Anti-MLM Zealots – Part XI

Market Saturation

        The more naive of the anti-MLM crowd will typically offer a mathematical progression showing five people who get five, and so on, then gloat over their revelation that by level 14 they would have accounted for the entire population of the Earth (Van Druff uses an even more ridiculous “ten sponsor ten” scenario). However, when an MLMer uses such a scenario to demonstrate the income potential of their plan, the anti-MLMer is always quick to jump all over the absurdity of such a scenario ever playing out. So, why use it then as evidence to debunk an industry based on it’s theoretical occurrence?
        In over 68 years we’ve managed to involve only about 2.5% of the U.S. population. By the end of this decade over 40 million Americans will turn 18, and another 9 million adults will immigrate to the US. I think there’s still some room to grow.
        John Taylor is critical of the lack of disclosure as it relates to local market saturation. He advocates territorial restrictions, believing that when a certain geographical region has reached a certain number of distributors for a particular company, no more distributors should be allowed to participate in that region. The glaringly obvious flaw in this logic is that by limiting the number who can participate in a given region causes local market saturation! Can you imagine someone wanting to join your MLM program but you can’t enroll them – unless they move out of the area?
        Another common anti-MLM concept suggests that those who get involved too late miss out. As Taylor exclaims, he was at the top, but those after him would be at the bottom, thus be too late to achieve any real possibility of success. But… didn’t he start at the bottom? Indeed, has not every single successful MLM distributor in history started at the bottom? There are numerous examples of folks who joined very mature companies, started at the bottom of what was an already large existing hierarchy, and managed to achieve success, like me – and John Taylor! Its happening every day.

Exploiting Relationships

        So, you invite your new neighbor over for dinner under the guise of making a new friend. Once desert is consumed you begin your opportunity spiel. Yes, that’s not a cool way to build your business, and you’ll lose more friends than you gain. Fortunately, most MLM distributors don’t practice such tactics. Naturally, those who were victims of deception or had their friendships exploited like to tell their story to authors of anti-MLM propaganda. Unfortunately, authors of anti-MLM propaganda never seem to bother to see how the other 99% of us conduct our business.
        Sure I’ve offered promotional material to friends. Some were thankful and joined. Most said they were not interested. No problem. I never mentioned it again, and we’re all still friends. Its not who you ask, its how you ask. The bulk of my recruiting efforts over the years has been conducted the same way most of those I’ve recruited, and those throughout the industry, have conducted there’s – by seeking out already interested people via various lead generation devices. Those who were not invited to their 20th class reunion because they obnoxiously tried to recruit everybody at their 10th are a very noticeable, but very small minority of MLM distributors. The hundreds of MLM-folk that you’ve come in contact with over the years who do not practice overly-aggressive recruiting behavior are never recognized – because they don’t aggressively try to recruit you!

Most Distributors Fail

        Yes, they do. In fact, this is perhaps the strongest argument of all against the imminent saturation theory (although, most anti-MLM zealots make no attempt to reconcile the two completely contradictory positions).
        What most nay-sayers would like us to believe is that this high failure rate in due to some inherent flaw in the MLM model. Some at least concede the MLM concept is sound, but the potential for success is grossly overstated. What they fail to appreciate is that “success” doesn’t necessarily mean getting rich. For some strange reason, anti-MLM zealots see success in MLM as an all or nothing proposition. Either you achieve wealth, or you failed. I don’t agree. Nor, according to a MarketWave survey of over 6,700 distributors and prospect (I base my conclusions on actual research, not theory) do 86% of you who are shooting for a comfortable living income. A nifty $6,000 per month without having to set the alarm in the morning would make most of us quite satisfied. The majority of the rest would be happy with only an extra $200-$300 per month. But, when that person only earns $250 per month, the anti-MLM advocate points to them as an example of MLM’s unfulfilled promise. Several years ago a distributor for a large MLM company was profiled as part of a semi-negative article that appeared, of all places, in Good Housekeeping magazine. The distributor lamented over his net profit of $16.45 after his year long effort. Of course, had this been any other form of business, a first year profit of any amount would have been considered a success story. Only in network marketing is this considered, at least by some, as an example of failure.
        Sure, many of us overplay the income angle, and that’s a problem – but not one exclusive to MLM. Hype exists in all industries. Its a flaw in one’s marketing technique, not the product or opportunity being marketed.
        Is it fair to blame the high failure rate on the MLM concept or model? Well, what if ten people were given free memberships to a gym which even included a personal trainer. Five went once or twice, saw no immediate results and quit. Two went several times but never followed the advice of their trainer and used all the equipment wrong, then quit. Two others never even showed up once. Only one went on a regular basis, followed the prescribed work out regimen, and after a year gained the body and vitality they desired. Then an anti-gym zealot comes along and claims that 90% of all those that signed up for the gym membership and trainer failed to receive any significant benefits. Although technically true, its not the whole story. Anti-MLM zealots are not telling the whole story. A classic example of this is the “Payout Distribution Study” attempted by Jon Taylor. When he requested payout data from 60 MLM companies he required “even those who only bought a starter kit whether or not they have done anything with it… be included in these statistics, including those who have not sold anything or quit, even after one day.” My point is, why would Taylor want to include those who didn’t go to the gym in a study about the benefits of going to the gym?
        The Anti-MLM Zealot can be just as guilty of manipulating data as they often accuse us of being. For example, if ten people join ten MLM programs in succession, then all ten succeed in their tenth company, based on the way Jon Taylor tried to acquired his data, by looking at what percentage failed in each of these ten companies, he could easily show a 90% failure rate (nine of these companies would show these ten people as failures) even though 100% of them are now successful!
        Certainly some people work their hearts out, do all the right things, and still fail, as is true with any endeavor in life. However, with rare exception, MLM failure is voluntary. No one has ever held anyone at gunpoint and demanded that they buy $5,000 worth of water purifiers or vitamins they didn’t want. That was a choice. No one forces anyone to jump in and out of ten MLM program in a year. One reader of this column wrote me recently to let me know that, indeed, MLM didn’t work. He should know. He’s been in 50-60 companies over the last nine years. I wrote him back to explain to him the most likely reason for his failure. He’s been in 50-60 companies over the last nine years. No one has to exploit their friendships, or make ridiculous product claims to succeed. What defines an illegal pyramid and how to avoid one, and how to sensibly pursue a legal MLM business, is easily accessible information for those that seek it. Most distributors fail because they make very emotional, very poor, but totally voluntary business decisions.
        One such decision is to quit entirely. Certainly, in some cases, if someone perpetually fails at something they might want to quit and try something else. But the ease of entry into MLM also makes for a way too easy exit, and far too often it is premature. I once met a woman who claimed she was “failing miserably” at her MLM business. After one full year of effort she was making only $250 per month. I took her actual, and very modest net growth figures and projected them forward one more year. She would be earning just over $3,000 per month which, she said, would allow her to reach her goal of quitting her job and living off her MLM income. If she could just “fail miserably” for one more year.
        What is perhaps the most ironic and hypocritical thing of all about this “failure rate” claim is that the Anti-MLM Zealot’s very anti-MLM campaign has, to some degree, increased the failure rate, thus personal and financial harm, of the very people who’s relationships and finances they claim to be trying to protect!

Success in MLM Requires Extraordinary Talents and Skills

        Not only is this untrue, it is perhaps the single greatest benefit of the MLM business model. If you don’t have the time, money or skills to build a large downline sales organization you can still achieve great success by finding someone who does! If you were to only get two or three people who are good at MLM to join with you, when they eventually succeed you succeed. They’re downline is your downline.
        I’ve heard many stories – including ones that are actually true! – where 70, 80, or 90% of one’s downline was build by one talented person. I recall several years ago speaking to the third highest earning rep in a large MLM company who confessed that he understood very little about how to build a downline and had only recruited a “handful” of people. One of them was the number one earning rep. Another popular story, which I have confirmed as true, tells of an opportunity meeting at a Holiday Inn in Dallas where only one person showed up – one of the grounds keepers at the hotel. He was a 19 year old Hispanic man who knew only a few words of English. This man went on to enroll only one person. That one person was the owner of the Holiday Inn – who went on to become one of the top earners in the company. So would have been the young Hispanic man – if he hadn’t quit after only a month.
        Is MLM for everyone? Absolutely not. Especially those unemployed folks looking for immediate income. And yes, some of us fail to reveal that to our neediest prospects, and that’s a problem. But once again, and for the last time, that’s a challenge with the way some people practice MLM, not with MLM.

Pyramids in Disguise

        Robert FitzPatrick epitomizes this position when he states “MLM is a legal form of business under certain rigid conditions set forth by the FTC and state Attorneys General,” but goes on to suggest “Many MLMs are in gross violation of these guidelines and operate only because they have not been prosecuted.” This is a bit like saying “Many honest people are liars.” Either you’re a legal MLM company, or you are an illegal pyramid disguised as an MLM company. And yes, this is unfortunately not uncommon and legitimate MLM companies certainly do suffer a guilt by association. But let’s be clear – illegal pyramids try to look like MLM companies because they want to appear legal!
        Most anti-MLM zealots are surprisingly ignorant as to what legally defines a legitimate MLM company. FitzPatrick’s definition of the “70% rule” is somewhat different than Taylor’s, but just as far off base. He claims this rule requires that, “at least 70% of all goods sold by the MLM company must be purchased by non-distributors.” Non-true. The original rule came from the FTC vs. Amway case in the late 1970s, and clearly prohibits a distributor from buying more product until at least 70% of all previous orders have been consumed or sold. It was also simply a suggested guideline, never a law. Yes, subsequent interpretations by state and federal regulators, and even other MLM companies, have been all over the map. Anti-MLM Zealots like to cherry pick the one that best serves them, and ignore the original. FitzPatrick also states that “the very legality of MLM rests tenuously upon a single 1979 court ruling on one company.” For us to believe that FitzPatrick actually believes this, we must also believe that he has somehow forgotten the literally hundreds of other state and federal cases since 1979 that have defined and refined the definition of a legal MLM operation. Or, that the ruling in question involved the aforementioned Federal Trade Commission vs. Amway case (not exactly a minor-league case). Or that, in the very words of the federal court “The Amway sales and marketing plan is not a pyramid plan. In less than 20 years, the respondents have built a substantial and efficient distribution system. Consumers are benefited by this new source of supply and have responded by remarkable brand loyalty.” The government’s position doesn’t sound too “tenuous” to me.

Researcher Bias

        Researcher Bias is a term used to explain why two opposing groups can study the exact same information yet come to completely contrary positions. People see what they want to see. If you have an agenda to debunk the MLM concept the “evidence” is not hard to find, if that’s what you’re looking for. Its no curiosity that when each of the four anti-MLM zealots mentioned above were asked to identify the number of happy, successful MLMers they surveyed, or to list the pro-MLM books or magazines they read, each refused to provide an answer (although Taylor claims to have interviewed “hundreds” of MLM distributors, he also claims the best information source are distributors who have failed). When Ruth Carter and her MLM Survivor followers are shown evidence of those who honestly succeeded in MLM they are always labeled “perpetrators.” Those who fail are always their “victims.”
        Its also no mystery why Carter, Taylor, FitzPatrick and Van Druff describe in their writings the most notorious examples involving only a handful out of the thousands of MLM companies that have existed. They’ll always focus on the most controversial practices employed by Amway/Quixtar (or more specifically, employed by some of their deified Diamond distributors) which tabloid TV shows are quick to back them up on. Then there’s Equinox, of course – the poster Bad Boy of the MLM industry. They’ll never let us forget the trouble Nu Skin was in over a decade ago, or Herbalife two decades ago (long since resolved). Occasionally they’re site Trek Alliance, FundAmerica, SkyBiz, International Heritage and a couple gold & silver deals from 15 years ago, likely because their ammunition was handed to them by state and federal regulators. That’s about it. That’s 95% of all the companies they’re hit by name, which is less than 1% of all MLM companies in existence today, let alone those that have existed since the 1979 FTC vs. Amway decision. The dozens of good, clean, mature MLM programs that have never had any legal challenge, or the thousands of hard working, professional network marketers who practice a conservative, honest approach to their business are completely ignored, as if to create the illusion they do not exist.
        Some anti-MLM zealots are passionate about their cause, and they’ve dug themselves into their position far too deep to ever emerge – the obviousness of their folly be damned. Ego is a powerful thing. If someone tries hard enough, long enough, to make a case that the sky is always red by only showing images of desert sunsets, they’re stick to their case no matter how many times you force their heads upward in mid-afternoon.
        MLM has never even approached market saturation in over half a century of existence. Thousands of distributors succeed in reaching their income goals (what ever that may be), many with mature companies that have been around for decades – and all started at the bottom. The vast majority didn’t exploit friendships, or hype their products. Products which they genuinely love, some with a passion. Most that failed did so due to poor, but completely voluntary business decisions. The legality of network marketing is well defined and based on decades of precedent, the model is sound, and to those seeking a home based business, the benefits are substantial. Evidence of this is everywhere, and easily obtainable – assuming you want to find it.
        To slightly misquote Shakespeare, Me thinks the Anti-MLM Zealot doth protest too much.