MLM’s: What’s the Beef?

June 5, 2009 § 8 Comments

Recently, Matt and I have begun recruiting for a business venture that follows a Multi-level Marketing (MLM) or Network Marketing business model. This has generated some curiosity, skepticism, and in some cases downright disgust, all of which are understandable reactions, but I wanted to directly address certain concerns, and hopefully educate and dispel any myths that may be infecting my friend’s list.

Somewhere down the line, MLM’s got a bad wrap, which is unfortunate, since some of the oldest and most respected companies in the US follow this simple business model. Companies such as Avon, Mary Kay, Amway (though they have gotten some bad press due to bad behavior from individuals, the Company itself is not bad–but I’ll address that later) and a slew of other household names like Tupperware, Pampered Chef, PartyLite, Creative Memories and on and on use this simple marketing tool and business model to give stay at home moms and industrious entrepreneurs across the US and globally the freedom to make as much or as little extra income as as they put their minds, time and energy too.

The premise is simple: What is the best way to promote a product or service but through word of mouth? We choose where we eat, what movies we see, and many of the products that we buy based on the advice of our friends and loved ones. Years ago, some brilliant business person realized that if you cut out the retial middle man and just sold a product or service directly to your friends, who told their friends , who told their friends and so on, that word would spread quickly and efficiently, and income and profit could be distributed more evenly across the board to the people that matter. It’s not an underhanded or manipulative manner of promotion at all– to the contrary, it is simply human nature– we trust the advice, wisdom and word of our friends and family.

In the past few decades or so, there have been underhanded and manipulative uses of this business model. But since the business model is merely a tool like any tool– money, a hammer, a wood chipper– it is only as evil as the hands and purposes to which it is put. You can either chip wood with it, or dispose of a body, but one is it’s proper and intended use, and the other is quite obviously not. Because of the “pyramid schemes” that busted wide open in the 80’s many people have become jaded, cynical, and downright dubious of anything that has even the slightest whiff of being an “Evil MLM.” Which, given some of the horror stories, and the broken hearts and wallets strewn in the wake of such bad business, is completely justifiable.

But please allow me to say that not all companies are created equal. The fact is, as I stated earlier, there are many respected and successful companies that use this valuable tool properly and respectfully of their distributors and their consumer base. Many of the world’s wealthiest individuals either support, promote or utilize network marketing– names such as Trump, Kiyosaki, Buffet, Sir Richard Branson, and many respected economists and financial wizards agree– this is a model that works, and if worked ethically and properly, generates a very real income for very real people.

Small business makes up half of the US economy. And of that, HALF of small businesses are home based. And of THAT one in five of Americans have a network marketing business, and one in three of Americans use some network marketed product, whether that is Avon, or Pampered Chef, or Shaklee or what have you. I bet if you were to go through your medicine cabinet or kitchen right now, you might find an item that was network marketed. Where do you think that Tupperware set Grandma gave you came from? Not Walmart, I can guarantee that.

My point is that in this economic climate, folks are looking not only for work, but for hope,and a simple and efficient (and ethical) way to put food on the table and keep a roof over their heads. And many want the freedom that owning their own business guarantees. It’s certainly not for everyone, and it is no cake walk– whatever one chooses to do, it will take hard work and perseverance in order to actually make a living at it. But isn’t that life?

Anyone who promises easy money, or huge dollar signs over night should be given a wide berth. But the fact is that many fortunes have been made through this type of business model. Some have been lost too, and the wreckage is strewn for all to see. But there is such a thing as personal responsibility. It is the individual’s job to exercise wisdom, discernment, research, and due diligence to whatever endeavor they undertake. And the internet, as a tool, has the same shortcomings as every other tool. For good or bad you can find any spin you are looking for in the vast morass of information and opinion that is out there. No one escapes unscathed from the black hole that the Great Webiverse creates. So be aware of that as well. If you look for bad press, no matter how good the product or service, you WILL find it.

So the next time someone approaches you with an idea that smacks of “MLM”, ask yourself a few questions; how well do you know this person? Do you trust their integrity, discernment and wisdom? What exactly are they telling you? And if you go so far as to check out the company they are promoting, does it seem above board, with a straightforward product, compensation plan and hierarchy? All network marketing companies will have an upline and a downline, but does it seem that no matter how hard an individual works, they never get ahead? And trust your gut. If after looking into it and hearing your trusted friend or family member out, you still don’t feel comfortable, then politely decline. This may not be the business, business model, or right time for you. But maybe down the road that could change. Just have an open heart and mind to the possibilities of having a useful tool in the right hands for incredible leverage in your life.

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§ 8 Responses to MLM’s: What’s the Beef?

  • amenquohi says:

    I lost a friendship to Amway, about 15 years ago. I remember vividly that it was almost like a cult – she was so sure she was going to be making millions. She did her visualizations, she recruited and recruited and recruited, she spent tons of money attending training sessions and workshops and team building events. Today, she and her husband are still living in a trailer park, and for all I know, still dreaming of someday owning a home of their own for their now grown kids.
    I haven’t ever known anyone personally who made a fortune, or even a living from a MLM-type company (and that includes Avon, Mary Kay and the like), but I have known people who operated them in an ethical way and didn’t irritate the crap out of everyone they encountered. That’s the only issue I ever had with people in MLM’s – most of them were like a dog with a bone when it came to recruiting me.

  • DT says:

    Yeah, I know how it can be. I’ve done Avon, and PartyLite, and had loads of experience and friends in many others. I guess it comes down to personality, and personal ethics. It works for some people, and not for others, and the training that a company gives, or that the uplines give their recruits, can make or break both an individual’s business, and their reputation/personal relationships– as you have personally experienced, unfortunately.
    The business I’m working with now is pretty good, for instance. The uplines, even far up up, are helpful and available, so I am able to talk to folks who are experiencing the type of success that the shiny brochures promise. That’s always encouraging, when it’s personal experience as opposed to through-the-grapevine-second-hand testimonies spurring one on.
    But, like I said, it’s not for everyone, and not all companies really show their folks how to succeed. I’m philosophical about it. I’m always healthily skeptical when I hear about an MLM, but all in all, I don’t think as a business model that it is inherently evil or flawed. People on the other hand… 😉

  • u_t_tiger says:

    I see I wasn’t the only one to recognize your and Matt’s posts as being recruitment for an MLM. That fact alone should give you pause for thought.
    I too almost lost a friend to Amway. Every time I’d call this friend to chat I’d get 45 minutes of non-stop Amway talk. After about 6 months the Amway talk stopped as he and his wife learned what BS Amway really is. The problem is they promote their products as being the best in the world but, quite simply, they’re really not very good. If they really were such high quality the name Amway would not be the joke that it is.
    For the record, I don’t think Tupperware nor Avon operate as true MLM’s.
    Does your company claim to be Christian based and/or run? Do some research, most MLM’s do. Are Christians naturally drawn to MLM’s, or is it because studies have shown that Christians tend to have the largest friend and social groups of all demographics? (friends & acquaintances = customers & people on your down line). Is that how you’ve been instructed to look at people?
    >And if you go so far as to check out the company they are promoting…
    In your original posts you two conveniently left out the fact this is a MLM. Even now you have not told us the name of the company or what their business is. Have you merely forgotten to do so, or is this the way you have been instructed to present this? If it is the latter, that tells me all I need to know that this is a company not to be trusted. What does it tell you?

  • welshwolf says:

    One time, an individual told me that he had a project for me that I would be interested in. With the way my mind thinks, I thought he was recruiting me for an art project. When we met, he began a speech on Amway. I thanked him for wasting my time and left the room, mustering every once of self-control I had at my disposal to keep from telling this person where to go and how to get there. Due to my experience with this person misrepresenting himself as part of an MLM, my taste for this kind of thing is quite sour.

  • DT says:

    Wow, UT, you truly have the cynical thing down! 🙂
    Look, we chose not to include the info, not because we were instructed not to (we weren’t) but because we don’t want to spam up people’s friends lists, or make them sick of us going on and on about our “latest and greatest discovery”. We are all too familiar with the issues people have a had with companies like Amway, and we don’t want to burn bridges with our friends like that– our friendships and relationships with the people we care about (people like you) are far more important than any business venture we undertake.
    We did a lot of research and soul searching before embarking on this, and decided from the outset we wanted to treat this like a true business– not like some club that we want everyone to join. We know that not everyone wants or “needs” our product, or this type of small home-based business, but we wanted to allow our general acquaintance to know there was an opportunity and to gently give them more info if they were interested.
    As a former Avon rep, and a customer of most if not all of the companies I listed above, I can vouch for the fact that, yes, indeed, Avon is a true MLM in the truest sense of the word. But they are not a scam– with which many (and it seems yourself included) have equated the word. They are an MLM, but they are not a “pyramid” or a “scheme”. I stick by my above explanation that network marketing is simply a neutral business model– neither good nor bad– until real life flawed individuals put it into action. And those individuals can misuse it, and tick off all their friends and relatives, or be cheated or misguided by those higher up the chain, but it’s the same with any company. It’s not the company that is evil, it is the folks running it or working for it.
    As far as the “Christian Company” motif, no, my company does not claim to be Christian, nor is it presented as a “Christian thing.” But there are indeed a lot of Christians who work for it– your observation is correct that Christians are drawn to this type of business. But I have different conclusions about why that is. I think Christians already tend to buck the mainstream. Among Christians, you have a lot of Stay at home moms who want to homeschool and be there for their children, but still want to contribute to the household income (as is the case with me.) You have a lot of men who feel a desire to own their own company and business. This model addresses both desires, and many more. Of course, not all folks who call themselves Christians really are and so we see some of the most unethical and underhanded dealings from such hypocrisy. But again, that is not a problem with the MLM, it is a problem with the people.
    We don’t want to waste our friends’ time and energies. Period. And we also don’t want to be looked at with mistrust and suspicion. If people want to know what we are doing, we direct them to the info they need, and we are not “hiding” nor ashamed of the MLM status of the company we work with. It is a model with which I am familiar and that works well for millions of people world-wide. I can’t keep apologizing for all the NUMEROUS and OVERWHELMING numbers of folks that have screwed it up though. That’s not mine nor my company’s fault. All I can do is make sure I am above board, and if it looks like my company no longer is, have the integrity to jump ship.

  • DT says:

    I know a lot of people have been burned by this type of thing. And that’s why, if folks are interested, I let them know up front what I am asking, and how much time it will take me to ask it. They will either want to hear more or not. If not, no harm no foul.
    We aren’t trying to hide what we are doing– there is nothing to hide. We are simply trying to work our business in the best way possible for us, and in a manner that will preserve our friendships and relationships. I’ve seen far too many times the dirty aftermath of gung-ho folks who lack wisdom and discernment in their zeal. (I’ll admit we were planning to call you about it though. But just once. :-P)

  • For me, it’s not really the company that I’m concerned about as much as it is the product. I actually completely believe they’ll be successful and that you guys will be successful in turn, and I don’t actually doubt their sincerity either. I’m just skeptical about some of the claims of the product itself.
    However, I AM continuing to do research on it, and I am investigating that one link you sent me, so it’s not impossible my mind could change. I just try to keep a certain measure of skepticism about things like this until more proof comes along.

  • kerewyn says:

    My step-mother is selling and recruiting for Usana, who do quality vitamin products. She’s having heaps of fun, making money, and is not a pest when it comes to recruiting – it’s not her personality to be pushy. I’ve bought products off her and they seem pretty good – I’ve been in good health while surrounded with people coming down with winter illnesses (touch wood). So my recent experience of an MLM has been reasonably OK. Not sure that I’ll go so far as to sell it though.

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