MLM Failures: Who’s Really Responsible?

By Len Clements © 1993

I was recently asked at one of my Inside Network Marketing seminars what I thought the top five reasons were for people failing in MLM. When I opened that question up to the group, I heard, again and again, stories of those they’ve heard about who were front-end loaded, had to stockpile tons of product to meet quotas, were misled or deceived into believing in a worthless product or opportunity, or duped into believing there was little or no work involved, or simply got involved with a failed company.

Not one time during this rather lengthy exchange did anyone suggest that perhaps the individual distributor was at fault. More importantly, in any discussion in the media as to why ex-MLM distributors fail, does anyone ever put the responsibility on thedistributor. It was always the company, or the MLM concept, that was to blame.

In no particular order, here is a list of what we’ve found to be the top five reasons for distributor failures. Take note, as you make your way through each point, who is really responsible.

Lack Of Knowledge.

Many people just don’t seem to take their business seriously. Heck, many won’t even acknowledge it as a business. It’s just this play-thing they take out once in a while to try to get rich with. Then, of course, toss it in the dump when it doesn’t perform.

Any legitimate MLM opportunity is a serious business, no less genuine than any other. But they don’t teach this type of free-enterprise in school. No, not in Harvard, or Stanford, or anywhere else. You have to learn how to do it, and this education process is worthy of much more than a quick flip through your distributor manual.

If you want to make a comfortable living out of MLM, you must go to school. Read MLM books (there are many good, generic ones out there), listen to tapes, go to training meetings, read as many of the MLM publications as you can, learn everything there is to know about your product line or service, and learn about your main competitors and how to contrast and compare with them. Call up your upline and ask questions. Do your homework!

I’m not saying this has to be drudgery, or you have to be an MLM expert. But folks, it doesn’t take much to be “expert” in this business – compared to everyone else. With even a little expertise you’ll launch yourself into the upper 5% (as far as MLM knowledge) and gain a great competitive advantage.
Aren’t you joining an MLM program to be successful? A question with an almost absurdly obvious answer. Okay, so this might, assuming you are successful, be the way you earn your living someday, right? If all goes as planned, this will be your livelihood for the rest of your life. People study for many years, and spend tens of thousands of dollars preparing for this. Yet, most MLMers won’t spend ten bucks for a training manual or even ten minutes reading it!

The Junkie Syndrome.

There is no basis for this figure, but I would guess that less than 10% of all MLM distributors who have been actively pursuing this business for more than one year are still with their first company. Most probably have been with several. Of course, this is not always the sign of a junkie. I, personally, have been involved with five, but they kept going out of business (this was years ago, when I didn’t do my homework).

I believe MLM Junkies fall into two categories. First, there are those that believe, If I can make $1,000 doing one program, I can make $10,000 doing ten! These are the folks who are distributors in ten programs simultaneously. Then there are those who believe, The cash is always greener on the other side of the fence. These people are in whatever program who’s tape they listened to last. They’re in ten companies in ten months.

I know a gentleman who used to brag about his “expertise” regarding the MLM industry. He was quite proud of the fact he had been involved with 21 companies over the last 15 years. Of course, he hadn’t made any money in any of them, but the one he’d just signed up for was going to make him rich! Again.
MLM is like a marathon. And we all run (or maybe craw) the 20 miles to the finish line at different speeds. And, unfortunately, there’s always that guy over in the bushes, at about the one mile mark, whispering to you to meet him back at the starting line. He knows a short cut that will cut five miles off the course! Usually, the promise is false. He just wants you to run on his course. And you’ve lost the mile you already finished. And this little scenario is then repeated over and over. Two miles in, then back to the starting line. A mile and a half in, then back to the starting line. Over and over and over. Then the disgruntled distributor stands there back at the starting line blaming their lack of progress on the track conditions, their shoes, the weather, the race officials – everyone but themselves.

Folks, EVERYONE has, allegedly, a better deal than the one your in. EVERYONE will tell you their deal will make you richer, faster, easier. Buy into that, and you’ll never finish the race!

Pumping Up The Volume.

By this, I’m referring to the act of artificially meeting group and personal volume quotas by stockpiling product with money out of your own pocket. This also includes the act of front-end loading your new recruits.

From all the feedback we get from the field, and from all the press MLM receives, it seems obvious that this is a major killer of MLM success, not only for the recruits that are victims of this practice, but the experienced distributors as well. And in some cases, even the company itself is ruined by it (think laundry balls).

Several years ago, while investigating a company for a review in my newsletter, I went to an opportunity meeting and later met with one of the representatives. She strongly encouraged me to sign up for $500 worth of product since that was this program’s personalmonthly volume requirement for advancement. Of course, I also needed $2,000 monthly group volume, and five active front line distributors… and it was the 25th of the month! But that wasn’t discussed. There was absolutely no excuse for her to suggest that kind of purchase, other than to increase her bonus check. By doing this she completely ruined my trust in her. And besides, front-end loading is illegal! Sure, this company didn’t require a product purchase at start up, but these people were actually being taught by their upline to not sign anyone up unless they bought at least $250 in product. Otherwise, they would “poison” their downline. I agree a new distributor should buy some amount of product, but at a time and amount they are comfortable with. Not by force. Which would you rather have, a distributor do $1,000 in volume and quit in a month or two, or $100 in volume for the rest of their life?

What I think is even worse than front-end loading, as far as cause for failure, is stockpiling. There are so many people out there that are either over anxious, lazy, desperate, or just plain ignorant when it comes to this practice. They think if they take money out of their own pocket and meet all the monthly volume quotas, they won’t have to retail, or perhaps they’ll sell it all later. Or they may not want to wait to naturally meet the criteria for higher bonuses by building a retail base or downline, so they buy in at some huge amount of inventory. Of course, sometimes they do this out of desperation. Their downline is dwindling fast, or maybe they had a lot of people break away all at once. This might be a fair excuse for a month or two, maybe. But I’ve heard of people who do this every month. There was a popular story going around about a guy in a popular break-away program who purchased $3,000 worth of product every month to maintain his status level and $5,000 check, because all his eight front line people broke away. He claims to have quit this business with over $50,000 worth of product rotting in his garage. Here’s a thought. Do whatever you did to get eight front line break-aways and build your front line back up. Okay, maybe he couldn’t wait. Maybe he quit his job to do this full time, and couldn’t afford the lower bonuses in the meantime. My suggestion; don’t quit your job until your status is secured. I’m not trying to be sarcastic here, I’m simply trying to suggest that these situations all stem from bad business decisions on the part of the individual distributors.

The worst thing about this practice, is that once the disgruntled distributor gives up and quits with this mountain of stock they’ve accumulated, they bad mouth the company, their sponsors and the industry in general. They file class action suits, go on TV, get interviewed by national magazines… and every MLM distributor suffers because of it.

Distributor Apathy.

Probably the most obvious reason for failure, in anything, is simple lack of action. Especially in MLM. So many distributors are convinced that to be successful in this industry you get other people to sell for you. And in many programs they even believe their upline will build their downline for them as well. And, of course, some distributors are just not very motivated, or just plain lazy. They want all those wonderful benefits they heard could be achieved in MLM, but they don’t want to do what is necessary to achieve them.

The more a company, or it’s distributors, continue to promote their opportunities as ones that require little work, or that can provide success “easily,” the more they are going to attract people who don’t want to work, who are going to take it easy. And when they fill their downline with these people, they wonder why nothing happens.

During my seminars, I like to tell the story of a man who is looking for a chisel (an MLM opportunity). A tool he can use to carve out a sculpture (carve out a living). He does his homework. He shops around and looks over several chisels. After studying each one thoroughly, he excitedly make the purchase (signs up). Then, he goes home and puts the chisel away. Days go by. The block of wood stands ready, but untouched. Occasionally, he takes the chisel out and ponders it. Fantasizes about what he could create with it. He keeps hearing great things about this brand of chisel. It’s sharp, straight, and accurate. Very comfortable to hold. Once in a while, he takes a stab at it, literally. Makes a few scratches here and there. A few shavings fall to the floor. Weeks go by. The block of wood is still shapeless. Spider webs begin to form at its base. The man begins to notice what little effect this chisel has had on his carving. It’s just not taking shape, he says. Damn chisel! I’ve been had, he thinks. My family was right all along… these chisels are nothing but junk! They never work. Not just this brand, but all chisels, he assumes. He throws the chisel into the trash can out back. Then, at work the next day, his co-workers ask him how his carving is doing. Terrible, he says. Those chisels are nothing but junk. Don’t ever buy any of them. It’s not my fault. I don’t have the right tools. But I’m going to the hardware store tomorrow — I’ll findsomething that works!

I Quit!

MLM is the one form of business where you could accurately state,If you fail long enough, you will success. I’ve heard many times that in MLM, you can not fail, you can only quit. I believe this is almost true. Almost.

I met a woman after a seminar one night who informed me that she was going to quit her opportunity because, after four months at it, she was “failing miserably”. I asked her what that meant, in numbers. She replied that she had signed up “only” two people her first month, none the second and third, and two more her fourth month. Four in four months. She also said that those four were doing no better than her. So, they too were “failing miserably.” I projected out on the white board what her downline would look like after one year, factoring in considerable attrition. It came out to about 20 people, which would have earned her roughly $120 per month. “See, that’s horrible!” were her exact words. I asked her what she thought her downline would look like after two years, assuming she and every one else continued to fail just as miserably as they had the first year. Her response, with no hesitation, was “Well, 40 people.” An obvious answer, right? Twenty the first year, so double it after another year. Obvious perhaps, but absolutely incorrect. I asked her to give me the number of people who were building her downline her very first day in the business. She gave the obvious, and this time correct answer of “One – just me.” Okay. How many people would be working to build her downline the very first day of her second year in the business? “Twenty, besides me” she said. Correct, since the downlines they build for themselves would also be building hers as well. So, since there are 20 times more people building her downline, wouldn’t it make sense that she’d receive twenty times the results? If each of those 20 people “failed miserably” and all brought in only 20 people each that year, she would have 400 people in her downline – and an approximate income of $2,000 per month. Keep in mind, we assumes no “heavy hitters” in this scenario. Although math is perfect and the real world is not, and her actual results could very dramatically either way, the point was clearly made. Don’t quit.

Notice where the responsibility lies within each of the above points. Not with the company, or it’s products, or it’s marketing plan, or even it’s distributor base. It falls on the distributor alone.
Yes, yes, the company could go under, or it could be an outright flaming scam. But if you’ve done your homework, the chances are increased that even this dreaded scenario could be avoided. And if it does, it will only be a set-back, not an end to your MLM career.

MLM opportunities are, in one way, kind of like investing in the stock market (and I’m speaking metaphorically). If you’re an “aggressive” participant, go for “ground-floor.” Sure, the rewards could be greater, but be prepared to take your lumps. Conservative? Go for a stable, mature opportunity that’s been around for 20 years. Or, are you somewhere in between? If you want to take the extreme risk of getting involved with a deal that’s in “prelaunch,” then that’s your decision. The 96% failure rate of MLM start ups is no secret. Pleading “lack of knowledge” of this fact is not an excuse.

What about the guy who quit his job, bought $5,000 worth of water purifiers, sold one to his mom, and then joined a class-action suit against the company (true story). He was deceived. Lied to. Scammed! If wasn’t his fault… was it? No, if someone held a gun to his head and forced him into it. Otherwise…
I hear about this kind of thing happening all the time. Some distributors make very emotional, uneducated, terrible business decisions, then look for a scapegoat. If you owned a video rental store, and a supplier offered you a great deal on 1,000 copies of Ishtar, which you agreed to sight-unseen, and later you found that only one was rented would you sue the supplier you bought them from? Sure, some would. But who’s the one that could have read reviews, talked to critics, called other video stores, or just watched the movie first? Who’s really responsible?

In today’s information age, especially with the abundance of information sources available in and to the MLM industry, there is absolutely no excuse for a new distributor to go into an MLM opportunity unaware of the truth. A few simple questions, a couple phone calls, and a little bit of reading is all someone needs to do to know exactly what will really be expected of him or her, and what to expect from MLM, to be successful.

Multi-Level Marketing works! The concept is sound, and the good, legitimate opportunities are everywhere. Everything you will ever need to succeed in this industry is out there, right now. The only ingredients that still need to be added to the mix are, hard work, patience, knowledge, honesty and commitment. Things we must provide. All of us. We are responsible!