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October 2, 2004
What's Wrong With Multi-Level Marketing? - IV
By QBlog in
When I first began searching for information about Quixtar, sometime around the summer of 2002, I stumbled across Dean VanDruff's article titled "What's Wrong With Multi-Level Marketing?" Something about the article struck a chord with me and it's points have lingered in my mind ever since. I love the article's pragmatic tone and the meticulous way in which VanDruff defuses each potential objection, the sign of a skilled debater.
At my request, VanDruff has graciously granted permission for me to republish
his article here on Quixtar BLOG. His article analyzes four "problem areas"
with MLM and I will publish each specific analysis as a separate post (see parts
I,
II
& III).
I consider this article required reading for everyone involved in any Multi-Level
Marketing business.
- by Dean VanDruff
IV. Relationship Issues: An Experiential Problem
Learning the Hard WayMLMs grow by exploiting people's relationships. If you are going to be in an MLM, you swallow hard and accept this as part of "building your business." This is "networking." But to those not "in" the MLM, it seems as if friendship is merely a pretext for phoniness, friendliness is suspected as prospecting, and so on. There is no middle ground here, try as you might.
While this is the most difficult point to make, it is perhaps the most important.
Anyone who has any experience with an MLM has strong feelings, either for or
against, and this is the problem. Polarization runs deep.
High-pressure Selling -- Reserved for Pyramids Only
When it comes to selling product, MLM sales reps are probably no more aggressive
or obnoxious than ordinary salespeople. Since most are not salespeople by nature,
and it is characteristic that MLMs attract few people with any experience selling
this particular product or service, they usually sell through pre-fab "parties"
or home "demos." Thus, sales pressure is exerted by situation, if at all.
It should be noted that when selling product, the only distinction from a real-world business is the possibility for deception due to the "looseness" of the MLM and the incentive to exaggerate claims without any accountability. Other than this, selling product in an MLM is fairly similar to selling any product in the real world.
But when it comes to getting you "signed up" as a "distributor," the MLMers get pushy and deceptive beyond the boundaries of polite social norms.
Remember, an MLM is defined by its rewarding people to recruit others in multiple
levels.
"Mother, Let Me Tell You About a Fantastic Opportunity..."
Even ex-accountants are willing to practice the crudest of high-pressure
selling tactics, at least when it comes to "signing people up." The end justifies
the means, when it comes to getting people to come to the "meetings," where
the objective is to get a materialism frenzy going at high pitch through a slick
speaker or video. The reasons for this "confidence building" should be obvious
by now, but here we are considering the relationship cost associated with the
"success" of the MLM.
The above title is meant to be absurd. Most people, no matter how jaded, would
not foist such a con on their own mothers. Even if people don't know the specifics
of what is wrong with MLMs, intuition often warns us: "Don't tamper with that
relationship." The first marks for recruitment are the gullible, or the "expendable"
friends. But successive moral compromise, experience, and desperation... may
yet lead to "good old Mom."
Never Admit You Are Wrong
Many have left high-paying jobs to "pursue their dreams" in an MLM. Having been
conned so dramatically, they do not easily admit defeat. It seems easier to
cling to the bad dream in an increasing cycle of desperation to make the MLM
work against all odds. "Losers" at the bottom congregate into support groups,
perhaps spinning-off another MLM where they can be "boss."
There is an undeniable camaraderie among MLMers. But for everyone else, "there
goes the neighborhood." It is saddening to see people being encouraged against
all instinct and common sense to chase after an illusory "pot of gold," but
what can be done?
Counting the Cost: The First Church of MLM
Many readers will share the experience of observing MLMs divide families, friends,
churches, and civic groups. Lifelong friends are now "prospects." The neighborhood
is now "a market." Motives change, suspicions rise, divisions form. The question
is begged: "Is it worth it?"
Especially nasty is the church situation. Will the pastor join? If not, he will take a dim view of MLM proselytizing at church functions; animosity will rise, factions will form. You are either "in" or out. If the pastor joins, then those who are not "in" will feel a little uncomfortable in this church.
A church (or any community group) can be easily torpedoed by an MLM.
Trust Your Instincts?
For most people, thankfully, the MLM experience usually ends in very quick financial
failure and is then sidelined. Two possible responses are: 1) being embarrassed
about participation, or 2) becoming even more intractable when the MLM has failed.
You will find the latter chasing after the latest "get rich quick" scheme with
similar results. "If we could have just sponsored so and so--they have so many
friends--we would have made it."
Thus, there is reason for the "bad taste" most people have for MLMs. By instinct
if not experience or insight, we wince at the thought of what we know will follow
in the wake of an MLM. Relationships strained, factions formed, deception, manipulation,
greed, loss, a closet full of videotapes, brochures, and useless inventory that
"everybody wants."
Disease Alert: Beware of MLM Blindness
Apparently, it is difficult for gung-ho MLMers to see how they look
from the outside. They can watch lifelong friendships unravel, churches and
civic groups poisoned, the avoidance of friends and family, etc., and never
see that MLM was the cause.
If you try to point this pathology out, you are treated as if you have attacked the very gospel! Perhaps for some, the MLM approach is a new gospel?
They will claim to have made "new friends," most of which are MLMers or new acquaintances who could be considered "future prospects." The shallowness of these "new friends," the stilted conversations among the "old friends," and the embarrassment, in general, for what seems clear to everyone but the MLMer go unnoticed. Callousness sets in; standards are lowered.
Of course, it could be pointed out that this might have happened anyway. Perhaps the die-hard MLMers would have ruined their friendships anyway in some other non-MLM business failure. Is the MLM really the cause, or just the vehicle?
Business failure of any type is traumatic on the relationships involved, but in most small businesses there is at least the chance of success. And this is never the case in an MLM, unless "success" can be defined as profiting off of the failures of others.
Non-MLM real-world businesses that offer products of interest to friends, family, etc., such as insurance agents and small retail shop owners, seem to be more circumspect in dealing with personal relationships in all but a few rare (and grievous) cases. But the MLMer is recognizable by duplicity of friendship overtures, overbearing glad-handing, full-time prospecting, outrageous initial deception, and social callousness. This is no accident, but rather sheer desperation. How could it be otherwise? For the active MLMer is in a hopeless bear trap: with hubris as one steel jaw and oversaturation the other.
And so the MLM relationship "bull" tramples through the relationship "china
closet," blindly ruining fragile and valuable things. Some never pull out of
this, figuring the coldness they experience in their emotional lives is due
to some other cause than their MLM participation.
The Aftermath
One can't help but wish that the "neighborhood" could be like it once was. But
an MLM storm has blown through, ruining valuable relationships with no regret
or conscience. And brace yourself, another one is coming. Perhaps it is in that
smiling face approaching you, or in that nice letter you just received from
a "friend"?
What goes unnoticed to the MLMer is that when the neighborhood is turned into a marketplace, something precious is lost... which is not easily regained.
This aspect of the MLM experience should not be underestimated, and the reflective reader would do well to think twice about the value of friends, family, community, and church fellowship before joining or continuing in an MLM.
Summary of What's Wrong With Multi-Level Marketing
- MLMs are "doomed by design" to recruit too many salespeople, who in turn will then attempt to recruit even more salespeople, ad infinitum.
- For many, the real attraction of involvement in multi-level marketing is the thinly veiled pyramid con-scheme made quasi-legal by the presence of a product or service.
- The ethical concessions necessary to be "successful" in many MLM companies are stark and difficult to deal with for most people.
- Friends and family should be treated as such, and not as "marks" for exploitation.
It is hoped that by clearly pointing out "What is Wrong With Multi-Level Marketing" that many might be spared the inherent and associative pitfalls by avoiding the practice.
As well, for those who insist on practicing MLM, it is hoped that this analysis will serve as a handy framework of problem areas to be avoided if and where this is possible.
- By Dean VanDruff - republished with permission.
Comments
Great idea. I'll see what I can find. It must first pass the "QBlog" test ;o) Do you have any in mind?
By the way, I've posted "pro-mlm" commentary in the past. There is precedence.
One example: http://tinyurl.com/5y8ug
Qblog,
I keep stumbling through a book by Poe? on network marketing.....I've never bothered to look at it, but apparently, he goes into depth about the merits of the mlm model. (I don't think it's too current, however) Maybe there's something in there.
Out of curiosity...what is the Qblog test? (I'm interested in knowing your screening process) : )
The QBlog test is pretty simple and unscientific. I have to like it. If I don't like it, I won't post it. And like doesn't mean I agree with it either, just means I find it interesting or compelling on some level.
Wow, this is great!
While I did not agree with VanDruff's business model assessment or its link to these problems, I do heartily agree to his observations on the social problems that exist. (And I've even seen IBOs pressure their own families.)
QBlog, thanks for posting that link to Scott Allen's article. I hadn't read the comments to your post when it was originally posted. I agree with Scott Allen that to blame this problem on the business model seems suspect because this model works in other areas for other businesses. And it's nice to see that I'm not the only one holding this view. But Sott Allen's assessment that it's the people that MLM attracts, does not provide a solution to the problem, nor does it adequately explain the extent of the problem. He also doesn't take into account the BSM problem that exists that exacerbates the problem, IMO. There are rich successful people in the system, who are poor social citizens, teaching others to do the same.
I'm interested in hearing anyone's experience that involved Quixtar that did NOT involve these social problems. Thanks.
Ambivalent
QBlog: Speaking of your test, there is a topic in knowing about -- it is acceptable for IBOs to sell there wares (product or tools) on ebay, or auction sites of this nature?
I'm curious and I think others may be too.
Ambivalent,
Good commentary! I also appreciate the Allen article. I have said all along that the business model is just that...a business model. The nature of the people involved in the business is suspect...from the greedy higher level IBOs to the inexperienced, gullible newbie.
I actually like the concept that the big Q has to offer people. I wish, however, that the prices were more reasonable (and there is no reason why they shouldn't be) and there were some solution developed by the corporation to deal with the BSM issue.
Did you find that you could really trust anyone in your upline, to make sound, truly ethical decisions? Personally, in my experience with these people, I found very few to be this way, with the biggest leaders being the furthest away from this ideal. (Take it from me, this is coming from one who has dealt with them in non-Q related business. I have never seen such greed and the "entitlement" mentality in my life)
How would you define these "Social Problems"? There are many. Simply pressuring your family members to sign up is not the only one. In the MLM world you must sign up as many as you can as fast as you can to try and minimize the impact of the many who quit. And because of the constant pursuit of this, you greatly affect how your family and friends think about you. So even if you never pressured your "A List" to sign up your inevitably going to run into these problems. If you don't want people to post that haven't experienced any social problems, you'll be lucky to get a post.
To be honest I think if the System were used to motivate and encourage people to go after their "Dreams" in whatever profession they choose in life, this system would be second to none. But alas it is all designed for only the people at the top few levels to get rich and get everyone below to believe this is actually achievable.
I know from personal experience how an MLM based in Michigan can destroy families and life long friendships.
I have tried Quixtar back when it was Amway and I hated the recruitment process. The products were excellent and I knew if people could try them, they would be likely to purchase them again. But, every meeting I had to sit through changing "Money, Power, Success!" with my fist in the air was about getting MORE people. What would this world be like if everyone sold the same products? The only way you'd make money is if your downline did their required PV or BV, whatever. That stuff trickles its way up so the people on top truly do benefit.
There is also a company called Big Planet, or Pharmanex or Nuskin, all 3 are related and they focus on their vitamins and skin products. You have to buy into the company (200-400 dollars, depending on the level you wish to start up at) and pay monthly for the website.
My husband told me, "Whatever happened to good old fashioned selling? If the products are good, get people to buy it, make some money and stop trying to recruit them as sales people, too."
Don't even get me started on Primerica.
Evan wrote:
"Did you find that you could really trust anyone in your upline, to make sound, truly ethical decisions?"
I'm not sure if this was a rhetorical question or if it was intended for me, but I'm going to answer it. Yes, I did have people in my upline that were very ethical in a business sense. I was recruited by a businessman who was recruited by an attorney. Both were very successful in their fields. But we were all too embarrassed (mortified really) to introduce any of our acquaintances, much less our friends, to the people in our upline from the Crown on down. Eventually, they both dropped out.
NO DIAMOND! wrote:
"How would you define these "Social Problems"? There are many."
Too many to enumerate really. IMO, it stems from the IBOs looking at people as prospective recruits. Something happens when people stop looking at other people as people and start looking at them as potential business material. Looking at people as objects allows the bounds of decency and respect to get crossed. And once crossed, it gets easier to do again.
I can't enumerate the examples but there was a lot of invalidation, disrespect, humiliation and intimidation, just to name a few.
IMO, looking at people as potential customers is vastly different than looking at them as potential business recruits. In the latter, in my experience, more manipulation is involved.
Ambivalent
Wil:
If you are comfortable with sharing your story, I think you should. It could make the a big impact on someone else.
Ambivalent:
"Pushing" your product and/or company is not right in my book.
People gravitate toward success
(i.e. a 'pulling' strategy), so pushing shouldn't be necessary. If pushing is necessary, you should reallly examine what you are involved with.
I love MLM. It is the greatest! The more offers the better. I have made over 1,000,000 and invested thousands!
And most are entirely lacking stats.
VanDruff:
Here is a very intelligent guy with a very professional, if not totally biased viewpoint on MLM. (If IBO's take off their rose coloured glasses, they will at least admit to many of VanDruff's claims)
I wonder what his motivation is, considering he is extremely busy in other areas of his life.
Any chance that we can get an article promoting MLM, so that this article can be critiqued? Any way that we can show both sides of the fence with equal vigour, for a short time anyway. I would love to see that material referenced by some of the people on here interested in tearing it to shreds.
Posted by: Evan | October 3, 2004 10:58 AM