And Up … And Up … And Up
By Len Clements © 1999
In late 1996 I wrote an article simply titled “The Hype Cycle.” I suggested then that if we could measure “hype” and then construct a graph of its occurrence, intensity, and duration, it would likely appear much like a sine wave – a wavy horizontal line intermittently dipping above and then below a certain median point. Each rise in the level of hype was followed by a sharp drop, usually due to some industry shaking regulatory strike on a major MLM company. All the rats in the industry would then go away for a little while, leaving the rest of us to compete on a more level playing field. For a while. Slowly, eventually, once the heat was off and the smoke had cleared, they would creep their way back in. Until the next big hit, then the cycle would repeat.
So, what is “hype?” Messieurs Funk and Wagnalls define it accordingly: “To increase artificially; to deceive; to publicize extravagantly.” Do many network marketers practice such activity? A loaded question, obviously. But still an interesting one in that the current rage of hype being heaped upon our industry has maintained a definite pattern to it, only now the regulatory hits are not knocking it back down. And this most recent, ever rising wave is dredging up a mountain of sludge and debris onto our happy little beach that we all have to play in.
In fact, if we were to take a look at the hype cycle today, it might look something like this:
Note, as I mentioned earlier, that each peak is immediately followed by a sharp dip. This is usually due to one or two prominent MLM companies being made examples of by various regulatory agencies, followed by the aforementioned lull (rarely are the attacked companies the most guilty, they’re just the most visible). After the big guy gets punished for being too rowdy, everyone calms down and plays nice for a little while. Most take on a very conservative, low hype approach. No one else wants to get caught in the web, plus the actions taken against the target companies usually result in a clear definition of what not to do or say and most try to follow the model.
Unfortunately, like a punished child who promises never to misbehave again, the tendencies gradually return. Everybody’s cool, most are playing by the rules, no one is getting in trouble, and the hypsters get lulled into a sense of security. They start taking a few liberties. They start pushing the envelope. They begin to be a little more aggressive in how they present their compensation plan, what people are earning (or how much they could earn), and what the benefits of their products are.
For those of you who were around during the mid-70’s, you may recall prominent MLM programs such as Holiday Magic, Culture Farms, Koscot Interplanetary, and Unimax. All were eventually deemed to be illegal pyramids and closed down. But one company back then fought the “pyramid” label. In fact, they spent millions of dollars and four hard years to defend themselves against an attack by, not just a state attorney general, but the Federal Trade Commission. Fortunately, Amway won that battle and to this day they offer a model of what both state and federal authorities look for in a “legal” MLM program — and what you can say about them. What’s curious, though, is how well most companies abided by that criteria around 1980 and ’81. I know that 1982 saw a resurgence of at least some amount of hype because I remember being taught how to practice it. Then, in 1983, Herbalife was blasted on both a state and federal level, primarily due to product and income claims, and 1984 through early 1986 was real quiet again. Hardly any hype. Then came United Sciences of America (USA), perhaps the most hyped MLM opportunity in history (and arguably the record holder for first year growth). While USA was not actually “shut down,” it was gone by the end of 1987. This was due in part to a barrage of negative press concerning their over zealous promotional campaign. National Safety Associates (NSA) also began to share the burden of anti-hype scrutiny about that time as well — and 1988 and 1989 were real quite years (relatively speaking, of course — network marketing has never been completely void of hype). Then in 1990 things started to heat up. In 1991 practically every windshield in America has a little card on it exclaiming they could earn “$10,000 within 6 to 18 months from today” if they joined Nu Skin. Photocopied checks, grossly exaggerated income projections, and curative or anti-again product claims were pouring through the U.S. Postal Service (again, Nu Skin was not nearly the most guilty, just the most visible). Most of us surely recall what the result was — Nu Skin was slaughtered in the press and sustained hits from both federal and state regulatory agencies. The next few years the newly reformed Nu Skin was the industry model that most companies followed (although, even they are back to pushing the proverbial envelope with their Big Planet division). Photocopied checks, exaggerated income promises, medical claims, and the like were as close to nonexistent during 1992 and 1993 as I’ve ever remembered it. And sure enough, 1994 it returned. It reached what I thought was surely it’s peak in 1995. Yet, in 1996 it may have reached record levels not seen since the pre-Amway v.s. FTC era. I predicted then that if history repeats itself yet again, somebody was about to get killed.
Well, somebody did get killed. A lot of somebodies! Boston Finney, Destiny Telecom, Jewelway and International Heritage were the most prominent of the group (the latter three each claimed well over 100,000 distributors). As of this writing, some operational, but wounded survivors include TravelMax and FutureNet. Although none could claim the prominence of an Amway, Herbalife, or Nu Skin, surely the combined impact of all of these regulatory attacks, along with many other attacks at the state level on several minor players, would create the same motivation among MLM companies to clean up their act and not follow the tactics of these target companies. Yet, I see one example after another of companies not only implementing the very same hype tactics and questionable compensation methods, they’re far worse that those who were attacked!
The hype cycle likely has reached such monumental proportions due to the massive proliferation of MLM opportunities entering the market and the resulting increase in competition. To compete in the MLM marketplace in 1999 you almost have to practice some amount of hype. You place yourself at a marketing disadvantage by telling the truth (a sad, and perhaps cynical comment, but one that is unfortunately quite true). I’ve had discussions with various MLM leaders and corporate-folk who are, to varying degrees, guilty of hype and I keep hearing the same explanation/excuse: “Our truths are not as good as their lies!” Frankly, although I certainly don’t condone the practice of excessive hype, from a strictly business standpoint I can almost see their point. How can a good, honest distributor compete with those who claim their company is signing up “4,000 distributors per day,” or their comp plan pays “$1,000 with just 25 distributors,” or their product “reverses the aging process 20 years.” All of these statements are right out of material I’ve received in just the last few weeks. Offer after offer claims I’ll make tens-of-thousands of dollars within “a few short weeks.” I’ve got a pile of material here with not only exaggerated income promises and projections (both illegal), but direct claims of income by the distributors themselves — including the resurgence of what was just a few short years ago considered one of the most taboo items one could possibly offer: photocopied checks!
In the past the hype was primarily directed towards compensation plans and income, where as the trend today is now heavily weighted towards outrageous product claims. Isn’t it fascinating how decades old pharmaceutical companies with access to some of the greatest scientific minds on Earth and billion dollar research and development budgets can’t find effective treatments for arthritis, cancer, diabetes, or baldness, but little start up MLM companies can? Isn’t it amazing that someone who discovered a microscopic crystal that makes water freeze at room temperature, improves your car’s gas mileage, increases the effectiveness of skin care products by 85%, and cleans your clothes without laundry detergentisn’t making front page news all over the world and isn’t accepting his Nobel Prize, and is marketing this miraculous technology through two start up MLM companies (the first of which was shut down by their state AG)? Isn’t it just a little curious that there are people being injected with Human Growth Hormone (HGH) and paying $300 per dose, several times a month for it, and several MLM companies, all about the same time, discovered a way to increase HGH levels in the body and “reverse the aging process 20 years” for $90 per month by simply swallowing a tablet?
Does anyone else see anything wrong with this picture!?
There also seems to be a glut right now of “downline building” schemes and fluff programs with grossly overpriced token products. “Gimmick Marketing” is all the rage. Today, everyone has some “revolutionary” new comp plan, product or service, or marketing system. They don’t! This is a 53 year old business, folks. Everything has been tried. Everything you see out there is a variation of stuff that’s already been done. Over and over. We have half a century of precedent to look back on to know what works and what doesn’t work. It’s not a secret. We don’t have to guess or experiment anymore. And history is telling us – in a loud, booming voice – that traditional, merit-based companies offering legitimate products of value work, and almost, but not quite, everything else has or will fail.
Unfortunately, those traditional, merit-based, network marketing companies offering legitimate products of value either have to try to compete with this bunk, or tell people the truth — that success in their program will take time, commitment, patience, hard work, and a financial expense that might even cause them to operate at a loss in the beginning. Of course, if you do you stand a good chance of being out-hyped by your competition. Hype is designed to recruit you, not inform or educate you. Hype is used to destroy realistic expectations, not create them.
But, there is hope!
I recently ran a series of “anti-hype” display ads in several prominent MLM trade publications. The ads were practically a negative pitch – but they were honest and realistic. I expected the number of responses to drop, but the quality of the lead to increase. Amazingly, the total response rate has increased by over 50%! I’m becoming more and more convinced that the hypesters are the over-zealous, over-aggressive minority in this industry. There are still a LOT of good, professional network marketers out there who still understand that, sure, you can keep to the high road and get out-hyped. But, those prospects you lose will inevitably discover the truth sooner or later. And when they do, they are going to remember those that were honest and realistic with them in the past. And, the next time around, those people will have all the credibility.
Help us end the hype cycle.
Be the one that they remember.