The Truth Behind All Those Screwy Deals
By Len Clements (c) 2000
Network marketing is a very perception oriented business. To compete for distributors you must somehow create the perception, or in most cases the illusion, that your opportunity will make your prospect richer, faster, easier. Instead of emphasizing a strong work ethic, loyalty and commitment to one MLM program, and an honest, moral approach to recruiting, it seems many, way toomany, MLM programs today are offering the proverbial “magic bullet.” They claim to have discovered some “revolutionary” new product, concept, or system that no one (out of tens of millions of people over half-a-century) have ever thought of before. Have they? Let’s take a closer look…
Let’s start with “infinity” bonuses. This is a form of commission that pays on a certain percentage of volume per level down to the next distributor in the leg who also qualifies for this bonus. At that point the bonus can be all or partially blocked. In other words, it pays down to a certain point and then stops. Mr. Webster and I have a very different definition of “infinity.” I find it rather amusing to listen to the various pitches some distributors offer when presenting their “infinity” bonus. They emphasize how easy it is to qualify for the bonus (usually there is only a small recruiting quota). But, of course, this advantage is solely based on the illusion that you are the only one that has this advantage! If it’s so easy for you to qualify for this bonus, then it’s just as easy for all those in your downline to block your infinity bonus. In a worst case, if everyonequalified for it, no one would earn anything from it!
I’ve heard many people claim that it is possible to earn an “infinity” bonus on people over 100 levels deep in their organization. Think about what that implies. This would mean that you would have to have someone on your second level with a downline over 99 levels deep who has not qualified for the maximum infinity bonus! I suppose it is possible — theoretically.
Recently there has been a flurry of two and three level pay plans (usually employing an “infinity” bonus on the third level). While they may have noble intentions (more up front money for the “little guy”), they are entirely deceptive in their claim that better-than-average earnings per distributor ratio will last more than a few short months. These deals love to compare the earnings potential compared to a list of their competitors based on a two or three level downline. That’s because this would likely be the only scenario in which their plans would pay more!
There are only two possible paths a 2-3 level program can take. They get really big, or they don’t. If they don’t, that’s not good. If they do, then it is inevitable that their leading distributors will develop large downlines. And what do you think happens when the top distributors look at their genealogy of 10,000 people and realize that 9,500 of them are completely out of their pay range. What happens when their $30 per distributor earnings ratio drops to under a buck, and they figure out that if they had the same group in a six or seven level plan they’d be making three or four times the income? What happens is exactly what has happened to literally every 2-3 level plan in MLM history over one year old — their leaders leave and the program crumbles, or they add more depth to their pay out! (Voyager, Changes, Outback Secrets, and Personal Wealth Systems are just a few recent examples of one outcome or the other).
What about programs that claim to have little, or even no personal volume requirement? Isn’t that great? You don’t have to buy anything as long as your downline does! But again, this is based on the illusion that you are the only one with this advantage. Isn’t your downline being told they don’t have to order anything too! So now everyone sits around waiting for everyone else to order something.
Another great example of this same kind of illusion are programs that allow you to enroll yourself or a spouse on your own first level. They tell you all about how you can now build under the second level position and earn from both positions on the same downline. What they don’t tell you is that everyone in your downline gets to do the same thing! Now your six level plan just became a three level plan! As everyone else double-dips, just like you, they are forcing potentially huge amounts of sales volume out of your pay range. Sure, you get paid on two positions — but on about half the volume!
(Note: due to the irrelevance of levels in determining commissions, the binary plan is exempt from this discussion — although most binary plans have a myriad other illusionary advantages, but that’s another article).
Speaking of binaries, there is one recently popular gimmick that’s worthy of discussion and that’s this “daily pay out” nonsense. My main peeve is that many such deals are actually claiming that getting paid three or four times a week means you are going to get paid three or four times more than a weekly paying plan. A few years ago, this same baloney used to be said about weekly paying binaries compared to monthly paying traditional plans. Once it became obvious to so many that you were really getting paid the same amount monthly, only divided up into smaller, weekly chunks, this absurdity ended. Now were being told daily pay outs result in more income than weekly due to the same ridiculous logic. In fact, the more likely effect if a significant increase in administrative expense on the part of the company — thus the very real possibility of lower actual pay outs!
And speaking of pay outs, I’ve noticed the Australian 2-up compensation plan is back for another round of resounding failures. This plan, which seems to make a resurgence about every three or four years, is the epitome of the word “gimmick.” It’s a classic example of a plan that looks great on paper, but actually pays very little to very few. Yes, the percentages are bigger, but what they don’t tell you is that you are actually getting paid those whopping pay outs on a small fraction of your total downline. The rest you earn nothing on, making it, over all, the worst paying plan in history. Which explains its literally 100% failure rate. But, alas, yet another group of “visionaries” have recently come along claiming they’ve discovered the secret to making the 2-up work (or, in one case, they just gave it a big fancy name and then flat out lied about the plan’s true identity).
There are gimmicks within the product category as well. How many times does the “smoking cure” fad have to make it’s loop though this industry before people realize it’s a gimmick! Think, people! If there really was an herbal substance that permanently cured people of their smoking habit, it would be front page news all over the world, the FDA surely would be trying to classify it as a drug (so the drug manufacturers could make a killing off of it), the tobacco industry would be spending billions to destroy its credibility, andevery MLM company in existence would be knocking it off! Not to mention all the brand name versions of it that would be flooding the store shelves.
Same goes for baldness cures, anti-aging creams, libido increasing oat pills, IQ enhancers, and other such bunk. I’m still waiting for some MLM company to offer X-ray glasses!
Another marketing gimmick that is at least original (I never saw this one much before last winter) is the “guaranteed income” or the “reward” for finding a better MLM program. These offers have more catches than Willie Mays. For example, one scheme currently operating claims they will guarantee you an income of $5,000 within 120 days or they will “continue to execute our program on your behalf, at our expense, until you do earn $5,000.” What does that mean? It means that if they fail miserably and don’t earn you a dime, they’ll just keep on trying. Think about it, folks. For a company to guarantee an income to every distributor that ever joins, they are in essence guaranteeing a downline to every distributor. This is, obviously, a mathematical impossibility.
One company is now offering a “$10,000 Reward” to the first person who can show them a pay plan that pays better than theirs. What is so ironic is that there plan is a classic Australian 2-up, which means that almost every plan pays better than theirs!
Portfolio programs are one of the most amazing phenomenons to ever cycle through this industry. This is where someone tries to get everyone into a group of MLM programs, either all at once or in a series. No matter how many of these schemes fail, over and over and over, all for the exact same set of reasons, people will still go out and try it again. And again, and again. Do you want to know how I know that no portfolio scheme has ever worked. Well, for the same reason I’m pretty sure dinosaurs are actually extinct — because there aren’t any! Other than the most resent batch of start ups, show me one that is working. There have been dozens, perhaps hundreds, that have come and gone.
The primary reason portfolio deals don’t work is that each program they place you into either requires a product purchase to qualify for a check in that program — or they don’t. It’s got to be one of the other, right? So, if each program requires, let’s say, $100 per month, and they place you into ten programs, you have to spend $1,000 per month to earn a check from each one! Now, if they don’t require a monthly purchase, then every sits around waiting for everyone else to order something — and no one orders anything. No sales volume, no income. One hot portfolio scheme is distributing a cassette tape where one of the founders admits to all the reasons why these deals have never worked before, then rather than explaining how they corrected those challenges he describes the exact same system as all those who have failed!
Show me a list of professional network marketers who have focused on one MLM opportunity for more than ten years and I’ll show you a list of millionaires. Show me a list of MLM portfolio participants who’ve earned even a modest full time income for more than even one year and I’ll show you a blank sheet of paper.
In next months issue… The biggest, nastiest, MLM gimmick of all time — the downline building scheme! (This one deserves a whole article to itself!)
Folks, there have been professional gamblers who have spent their entire lifetime trying to perfect the perfect “system” — and failing at it — for as long as there has been gambling. There have been those who market get-rich-quick schemes through the mail claiming to have discovered an easy, sure-fire way to wealth for as long as there has been mail. And, there has been MLMers claiming to have found the perfect income building system, concept, or product for as long as there have been MLMers. If there was such a thing, we’d all be obscenely rich and the entire Earth would be saturated with 6.5 billion MLMers.
It’s not because there isn’t!
What there is is an industry with many, albeit a minority, of hard working, devoted, loyal, professional network marketers who haveearned their incomes with sweat, honesty, and a lot of patience.
We need more of them, not more games and gimmicks.