Saturday, March 27, 2010

Is this business or badness? Part 1

Everywhere you look, things are creeping into the church. And for the sake of "not offending anyone", we are all silent. We graciously say "no thank you" and let well-meaning people continue to wallow in the sea of bad decisions.

Meanwhile, the waves of financial chaos, friendship manipulation, and spiritual fragmentation are crashing on all sides of the pews and pulpit alike. What is this well-packaged intruder that splintered the Gospel focus in the name of financial security? Can you guess?

It is usually labeled as an "opportunity". It's more like a "flop-or-turn-on-me". Do you have it yet?

Multi-level-marketing. MLM for short. Companies that sound like "Shamway" or "Manna-take" or "Longest burger baskets" "Mary (fake-it, til you make it) Kay" and others like it.

First of all, I should define terms. Multi-level-marketing is a "business model" of several layers.

Let's say you come up with a product to sell, preferably something that has a lot of value, such as laundry soap, cosmetics or miracle-cure vitamins. If you jack the price up to double or triple what its actual worth is, you can easily share your profits with as many underling salespeople as you want to. If you recruit one underling, you agree to give them a 30% discount. If they are able to recruit other underlings, they make a share of the profits from their underling.

You can use this discount to merely buy products for yourself, or you can recruit and get others to recruit. Before you know it, there are several "levels" that you have created above and beneath you. The people who recruited you are your "upline", and the ones you recruit, are your "downline"?? (not sure of that term) Either way, there are many (over 350) of these types of companies in existence today, and more get added to the ranks every year.

Overpriced products: The miracle of this system is that extremely overpriced products are the cash cow of this business model. What would possess seemingly normal, intelligent people to buy such overpriced merchandise? To promote their business quota, of course!

Here's a good example. Let's say you buy a can of pop for $.65. You drink the pop, and notice there is a $.10 refund. So, now you've just made 10 cents! So, the more pop you buy, the more money you make.

Now, if you just add incentives to this plan, you almost have the profit structure of a typical MLM. Let's say you could buy your pop for only $.35 a can, if you can "purchase" more, either through your sales recruits or for your own personal stash. And really, it doesn't matter if you like the products or not at this point. Once you get so entrenched in this, you will consume products as often as you can just to keep your numbers up.

Hey! Wait a minute! My MLM is not selling pop, already. WE sell nutrition--full bodied nutrition that you can't get anywhere else, like pure WHEY protein. And vitamins that cure everything and anything. And things that have purely secret things that have documented testimonial evidence..

Yeah. If I were selling miracle drugs that were not verified by the FDA as the true miracle that they really are, I'd rely on testimonial evidence also.

There are many things wrong with this business model on so many levels. We are going to talk about them bit by bit. If you are reading this and you are highly involved with the recruiting aspects of your current MLM, you are going to bristle at this. For now, don't get all upset or even quit your MLM. Just ponder these thoughts and see if they apply to you.

Consumer level problems: Consumerism in America is based on competition. That is what keeps our prices reasonable. As soon as our choices are limited, we end up spending a lot more money than necessary. Keeping your own budget in check tends to go out the window when you are on the consumer level. If you have merely bought into an MLM for the pure purpose of getting a discount on the products you actually like, this is the only viable form of involvement in this scheme. Keep in mind, you still are paying more for a good product than you should be, but it could be worse. You could become a recruiter.

Recruit level problems: Once you've been bitten by the greed bug, it's hard to wake up out of it. The promise of fortune seems so real that many, many people buy into the sales-person approach to "paying for the products they like". I am literally looking at the tip of iceberg when I make this list.

1. Relationship issues: You've worked so hard to form relationships with people, but you are about to become the disdain of everyone you know. Recruiting your friends and family is the next logical progression to business model. Everyone knows it, and everyone HATES it.

2. Financial issues: Statistically, less than 10% of MLM salespeople make money. Do the math and see what you are actually "making".

3. Spiritual issues: There are so many! I guess I'd rather sell laundry detergent than some of these miracle cure drugs, at least God could be thanked for doing the healing.
Fragmented focus/ lack of focus is the main issue that I can think of at this moment.

I think I'll stop there. I just cringe when I hear of yet another friend plunging headlong into this nonsense. I'm reaching out to you, whomever you are, and trying to get you to see this craziness for what it is.

Don't stop there read the next article. 


Braley Mama said...

Amen! I can not stand pyramid schemes!!! My dad just got into the communications one. He thinks it will help him retire faster. ARGGHH!!! So upsetting. said...

A pyramid scheme is when there is one person at the top and many people at the bottom...the one at the top makes all the money. MLM's are not pyramids. A corporation better represents a pyramid. In a corporation, the CEO makes the most money, then the vp, then the managers, then the supervisors and then the laborers, and on down the pyramid.

Network Marketing is based on satisfied customers who are happy to tell others about products they, themselves, use. These customers are not employees. They are volunteers who work (share a product they are happy with)with no quotas and no protected territories. There may be *incentives* to share their happiness with a product with many people.

Now, INDIVIDUALS can get greedy and lie or coerce or make false claims because of the incentives...but that does not mean network marketing is bad.

We network all the time...blogging itself is a form of network marketing. "I like this, let me tell you about it. It may or may not be for you, but will you let me tell you?"

Just my two cents,
Mrs. Santos

Herding Grasshoppers said...

Oh you're so right about these companies. UGH!

When that many layers of people are making a profit, how do consumers not get how overpriced the products are?

And... ick. I have friends who repeatedly invite me to their homes for "parties", when they just want me to buy junk. (But don't ever invite me over just to visit... but I digress.)

I won't go to the parties. Not one. And I won't host them for "friends" who are selling. I don't want to invite my friends over with an unspoken obligation to buy something hanging over their heads.

Ick. Ick. Ick.

sara said...

I understand the appeal especially for SAHMs and under-employed people. And sometimes the products are pretty good - Tupperware anyone?

I don't personally go to or host these parties but the only one I thought was really odd was the one for ummm, intimate thingies. I had to explain delicately that I'd love to get together for another reason but not for that.

I agree that this is an unwise business decision for most people.

Jenny P. said...

I hate to disagree with Mrs. Santos, but my mother has been involved in at least 3 of these companies at different points in my life. She most definately had quotas -- even at the entry level -- or would be dropped. I have a friend who joined one of the cosmetics companies hoping to help her pay for school, and ended up having to buy product herself every month to cover her quota. Yes, it was at a discount, but it was still things she didn't need. This, on top of the start up kits and sample kits you have to purchase to even be able to have the parties.

There may be legitimate, safe, straight-forward, good-to-be-a-part-of network marketing companies out there. I just haven't seen any... and I've seen a lot of this type of business.

Jenny P. said...

Oh, on a completely unrelated note, could you please email me? I do believe I've FINALLY gotten through my stack of commitments and have a couple opportunities over the next 3 weeks where I am free to come for a visit!

s and j preston 08 @ live . com (without the spaces, of course)

Diane Shiffer said...

Oh girl, you are speaking my language. One of the most horrifying experiences of my life was an Amway meeting some friend of an old roommate hosted in our apartment. *shudders* Then there was the time a pathetic couple from our church practically held me hostage in their home extolling the virtues of tea tree oil and its part in some line of products they were selling (I can't remember the exact name. I've blocked it out due to the trauma.) Then there was the Arbonne horror... an online "friend" was very involved and was trying to convince me that getting involved myself would solve all my woes. I was trying to politely get out of it when she offered to send me some "samples." The samples ended up being full sized containers of a whole range of products. I was shocked and told her I couldn't accept them, but she insisted I keep them. Of course after I had opened them she let me know I would have to pay for them... and they were hundreds of dollars! But if I joined the program I could buy them for much cheaper. I declined joining. The whole thing was horrifying. I don't see how Godly folk manage to get so wrapped up in this stuff...

Jena Webber said...


Let's see--the tea tree oil thing is Melaluca, I think, which is VERY aggressive. NOT all MLM reps are as aggressive as they "should" be in order to make it work. But the "system" is flawed, even from a secular standpoint. I can NOT believe your friend sent you those things and then made you pay for them. That is horrifying. And Friend?? what kind of friend??

These posts need to be written. I have more to say on this topic!

Herding Grasshoppers said...

Good heavens, Persuaded, you didn't pay, did you? That's extortion!

The deceptive tactics of these companies are endless. The coercion is unbelievable.

Write, Jena, write!

Kristi said...

A Very touch and controversial subject! I can see many of your points, and I do believe many of these companies have gone too far off the buisiness end. However, I happen to be a distributer for a company that works like this, and I have no problem standing up for them and backing them to the fullest. They have an excellent product that has and is changing lives of the people around me whom I love and care for so deeply.

My mom has MS. She has gone into Secondary Progressive MS, and there is only one drug out there to help stop the progression. It comes in the form of Chemotherapy and has been brutal on her. She has taken all but one medications avaiable for MS and has had little sucess in slowing down the disease. She has been taking suppliments from the company I am a distributor for, for only a few months now, and she is walking better and has more energy than she has had in YEARS! Her color is back in her face, and she can actually remember the conversations she has with people now! Just because the business model isn't perfect, doesn't mean that they aren't selling a wonderful product! I don't want anything that's backed by the FDA! They are liars and are trying to keep us in the dark about our health and what the food and drug industry is doing. And that's not said by our company, that's said by me!

I do have to be careful who I let talk to my friends an family, because I am about helping, not recruting and some do lean to far that way, but that doesn't mean that I should sell a great product that will greatly help people, and by doing so, be able to afford it for myself and my family. I could never afford to get it with our single income, and I can't work a regular job, because my place is in my home, teaching and nurturing my children.

Just a view from the other side of the argument!

Kristi said...

Sorry for all the typos! This Laptop doesn't create a great typing environment! lol

Jena Webber said...

Kristilea, Good point! And I think we need to discuss the products--especially the ones that really are valuable to us as consumers.