Deciphering MLM’s Secret Language
By Len Clements © 1999
Romantic: Imaginative, but impractical; not based on fact, imaginary.
Semantics: The study of meaning in language form with regard to its historical change.
These definitions courtesy of the American Heritage Dictionary. So, how does this apply to network marketing? Let us count the ways.
Network marketers have, over the last half century, evolved into some of the greatest spin doctors and word-smiths that our society has ever created. We’ve become masters at romancing our semantics. That is, we as an industry have created this wonderful, al beit misleading and illusionary, way of stating facts. As paradoxical as that may sound (illusionary facts?), practically every line of every ad, and every sentence spoken at a typical opportunity meeting now contains some degree of evidence of this. To wit…
“No, we don’t accept credit cards… we’re in the business of getting people out of debt, not further in debt!”
I didn’t make that one up. A prominent MLM company made this exclamation several years ago – after burning through 22 Merchant Service providers that refused to accept their account. The proverbial lemonade out of lemons.
How about this classic: “We are absolutely debt free!” Translation: “No one will lend us money!” Now, understand. I’m sure there are many MLM companies who are debt free because they pay for everything with cash, and they can comfortably afford to do so. Good for them. But, how do you know? Simply proclaiming yourself debt free certainly implies your cash rich and financially prudent, or it could mean you can’t initiate credit terms, or you’ve screwed so many of your vendors in the past they’re only agree to do business with you on a cash basis. The latter scenario would likely signal the death knell of the company. Yet, they could still claim “We are absolutely debt free!” and they would be absolutely telling the truth. Another paradox. Dishonest honesty.
I’ve always loved this one: “We’re approaching momentum!” Now, if we were to make the logical assumption that all MLM companies will eventually achieve some degree of fast growth if they stay in business long enough, practically any company could make this claim. But, what exactly is “momentum?” Is it 50% growth in one month? Is it 100% monthly growth over three months? One thousand percent in a week? Well, let’s take a look at one recent situation. A 10-plus year old MLM company had never received more than 350 applications in a single day. That was their record. Then, one recent Thursday, out of no where, 800 apps swamped the home office. The next day, 1,300 more! Some of their distributors road through MLMville yelling “Momentum is coming! Momentum is coming!” Was it? Mmm, well, sounds like it, doesn’t it? But, let’s take a peak behind the scenes. This company had a $295 enrollment package (I’ve changes the details here just slightly to protect the innocent). They had also just absorbed the distributor base of another MLM company. This new influx of distributors were given a grace period to re-enroll and have the $295 fee waved. Guess when the deadline was? That’s right. Five o’clock that Friday.
Pay no attention to that man behind the curtain.
Let’s stay with this issue of “momentum” a bit longer. This is surely one of the most romanticized words in the MLMer vocabulary. What exactly is “approaching?” A common MLM myth that continues to go in and out of remission is that MLM companies hit momentum when they reach $50 million in annual sales. The truth is, one company out of thousands, over the last 53 years, went into momentum at that point (Nu Skin around 1990). Not one before, not one since. But, for some reason, that’s now the accepted benchmark by many MLM romantics. So, when they boldly claim that their company is going into momentum soon because they are “approaching $50 million in annual sales,” are they being truthful? It’s hard not to be. If that company had sales last month of $10, and sales this month were $20, they are, in fact, “approaching” $50 million in annual sales.
Rationalizing: Lying with a clear conscience.
That’s the Clements Dictionary definition.
The word games some companies play to avoid the Multilevel Marketing stigma are almost funny. Almost. The original title is a definition unto itself. Multilevel Marketing: Multiple levels of people marketing. Pretty simple, isn’t it? Yet there are companies out there that will deny ad nausea, even to the point of taking legal action, if you refer to them as a Multilevel Marketing operation – even though there are obviously multiple levels of people marketing there in. What’s so absurd about this is that their entire case is based on nothing more than title changes. Their delineation from MLM is based solely on their making up a different group of words for things. For example, Melaluaca is NOT multilevel marketing, they are Consumer Direct Marketing. Market America is NOT multilevel marketing, they are the UnFranchise. Mary Kay Cosmetics is NOT multilevel marketing, they are Dual Marketing. And, they don’t have “break away” groups, they have “offspring” groups. They don’t have levels, they have “tiers.”
I think I’ll call the tires of my Mitsubishi “landing gear” and the body a “fuselage” and the cab a “cockpit” and the horizontal fin on my trunk a “wing” and then I can rightfully claim to be an airline pilot. Can’t I?
Sarcasm: A mocking or contemptuously ironic remark.
Here’s a few other recent examples. I’ll just run through them quickly.
“We’re listed with the Better Business Bureau!” One of the most common ways a company get’s “listed” with the BBB is by having complaints registered against it. A company chooses to be amember.
“(fill in the blank) has been nominated for a Nobel Prize!” I can nominate by cat for a Nobel Prize.
“(fill in the blank) has previously owned/operated two multi-million dollar network marketing companies!” Mohammed Ali wanted to be “four time Heavy Weight Champion.” To achieve this feat required that he lose at least three times. So, if so-and-so used to own and operate other MLM companies – what happened to them? They went out of business? They were shut down? The shareholders booted him out? He sold his interest and is now starting another MLM company in competition with his old company? The possibilities are myriad. None of them are good.
“Our products are listed in the Physician’s Desk Reference.” The PDR lists what you pay them to. The publisher “does not warrant or guarantee,” nor have they performed “any independent analysis,” nor are they “advocating the use of” any product found therein. That’s straight from the forward of the 47th edition.
“Our product is a $60 billion industry!” In other words, you’re trying to sell something everyone already possesses?
“We don’t sell lotions and potions!” So, you’re saying you’ve intentionally avoided the one product niche that the largest, most successful MLM companies and richest distributors are all involved in? That’s a selling point?
“No meetings!” So, you’re saying you don’t offer what has been proven to be the single most effective enrollment and training method throughout MLM history? This is a benefit?
“No selling!” So, you’re… lying?
“Our infinity bonus pays 10% down to the first Platinum-With-Diamonds-In-It Director in the leg.” Translation: “Our infinity bonus pays down a few more levels and then stops.”
Mr. Webster and I have a very different definition of “infinity” than many MLM companies. I’m pretty sure infinity means doesn’t stop.
Here’s more illusionary benefits…
“We allow you to enroll your spouse (or yourself) on your own first level!” An illusionary benefit based on the illusion you’re the only one that benefits. If everyone else has the same benefit, and they’re all double-dipping too, then sure, you’re get paid double – on half the volume!
“No (or little tiny) monthly personal volume requirement!” So, you create this big downline full of people all sitting around waiting for someone to order something. If you don’t have to order very much, then they don’t have to order very much.
“You can earn overrides on your own personal volume!” This essentially amounts to a rebate. Problem is, it’s really just a tax free loan to the company that you will pay income tax on twice!Think about it. You pay $10.00 of already taxed income for a bottle of vitamins. The company keeps it for a month, then pays you back $2.00 of your own money. They got free use of your money for a month, and Uncle Sam says that $2.00 is new income. And you get double taxed – instead of just charging you $8.00 for the vitamins. The company benefits in two ways: Financially, and the creation of good will. The distributors actually think they’re doing them a favor!
Here’s my all time favorite: “We sell our service at slightly below cost, but we make it up in volume.” I think we should pause for a moment on that one.
Okay, let’s continue.
“(fill in the company) was ten years in development!” So, the founder thought about it for nine years, and spent the last year putting everything together?
“We’re in prelaunch!” The birth of an MLM company is no different than the birth of a baby. You’re never in “prebirth.” Either you’re born, or your not. Either your processing applications, shipping product, and cutting checks, or you’re not. “Prelaunch” is nothing more than a marketing gimmick to entice the naivé newcomer to MLM who still believes there is an inherent advantage to “getting in at the top.” Some companies have romanced this illusion for literally years! I know one company that claimed they were in prelaunch in their third year of business!
“Ground floor” is abused in much the same maneer. Some companies are now defining ground floor by the relatively small number of distributors they have, not their age. One such company recently claimed to be a “ground floor opportunity” even though they were over ten years old!
Statistics can be romanced as well. And when you couch them in well played semantics, the results can go from ridiculous to dangerous.
“You can earn up to $90,000 per month, or more!” Read this very real ad headline carefully. It essentially covers every number from zero to infinity. The ultimate Truth in Advertising.
“Over 300,000 people have joined our company!” This was also a true statement at the time. Of course, the ad forgot to mention that 230,000 had since quit. Note, it doesn’t say they have 300,000, it says that’s how many “have joined.”
Along those same lines, several less-than-five-year-old MLM companies today are bragging about their distributor base of 500,000-plus. The catch is, they are counting how many sequential ID numbers they have given out throughout their history. Each could lose 50,000 reps next month, and gain 1,000 new ones, and that number will go up to 501,000.
Hype: To increase artificially.
And speaking of less-than-five-year-old companies, have you heard this one? “Only 26 (29?, 32?, 36?) MLM companies have made it to their fifth anniversary.” The most ironic thing about this wholly incorrect claim (I have 79 such companies in my database) is that it was popularized by a leading distributor for a company that had not yet celebrated it’s fifth anniversary. The intent here, obviously, was to scare prospects away from less-than-five-year-old companies. The reality is that the vast majority of MLM failures occur within the first two years. So, to then suggest that the vast majority fail within the first five years would be an accurate statement, would it not? But then, so would “The vast majority of MLM companies fail within the first 20 years.” Of course, you’d only say that if you were involved in a 21 year old company.
But the illogic of this scare-tactic propaganda goes even deeper. Even if the 26 company figure above were accurate, it still wouldn’t really mean what it’s intended to mean. Of all the MLM companies that have ever existed in the last 53 years, the vast majority launched this decade! Of course there are very few old MLM companies. Using the same illogic I can prove that the Model T Ford is better built and last longer than a Lexus. After all, of all the cars still on the road after 75 years of use, almost all are Model T’s and not one is a Lexus.
This one drives me nuts: “If you get four people who each get four, you can make $800 with just 20 people!” These types of pitches will even be referred to as “conservative.” They are also assuming that every single distributor that you enroll will enroll four others, and that the bottom 16 will never quit even though they have no downline themselves, in fact no one ever quits, and every single distributor in your downline always orders each month.
Conservative: Moderate; cautious; restrained; erring towards the negative.
And what about those really low attrition rates we keep hearing about? Is a 6% attrition rate good? Sounds pretty good – if they’re talking about last year, or over the life of the company. Or, are they referring to yesterday? Or last week? We don’t know. They never say. Wonder why.
Reorder rates can be manipulated in much the same way. More than one popular program has recently claimed a “75% monthly reorder rate.” Okay, so 100 people order in January. Seventy five reorder in February. Then, 75% of them, or 56 people will reorder in March… and 42 in April… 32 in May… 24 in June… I think you see where this is going… and 12 months later you’ll have no customers left – and still be able to make an honest claim to a 75% monthly reorder rate. Technically.
There was a company a few years ago that claimed 93% of all those surveyed had lost weight on their diet products. What wasn’t revealed was that only those who had been on the product for at least six months were part of the survey. What I can’t figure out is why the other 7% kept ordering!
“There are liars, damn liars, and statisticians.” – Mark Twain
The Aloe wars of the early 90’s saw it’s share of data romancing. One company said right on their 16 oz. bottle, “This bottle contains 100% pure Aloe Vera.” A competitor had the product assayed. It contained one ounce of pure Aloe Vera, and 15 oz. of water and flavoring. They sued claiming false advertising. They lost. The bottle did indeed “contain 100% pure Aloe Vera.” As well as water and flavoring.
Sales figures have seen more romance that a Harlequin Novel. One popular company claimed sales in the hundreds of millions. Upon closer review, I found that almost half of their “sales” were the training packages they were charging their distributors, not the product they were in the business of selling. In fact, “sales” included administrative fees, shipping charges, marketing tools, and other such items. I guess a sale is a sale. Another company recently claimed a monthly sales figure of $8.5 million. Of course, they were quoting “retail” sales… and they have a 100% suggested markup… and an 8 oz. bottle of shampoo wholesaled for $12.50 ($25.00 suggested retail)… they have free distributor enrollment… so their products are probably never retailed, ever… so… their actual sales were exactly half the number they were promoting.
There’s an old saying, “If you torture the data long enough you can make it say anything.” It seems it’s also true that you can romance it into doing your bidding as well.
Do we, as an industry, tend to romance our incomes, just a little? Like, when someone says to you “My income has reached $50,000 per month!” Only, they forget to mention that a third came from a downline that was given to them as part of a sweetheart deal with the company, another third came from a past downline that they moved over, and the other third came from the books and tapes they marketed to this prefab downline. Oh, and notice they didn’t actually tell you they were making fifty grand right now, they clearly said their income “has reached” that level. That was in 1993. They’re only making $5,000 now, and have $6,000 in monthly expenses. Unfortunately, I’m only exaggerating just a little.
I actually find it quite amusing when I hear these hucksters claim they were making some huge income in another MLM program, and they just “walked away” from it to join this hot, Earth shaking, revolutionary new start up deal. Obviously, there’s always more to the story. Like, they sold their old downline, or their distributorship was terminated, or the company just filed Chapter 13. It’s easy to walk away from a $50,000 check – when it bounces. One “heavy hitter” called me recently to proclaim he’d just walked away from aone… hundred… thousand… dollar monthly income. True story. Even if his story were all true, you know why I’d never want to be enrolled by this guy? Because I wouldn’t want an IDIOT for a sponsor! Or, someone who thought I was.
Folks, when my income gets to $100,000 per month, I’m going to brand my company’s logo onto my forehead!
Please understand, I’m not suggesting every positive claim or impressive statistic about network marketing is bogus. In fact, as cynical as I’ve become about this business, I still believe the “pros” (professionals) outnumber the “cons” (convicts). The desperate, aggressive, over-zealous minority of MLMers out there just seem to be the one’s that are always in our face. They stand out.
Network marketing is good. Very good. There’s no shortage of positive information out there. I’m just balancing the scale. This is the secret behind the trick. Take away the smoke and mirrors and the illusion loses it’s ability to persuade.
Romance the truth. It’s okay. Hype is powerless against it.