Ok, ok, there is no perfection in this world, but can an MLM company at least be optimal? Which means, yes, worth dealing with. Of course the majority of MLMers would answer: “Of course. My company!” They are already brainwashed into this voluntarily or non-voluntarily. But if asked: does your company need any improvements? Would you consider the existing conditions ideal? Don’t you observe any current problems? And if you do, can something be done about it?
Of course these questions are rhetorical. Anybody who does MLM systematically these days experiences a cascade of problems, one worse than the other.
The idea is: understanding the problem means already having it half resolved. So let’s try to observe and analyze these problems of networking systematically.
By the way, one thing we know for sure: there is always a conflict of interest behind each and every problem.
Problem #1: Even if you understand what should be improved in the company you deal with, there is no way you can do anything about it.
It’s not in your power; it depends solely on the ownership of the company. In other words, there is a severe conflict of interest between the owners of the company and the participants (distributors). No matter what the company claims, no matter how much they try to assure you that “the benefit of the distributors” is their “major concern”, in reality what happens to be your benefit is the expenses of the company. And no MLM administration on earth would or could act in the interest of distributors compromising the profits of the company.
The more successful you become in the business, the tougher the conflict is. The mere idea of MLM is: you are not receiving for what you do, you are receiving for what you’ve done already. So the most beneficial thing for any company, when you’ve already built your network, is to simply get rid of you, or to create multiple and intricate obstacles to prevent you from maximizing your outcome, simultaneously blackmailing you into promotional activity in the interest of the company.
And there is nothing more common in this sphere of business than the company suing its leader for some kind of “artificial qualifications”, which is an attempt of the leader to receive what’s actually due.
Solution: The company must actually be owned and run by the participants, and 100% of the profits should be shared among participants, and participants only. There should be no such thing as the profit of the company.
Then there will be no need to outsmart the company every month in order to receive more bonuses. The payments will be maximized to an extent that can only be called absolute. The ultimate flexibility will become an attribute of the business: if something is lacking for participants, they will add it; if there’s something unnecessary, they will remove it.
Problem #2: Pyramidal nature of existing MLM companies and conflict of interest between the upline and the downline. In all the MLM companies, what is received by the “leaders” is received at the cost of their downline participants.
Yes, the pyramidal nature of the MLM business is so obvious that often people ask, "Is this a pyramid?" When they deal with "professional" MLMers, they usually receive one of two answers. The first one is: "No; pyramids are illegal and this is legal”. It must be acknowledged that the legality of MLM is questionable, to say the least. In some countries, MLM is strictly forbidden. In any case, if asked why pyramids are illegal, no MLMers give a proper answer. They are not trained into it. The second answer is: "Everything is a pyramid! General Motors is a pyramid, the United States government is a pyramid, etc." In most cases, when professional MLMers use this answer, they know that people will thoughtlessly go along with it because it's so easy to imagine any hierarchy or infrastructure in the shape of a pyramid. However, neither the US government, nor General Motors, nor even the Egyptian pyramids are "pyramids!" A "pyramid" or "pyramid scheme" is a concrete economic concept, the idea of which is: some people make money on what is being contributed by the people they attract into the system. In order for these people to make money, they must bring others who contribute, who will also bring others who contribute, etc. And the nature of the "pyramid" does not change when it is attached to a product. The pyramid is simply included in the price and, not surprisingly, overpricing becomes inevitable.
But what is the problem with pyramids, anyway? The first problem is moral: a pyramid is just another form of gambling. In order for one to win, many must lose--either by contributing money directly or simply by paying too much for the products. And although the MLM overpricing is justified with the claim that "the people are WILLING to pay these prices," all the MLM participants understand that overpaying is an essential condition of the MLM opportunity. And, like in gambling, they agree to possible loss for the sake of the chance of becoming a winner. However, the percentage of people who lose in MLM is sufficiently greater than the percentage of those who lose in casinos. And any casino could easily produce a list of people who have won big there. Even so, can you imagine a casino owner standing up on stage and claiming that he is bringing financial independence to the people, as MLM company owners and their representatives do? Even the casino owners would probably consider this immoral! (Unfortunately there is a tendency to no longer distinguish between moral and immoral, only between legal and illegal. In New York City, gambling is illegal, obviously because of its immoral nature. But it is permitted across the river in New Jersey, so it must be considered moral there. In some states, prostitution is legal. Does that make prostitution moral?) (See http://www.vandruff.com/mlm.html#III) But there is even a bigger problem with pyramids: they are not viable economically. In order to exist, the pyramid must continuously grow because people who are higher in the structure contribute in order to receive from people under them, and those people contribute in order to receive from people under them, etc. Sooner or later, the development will reach a level at which people will be unable to bring new contributors into the system. Being unable to receive any benefit, these people stop contributing. The people over them stop receiving and also stop contributing, and on and on until the whole structure collapses. So at the moment a pyramid stops growing, it starts crumbling. Of course, when professional MLMers hear that, they retort, "Then why is it that Amway has existed for 50 years?" Good question. But how many people who started then are continuing today? And how many of them are successful? You can easily guess the answer... Almost all of them are gone and the vast majority of those who participate today have joined recently, and most likely in markets which have just been opened. This turnover may not be very noticeable in the business of the company as a whole. But an individual leader in the business with an average organization knows very well that he must bring new people constantly or else, sooner or later, there will be nothing left of his organization. And it goes without saying that it is becoming harder and harder to attract new people into the MLM business as a whole, and into the older companies in particular. In fact, the older the company is, the harder it is to attract new participants into its business.
Solution: First, the participation should not be “low cost”, it should be absolutely, unequivocally, FREE. The major selling point of today’s MLM business “you cannot lose much. What are we talking about, some lousy 30 bucks?!” should be completely abandoned. It’s not how much people lose, it’s about people disliking being taken advantage of.
Secondly, not only should the upline have the downline as a direct source of income, but the downline should also have the upline as a direct source of income. However, without any damage or loss for the upline. In other words, there should be advanced “anti-pyramidal” mechanisms in the program.
Problem #3: Distribution and promotion of, more or less, exotic and significantly overpriced products in the form of petty-peddlers activity with opportunity as the major selling point for consumption.
In order to create a financial opportunity for participants, the companies have to mark up their products at least twice as high as in regular retail distribution. Thus, in most cases, the MLM companies have no choice but to promote their products as being "unique " so that the overpricing is not too obvious. A closer look generally reveals this "uniqueness" as questionable; but even worse, "uniqueness" means that the products have not been consumed before and that people's buying habits must be adjusted. So the MLM companies expect their participants to convince themselves and others that these products, which they could do without before, are indispensable to them now. To achieve this, the companies conduct special training sessions in which more and more testimonials and innovative selling points of the products are presented, with the participants being expected to enthusiastically accept and apply them in their sales activities.
This approach is somewhat similar to that of Hodja Nasreddin, a folk hero of Uzbekistan. He went to a bazaar in Bukhara, put up a tent and inside the tent he placed a black cat in a cage. On the outside of the tent, he hung a banner that said: AN ANIMAL CALLED "CAT." He stood outside and promoted the cat as "a black animal with the eyes of burning coal and claws like sharp needles, on display in a strong and escape-proof cage. Come in, people, pay only 2 tanga to see this animal named "CAT."
People went in and when they left, they pretended that they had seen something special. No one wanted to be thought of as a fool!
Of course, they suspected they were being taken advantage of, but they couldn't figure out how it happened. So they played along.
In the MLM business, people generally accept that in order to convince others, they themselves must believe. So even if they are not absolutely convinced, they AGREE TO BELIEVE as a condition for making money. And this is where the trap is. They can no longer blame anyone else for taking advantage of them. It would mean that they were either fools or liars.
Yet, of course, there is one key selling point which makes people accept and repeat any and all selling points they are being equipped with. This selling point is MONEY.
It cannot be argued that in the MLM business, financial opportunity is used as the major advertising tool to boost the sales of the company's products. The attractiveness of the opportunity is usually so strong that it makes people buy the products even if they are greatly overpriced or not very consumable. In other words, people are attracted by the possibility of making money, so they buy things that they would not buy otherwise.
And in most cases, when people realize that they cannot make the money they had hoped to make, they stop promoting the products and they stop buying them as well. There are countless cases of this happening and you probably know some of them. Just yesterday, people were giving impressive testimonials about the miraculous nature of the products; today, not only do they not use them anymore, but they don't even want to hear about any products distributed through networking, much less the networking opportunity.
Solution: The products which are to be consumed should be every day products, with assortment of a few thousand different items in the major spheres of consumption, like in a department store. The products should be “self-selling”, not requiring any promotion or special testimonials whatsoever. The major selling point should be “same brands, better prices” (with an opportunity on top of it). People should be able to buy what they want, when they want, as much as they want, ideally- even WHERE they want. They should be able to buy DIRECTLY, without a need for the distributors to be involved in supply, delivery, and customer service.
Problem #4: The reputation of MLM business as a whole leaves very much to be desired. For professional, or at least devoted MLMers, migrating from company to company with the hope of catching a train that has just departed does not make any difference. Yes, there are some people who can achieve much more practically in any business because of their personal qualities, and there are some people who cannot achieve anything, irrespective of the quality of the offer. For both categories, and in the vast majority of cases, the reward is still not viable proportionally to the amount of effort.
Solution: The offer of the company should be IRRESISTABLE. That is, objectively and undoubtedly, acceptable for the majority of the population, irrespective of age, sex, profession, ethnic origin, political, religious, or sexual orientation. Then, with the same amount of effort, both MLM “winners” and “losers” will receive an adequate reward.
Problem #5: The company’s good standing and stability is always the major issue. Theoretically speaking, you can build the business, with a tremendous amount of efforts, and the next day the company goes belly-up. Where will you be?
Instinctively, people tend to ask “how old is the company?” In their subconscious, the question is “how stable and reliable is it?” Sometimes they ask “who’s behind this company?” The problem is, they’re not even capable of coming up with proper conclusions when they receive the answers to their questions. You can always make an experiment: re-ask the person who has just asked how old the company is- How old would you like it to be? Let’s say: the company is 3 days old, or it’s 3 weeks old, or 3 months old, or 3 years, or 30 years… which one would you prefer to deal with? Most people tend to chose 30 years old - this is how paranoid they are these days. And of course taking into account the importance of timing in networking, this choice can only be defined as idiotic. On the other hand, yes, 90% of new companies fail within the first 6 months, 98% within the first year. So, should the choice be something in between? It could very well mean both problems combined, not even talking about the fact that, in the end, the calendar age of the company is irrelevant to its stability. By the way, the stability of MLM businesses as a whole is also quite questionable (today, the major stabilizing factor of MLM is Amway lobbying. The vast majority of MLM companies, Amway included, are in violation of the 70-30 Rule). Any moment, a new regulation can appear which will change the fate and nature of this sphere of business.
Solution: The company you deal with should be principally indestructible. In other words, the business should be organized in a way in which it does not principally depend on administrative and corporative regulations of this or that country.
Problem #6: Almost all MLM companies have inevitable contradiction planted in the system itself. What the distributors are advised to do is to sell the products, and then recruit their downline distributors from the customers. The problem is that it’s not a traffic-oriented retail and the activity is tightly outlined demographically. The salesmen activity happens within a very narrow circle of friends, relatives, and colleagues. The result is: by recruiting distributors from the customers, the distributors are creating a growing competition for their own downline and for themselves. So this narrow circle turns into a vicious circle in no time. Paradoxically, the more active you are, the harder it becomes for you to function. But can people outside of the circle be reached? You can only reach them with institutional advertising, spams, and cold calls. Not even talking about the efficiency of this kind of activity, we can only say that it’s not networking anymore. Because networking means sharing the news with someone you know and respect, and who knows and respects you.
Solution: The business should not be based on salesman activity. The participants should not be required to create clientele; consumers should buy directly, without any middleman assistance or interference, and the consumption itself should be rewarded within the business.
TO SUMMERIZE: In order to deal with a network marketing company without reservations, and with serious loyalty, what kind of company should it be?
It should be an internationally outlined business, cooperative in its nature, ruled and run by the participants in a fair and productive way, so that when asked “who’s behind this business?” you can answer “we’re about minds, not behinds. It’s our business, you can join us, and it will mean joining your own business.” 100% of the profits should go to the participants. There should be no need to discuss which marketing plan is better because the marketing plan is MAXIMIZED. It should be a department store variety of products offered for consumption, which do not require any additional advertising or promotion, and with prices obviously better then in other places, so that the consumers are guaranteed not to overpay. The function of participants should be individual consumption and/or organizational activity, sharing the news, bringing new people into the business. There should be no need in product training, or training in how to take advantage of a sucker. Your reputation should not be at stake, especially with your family and friends. Nobody should be able to blame you for luring them into buying some unnecessary overpriced products, or bringing them into some doubtful scheme. The only blame should be for not telling them about this opportunity in time, or “somebody before me”. The relation between the organizers and the organized should be such that it’s a two way street, and the dependence of both parties on each other should be commercially outlined with a slight trend for the organized to feel that what they receive, they receive thanks to the organizers. There should be NOBODY LOSING, directly or indirectly. Everybody should be gaining, the activity should be rewarded fairly and proportionally, and each and every participant should receive at least slightly more than he deserves.
The question is: IS IT REAL? Can a company like this exist at all?
