact that the major brand names had to start selling concentrated detergents themselves or keep seeing their market share continue to decrease.
This has happened in many areas not just concentrated laundry powder. Non-toxic cleaning products of any kind would not likely be on any store shelves today (and they are still a small portion) if not for MLM. Nutritional supplements would not be as readily available today, apart from the influence of MLM, the same goes for super food products like Acai Berry, and many others.
But this also gets to matter of why MLM is still needed even after products like these hit the broader retail market. The big corporations still do not have producing quality products and services as their top priority. Maximizing profits is still at the top of their list. So most products that exist in retail stores because of the influence of MLM products, are still cheap knock off's of MLM products.
NOTE: Many in MLM are out to maximize profits too, so something being MLM doesn't always mean it's of better quality. That's where you need to do some research and not just get drawn in by a great sounding opportunity.
Plus, some types of products simply would not sell sitting on store shelves without someone to explain their value, even if they where of the same quality.
Concentrated household cleaning products come to mind.
Several MLM companies have concentrated, non-toxic cleaning products that are more effective, cheaper, and better for the environment that anything you can buy in a retail store. This isn't laundry soap like I mentioned above, but taking that idea to the next level.
It's a basic cleaning product that you can make several other cleaning products, like degreasers, normal household cleaners, and window cleaners from by mixing with different concentrations of water in reusable bottles. These type of products are hands down, no contest, better for you, your family, your pets, the planet, and your pocketbook! BUT the concentrate will always be more expensive by the bottle than diluted products are. So it would never sell well on store shelves. Such products simply need people to explain the benefits with others one to one.
My point is that due to the retail consumers products industry's purpose of maximizing profits, it will always require another avenue for products that are of higher quality and that are better for you and the planet to reach consumers.
Multi-Level Marketing with it's person to person approach does that better than anything else that I know of. Just be careful and research what you find in the industry because the desire to take shortcuts and maximize profits, is a very common human temptation.
Myself, well I got out of MLM for completely for more than a couple years I am now back in with because of a service that I love and missed, I liked who I was better when I was using it. It's a company that is turning the greeting card and gifting industry on it's head in several ways, it's creating a revolution of kindness and I wanted to be a part of that again. If that sounds interesting to you you can find out more about that by clicking here.
FYI: The company above was not the only source of inspiration for this site, but it was certainly a large one, the service and culture they provide make it far easier to be kind and promote kindness. I love it!
My journey in MLM has been a long and I'll admit rocky one. It started with my parents seeking out cleaning products that where safe to use around me, as I am rather chemically sensitive. They could ONLY find those products through an MLM company. I got into it and will admit to getting sidetracked by the "opportunity" now I have gotten refocused on the cause of sharing products that are better and make a difference, which happen to have a nice opportunity attached.
I hope that you will look at both the failure and success of MLM and decide like me that what it does is important and worth being a part of. I also hope that you will remember that NO business can be built exclusively on an internal consumption model. Even if it is not a large number ALL business must have a foundation of retail consumers to support it's success.
David M. Blood
David Blood Kindness and Relationship Marketing Coach