MLM excitement. MLM sadness. MLM confusion.

[Grifman]

Tomayto/Tomahto

No ground to stand on, no argument.

[noxiousdog]

Tomayto/Tomahto

No ground to stand on, no argument.

You're splitting hairs. I'm not interested in doing that. Obviously they are slightly different. I just don't think the legitimate ones are different enough for the hatred in this thread.

I'm not in any sales position at all and my boss's and his bosses bonus are based on my performance. How's that fundamentally different?

[JSHAW]

Nasai, are you allowed to give us a hint at what category the compelling product is?

Home Improvement item?
Electronic device?
Self-Improvement books/dvd's?

Not wanting you to give us information that you're not allowed to disclose, but since you started the thread my curiousity is
kicking in wanting to know if it would be something I would or wouldn't buy.

Is it an item that this and only this new company has access to and is offering for sale? Did they invent the product? Is it a product that other companies sell but this new company has found a way to reinvent, which makes it that much better than previous versions of it?

If you can't even hint at it, I understand. But it would be cool to know, because who doesn't like seeing new compelling products.

[Carpet_pissr]

I am...intrigued that Kasey Chang has "MLM-Hunter" as a hobby, including an extensive blog. That's pretty damn specific!

I bet there is an interesting story there...

OPTION 1: gang raped at an MLM convention when things got out of hand with all the coked up reps and managers?
OPTION 2: hideously deformed from an Amway cleaning product accident?
OPTION 3: Threw a dart at a board full of potential, but curiously specific, "Ills of the Modern World" list, with plans to go after said random target for your remaining days?
OPTION 4: Approached by a sexy, beautiful woman in your local hardware big box store, things got serious, she moved in...and then you found out that she was just a REALLY hard core MLM rep trying to boost her network, and had no actual feelings for you at all?

You may choose only one.

[Rip]

I can assure you at least in the Telcom sales business my boss most certainly did get a cut as did his boss and so on. We make numbers we get a % of value of the contract term. Sure you get paid even if you don't make numbers but you make crap and will not be around long if you continue to "miss your nut" as we used to say.

[Kasey Chang]

You don't have to buy inventory in Mary Kay, tupperware, scentcy, or pampered chef as far as I'm aware. It's all catalog and order based, no?

You are encouraged to a) buy a starter / demo kit to do your demos, and b) optionally, have some personal stock, esp. for Mary Kay, for immediate sales. "All the top sales people do so", they say. And if you ever tried to return any of that for refund, your upline immediately gets notified because they get "clawbacks" of commissions when you return stuff, and they'll guilt-trip the heck out of you to not do it.

This was discussed in that NPR Onpoint episode on Mary Kay. Don't know about the other 3.

[Kasey Chang]

I just don't think the legitimate (MLM)ones are different enough for the hatred in this thread.

My point would be even the so-called "legitimate ones" have evolved (or devolved) into PBPS taht they are not sure if they're legal any more.

I'm not in any sales position at all and my boss's and his bosses bonus are based on my performance. How's that fundamentally different?

You are not encouraged to buy a ton of company product/service, and keep doing it every month to keep your job. Yet that's what a lot of MLMs do.

[JSHAW]

You don't have to buy inventory in Mary Kay, tupperware, scentcy, or pampered chef as far as I'm aware. It's all catalog and order based, no?

You are encouraged to a) buy a starter / demo kit to do your demos, and b) optionally, have some personal stock, esp. for Mary Kay, for immediate sales. "All the top sales people do so", they say. And if you ever tried to return any of that for refund, your upline immediately gets notified because they get "clawbacks" of commissions when you return stuff, and they'll guilt-trip the heck out of you to not do it.

This was discussed in that NPR Onpoint episode on Mary Kay. Don't know about the other 3.

So how much does one sale to earn the "pink car"?

[Carpet_pissr]

You are encouraged to a) buy a starter / demo kit to do your demos, and b) optionally, have some personal stock, esp. for Mary Kay, for immediate sales. "All the top sales people do so", they say. And if you ever tried to return any of that for refund, your upline immediately gets notified because they get "clawbacks" of commissions when you return stuff, and they'll guilt-trip the heck out of you to not do it.

That was the case with Cutco as well (not sure if that has changed since 1990 though)

[noxiousdog]

You are not encouraged to buy a ton of company product/service, and keep doing it every month to keep your job. Yet that's what a lot of MLMs do.

That sounds like both an exaggeration and silliness. If you're not moving product why would you buy more? If you are moving product then buying more is a good thing.

And traditional sales are the same. Don't make quota and you may or may not keep your job.

[Kasey Chang]

I am...intrigued that Kasey Chang has "MLM-Hunter" as a hobby, including an extensive blog. That's pretty damn specific!
I bet there is an interesting story there...

Skeptic, dude. Skeptic.

They story is quite simple: I have a family member who was heavily into various MLMs, and never made any money, and as a result I was trained in MLM speak, but never got involved. About 5 years ago I by chance started tracking a scam called TVI Express, whcih claimed to be MLM, and from there on I tried to discern the difference between legal MLM and pyramid scheme.

[Kasey Chang]

If you're not moving product why would you buy more?

To keep yourself "qualified" to get the downline commissions.

Herbalife's requirement for "supervisor", which is the minimum level needed to share commission down more than one level, is one thousand sales per month for two months, and it doesn't matter who it's sold to... other people... or yourself. If your downline commission amounts to several thousand dollars a month, you certainly have incentive to buy more products even if they're not retailed. (And you can always dump them on eBay)

[Kasey Chang]

So how much does one sale to earn the "pink car"?

EDIT:

First of all, in order to earn the use of a Mary Kay car, you have to build a team. That means you have to sign up others to sell Mary Kay as well.
And those people need to place a minimum amount of product orders with the company. These wholesale orders of you and your team members are called your “production”. To qualify for the car at the “Grand Achiever” level, a consultant must build their team to 12 members and have a minimum “production” of $18,000 within 4 months. That means your average monthly production is $4,500. You may only contribute $4,000 of the $18,000 toward the requirement.

and

Once a consultant “wins” their car, they DO NOT own it, nor do they get to keep it unless they and their team maintain a specified level of production for every month that follows. Mary Kay actually calls the arrangement a “Co-op Lease”. Depending on the net production of your team, you will either owe the full lease payment, a portion of it, or nothing. The lease agreement lasts for 24 months. If you fail to meet minimum production requirements for several months, you will lose the car.

http://www.pinklighthouse.com/2008/04/t ... program-2/" target="_blank

[LawBeefaroni]

Right, but what difference does it make if it's MLM where your recruiter is taking a cut, or your boss, his manager, his director and the VP taking a cut?

They're selling insurance. They buyer gets insurance. The buyer isn't tasked with finding other buyers. The buyer isn't beholden to other buyers. Assuming the insurance is legit and not illegal, they have to retain capital for any liabilities and then distribute profits according to whatever method they use.

Also, in MLM you get product and are on the hook for product. In a crappy insurance job you get paid shit to sell insurance. But you get paid whether you buy insurance yourself or not. You don't buy an inventory of insurance you have to move like in MLM.

You don't have to buy inventory in Mary Kay, tupperware, scentcy, or pampered chef as far as I'm aware. It's all catalog and order based, no?

Mary Kay income is primarily "recruiting commission." Actual sales are usually the minimum to fulfill requirements and end up being a net loss. Most people don't move beyond the "$150 starter" kit cost that funds the pyramid.

I don't know much about Scentsy or Pampered Chef but I'd wager that you either have to buy-in to be "allowed" to sell their product or there's some kind of minimum sales quota (or they use the Mary Kay model). The minimum sales quotas are how they get you to buy inventory without "forcing" you to buy inventory.

Tupperware isn't a MLM. Sellers get commission for catalog sales. They act as sales agents essentially. No buy-in or recruitment required.

[Kasey Chang]

You are not encouraged to buy a ton of company product/service, and keep doing it every month to keep your job. Yet that's what a lot of MLMs do.

And traditional sales are the same. Don't make quota and you may or may not keep your job.

Traditional sales jobs don't have you selling to yourself and convince yourself it's a job. If you don't sell, you don't keep the job, but you don't lose money either.

MLM can have you selling to yourself, because your upline does the same thing, and money comes out of YOUR wallet, and you run a deficit without even realizing it.

[Kasey Chang]

@NoxiousDog -- not picking on you specifically, but you're basically repeating that MLM and their lobby org DSA had been putting out for the last 30-40 years without fact-checking the nuances behind their PR statements. I was not attempting to paint a bad picture of MLM (indeed, some anti-MLM folks accuse me of not hard enough on MLM), but instead, I'm more like "here's what they do NOT tell you about MLM", which is why I picked the moniker "MLM Skeptic": I'm skeptical of MLM claims, and I try to find the truth behind the PR spin.

[Carpet_pissr]

(indeed, some anti-MLM folks accuse me of not hard enough on MLM)

There are more of you? Is it a club?!

[Kasey Chang]

(indeed, some anti-MLM folks accuse me of not hard enough on MLM)

There are more of you? Is it a club?!

Search for Saltydroid.info, "David Brear", "Robert Fitzpatrick" (pyramidschemealert.org), Dr. Jon Taylor, and Dr. Stephen Barrett (MLM Watch and QuackWatch) should get you some good links. They are MUCH more vitriolic on MLM than I am.

[noxiousdog]

@NoxiousDog -- not picking on you specifically, but you're basically repeating that MLM and their lobby org DSA had been putting out for the last 30-40 years without fact-checking the nuances behind their PR statements. I was not attempting to paint a bad picture of MLM (indeed, some anti-MLM folks accuse me of not hard enough on MLM), but instead, I'm more like "here's what they do NOT tell you about MLM", which is why I picked the moniker "MLM Skeptic": I'm skeptical of MLM claims, and I try to find the truth behind the PR spin.

I'm not defending anything. I was curious why their was so much vitriol being spewed when I don't see that big a difference. Other than your specific examples, people were just foaming rather than pointing out real differences.

The minimum sales per month is a big deal, depending on how high that minimum is. I would assume it varies per company.

The bottom line is that if you are going into business for yourself, you're going to have to invest some capital and you better read all the fine print. I would guess that owning a franchise is pretty similar, though the barriers to entry are a lot higher too.

[LawBeefaroni]

The bottom line is that if you are going into business for yourself, you're going to have to invest some capital and you better read all the fine print. I would guess that owning a franchise is pretty similar, though the barriers to entry are a lot higher too.

The big difference here is that in MLM, there is no differentiation, no support, and you are basically forced to recruit competitors.

With a franchise, you have the support of the parent (granted you have to kick in for that, but a Subway franchisee gets ads during NFL games) and a common goal rather than a competitive one. Typically you have items that aren't also available on Amazon at a discount, too.

[Kasey Chang]

I was curious why their was so much vitriol being spewed when I don't see that big a difference. Other than your specific examples, people were just foaming rather than pointing out real differences.

Perhaps it's because there is a HUGE pool of MLM "victims" from the past 30-40 years, which ranges from suicide to broken families / lost friends due to cult indoctrination tactics used by many MLM leaders as "team building". Also, MLM is automatically "icky" because it mixes market norms (financial transaction) with social norms (social interactions) when two are supposed to be separate. Pure direct sales, which relies on cold calling, doesn't have this ickyness involved with it.

The minimum sales per month is a big deal, depending on how high that minimum is. I would assume it varies per company.

Correct, but $1000 / month is pretty typical among the pills&potions companies. Feel free to check "compensation plan" of various MLM companies and make a comparison. It's mean to be way beyond what one can consume oneself, but due to lack of audit of actual retail sales taking place, there's no telling how many are just buying stuff for themselves to keep qualified.

The bottom line is that if you are going into business for yourself, you're going to have to invest some capital and you better read all the fine print. I would guess that owning a franchise is pretty similar, though the barriers to entry are a lot higher too.

Franchise generally has territory protection (i.e. you can't open another franchise within X miles of existing franchise with population density Y). No such protection in MLM. In fact, you usually recruit people in your same social circle (friends and family), creating your own competitors in the same area.

With 30-40 years, MLM have mastered the art of willful negligence. It will say the bare minimum to cover the legal basis, and it uses all the vices like greed, envy, and so on to get you to commit while hiding the stuff in not only the fine print, but in "things best left unmentioned". I think I posted the URL "9 things MLM don't tell you about" before so I won't post it again.

[JSHAW]

This guy's MLM experiences didn't work out too great in the end. This one, is a must read.

http://en.wikipedia.org/wiki/Don_Lapre

I remember this guy from all his late night tv commercial pitches, showing how he was doing very well financially, with all the nice cars, boats,
and real estate he owned. Now...he's dead.

[Scuzz]

You don't have to buy inventory in Mary Kay, tupperware, scentcy, or pampered chef as far as I'm aware. It's all catalog and order based, no?

You are encouraged to a) buy a starter / demo kit to do your demos, and b) optionally, have some personal stock, esp. for Mary Kay, for immediate sales. "All the top sales people do so", they say. And if you ever tried to return any of that for refund, your upline immediately gets notified because they get "clawbacks" of commissions when you return stuff, and they'll guilt-trip the heck out of you to not do it.

This was discussed in that NPR Onpoint episode on Mary Kay. Don't know about the other 3.

So how much does one sale to earn the "pink car"?

My wife is a sales rep for Mary Kay. She buys about $200-300 worth a year. Maybe a little more. She only sells to a few friends. Most really like the product, but she long ago tired of the shows and parties. Her boss doesn't harass her and sends her a b-day and x-mas card every year. I think areas get saturated and the bosses know you just can't forever bring new people into the business.

I had someone try to get me into Amway, now that is where the pressure is, but I think around here that has died down. I have seen Amway TV ads recently though.

[Kasey Chang]

This guy's MLM experiences didn't work out too great in the end. This one, is a must read.
http://en.wikipedia.org/wiki/Don_Lapre

Ah, but that guy didn't enjoy much of a success. Did they tell you that one of Herbalife's top affiliate, John Peterson, put a gun to his head not long ago?

http://amlmskeptic.blogspot.com/2013/08 ... -save.html" target="_blank

[nasai]

Nasai, are you allowed to give us a hint at what category the compelling product is?
If you can't even hint at it, I understand. But it would be cool to know, because who doesn't like seeing new compelling products.

It's a sales development tool. I know that's nebulous, but it's the truth. This particular company is definitely defined as direct sales, where the product is sold at presentations, but there is a recruitment aspect which obviously would feed upstream. That doesn't seem to be the push, though. The primary focus is that it's a training tool to increase sales skills.

Obviously, the product would be pointed towards individuals that sell or deal with the public on a regular basis. That's all I can share at the moment.

[Kasey Chang]

My wife is a sales rep for Mary Kay. She buys about $200-300 worth a year. Maybe a little more. She only sells to a few friends. Most really like the product, but she long ago tired of the shows and parties. Her boss doesn't harass her and sends her a b-day and x-mas card every year. I think areas get saturated and the bosses know you just can't forever bring new people into the business.

Most reps are this "self-use and maybe a tiny bit retail" stage. She's really in it for the product, not for the camaraderie or the income. AND she has an ethical upline that doesn't try to push her for more "Group volume". Such uplines are rare, and probably are not among the top achievers, probably a mid-grade who is making a comfortable income and felt no need ot jeopardize friendship with her downlines by "pushing" them to sell/buy more.

Under my system, your wife's a Type I Grunt.

http://kschang.hubpages.com/hub/Six-Typ ... pe-are-you" target="_blank

[Kasey Chang]

Nasai, are you allowed to give us a hint at what category the compelling product is?
If you can't even hint at it, I understand. But it would be cool to know, because who doesn't like seeing new compelling products.

It's a sales development tool. I know that's nebulous, but it's the truth. This particular company is definitely defined as direct sales, where the product is sold at presentations, but there is a recruitment aspect which obviously would feed upstream. That doesn't seem to be the push, though. The primary focus is that it's a training tool to increase sales skills.

Obviously, the product would be pointed towards individuals that sell or deal with the public on a regular basis. That's all I can share at the moment.

Not saying that your thing is bad or good, as I haven't seen it, but I *have* encountered so-called "sales tool MLMs" before. One of them was called stiforp (profit spelled backwards). They sell autoresponders, capture pages, blog, banner, link track, domain reg, hosting, video, mobile site, texting responder, and that sort of things to desperate MLMers who need an edge of some sort to keep recruiting. While such a website would work perfectly fine via direct sales (no MLM aspect needed, much like A Weber, who sells the same things, with no MLM), their MLM aspects made them a bit too... shall we say... self-consumed? That every affiliate is also a user of the products? And that makes it almost indistinguishable from a PBPS.

Frankly, I think MLM makes the salespeople LAZY... let your "team" sell, you sit back and "manage" and "inspire" them. NOT! (it'd be like pointy-haired boss in Dilbert)

Just go direct sales. NO MLM, no recruiting. You have a team that do the presentations. Determine an equitable split of the commissions made at that sale (how to divvy up the pie) before you start. Then everybody just sell, sell, sell. No upline, no downline, no mess.

If any existing customer refers a new customer, he gets some bonus feature or time extended or something, but don't offer money. They are customers. They're not a part of your sales team.

IMHO, of course. You're probably not high enough to make a decision, but you can always offer your opinion: why not just direct sales, no MLM?

Their reaction will be your guide. Are they going to seriously consider your proposal? Or are they going to ignore it, as they clearly have designed the comp plan to benefit them, and your "ground floor" opportunity means you're just one of the backs they stepped on (i.e. you sell, they profit), and you're expecting to bring in people under you so you can step on their backs (they sell, you profit)?

Food for thought, indeed.

EDIT: I also like the lobster / crab boat system. Captain holds most of the shares, and most crew work for fixed wages, but the captain can watch how the crew worked, who's hustling and who's not, and who's got senirority and who's not, and allocate shares accordingly. Noobs get bare minimum, but can get extra shares if they hustle. Veterans get fixed shares, but if they don't hustle a noob can outearn them. And some shares are just pooled for split.

[Grifman]

Tomayto/Tomahto

No ground to stand on, no argument.

You're splitting hairs. I'm not interested in doing that. Obviously they are slightly different. I just don't think the legitimate ones are different enough for the hatred in this thread.

I'm not in any sales position at all and my boss's and his bosses bonus are based on my performance. How's that fundamentally different?

I think Kasey and LawBeefaroni in their posts above more than adequately showed the weaknesses in your attempts to draw analogies between MLM and legitimate businesses. I noticed you weren't able to refute any of the points they made.

[Kasey Chang]

It's not a contest, Grifman.

I personally recommend AGAINST "judging" an answer as more or less adequate than a different answer, as it tends to put the answerer on the defensive. I personally just put the different answers out there, so people can judge for themselves which answers are... more complete than others.

[Grifman]

It's not a contest, Grifman.

I personally recommend AGAINST "judging" an answer as more or less adequate than a different answer, as it tends to put the answerer on the defensive. I personally just put the different answers out there, so people can judge for themselves which answers are... more complete than others.

You just judged my answer

[Grifman]

Noxious Dog seems to focus on the fact that others in most other regular business benefit from the work done by others (whether that is management, stockholders, etc.) and that MLM is no different than other businesses in that regard. But that's not the only objection. The other thing Noxious Dog ignores is the mathematical angle. A big part of the MLM business is recruiting others to sell the product. A huge chunk of your profit is not selling your product but recruiting others, then you benefiting from their sales and their recruiting, and then benefiting from those that they recruit, etc. The problem with this is that it is mathematically unsustainable. The further down the chain you are the harder it becomes.

Just do that math. If it takes 10 people downstream for you to start to make money, then they each have to recruit 10 (or 100 total). The nexl level of people have to recruit 10 each or 1,000 total. Those then need to recruit 10 each, or 10,000, then that becomes 100,000, that becomes a million, that becomes 10 million, that becomes 100 million. So in 7 levels (if I've done my math correctly), you have to recruit one third of the population of the US - and the people on the bottom still have to recruit more! And of course, who's going to buy all this product if 1/3 of the US population are selling the stuff.

What business operates like this when recruiting sales people or franchisees or investors (all analogies that ND has used)? To me this is the really unethical part - it's not mathematically sustainable.

[Kasey Chang]

You just judged my answer

Badly misquoting Maverick from Top Gun here...

Bull****, you judged mine.

[noxiousdog]

I think Kasey and LawBeefaroni in their posts above more than adequately showed the weaknesses in your attempts to draw analogies between MLM and legitimate businesses. I noticed you weren't able to refute any of the points they made.

While you were so busy patting yourself on the back, you missed the actual discussion.

[Carpet_pissr]

I'm surprised at the hate for it around here.

I was actually surprised that this topic wasn't immediately pounced on, with more vitriol and flames spewing from all directions, considering the number of self professed critical thinkers we have on board. OTOH morals don't correlate with critical thinking necessarily, and I think the beef raised in the thread so far is that MLM is not moral.

I personally am more or less ambivalent...I find the "reps" seeking you out in various retail stores and restaurants beyond annoying, to the point of angering me, but no hate or anything.

Anecdotally, I was in Bogota not too long ago, as well as Mexico City and Lima, and saw in both places, TONS of people with Herbalife t shirts...it seems like they are everywhere (and I had no idea what it was until reading this thread). Not only that, but at least in Bogota, they have a huge, nice office right downtown in prime real estate. Buses stopping constantly in front, etc. VERY active.

[Kasey Chang]

John Peterson introduced Herbalife to Mexico in the 80's. He did so well, he divorced his blonde wife with 3 kids and married a Latina bonita by the name of Fernanda. From there, Herbalife spread steadily southward.

And as I mentioned, he put a bullet into his own head not too long ago, and Herbalife chose to called it a "tragic accident".

[Grifman]

I think Kasey and LawBeefaroni in their posts above more than adequately showed the weaknesses in your attempts to draw analogies between MLM and legitimate businesses. I noticed you weren't able to refute any of the points they made.

While you were so busy patting yourself on the back, you missed the actual discussion.

What discussion, you pretty much didn't have a response to anything they said. And you still have responded to my last post about the fact that mere math makes the scheme impossible. You're still striking out.

[LawBeefaroni]

Rough days for HLF.

BOSTON, Jan 23 (Reuters) - Massachusetts Senator Edward Markey is asking for more information about the business practices of nutrition company Herbalife, which has been accused of running a pyramid scheme by prominent hedge fund manager William Ackman.

Markey sent letters to the Securities and Exchange Commission, the Federal Trade Commission and to Herbalife itself to try an obtain more information, his office said in a news release on Thursday.

By Lawrence Lewitinn | Talking Numbers – Fri, Jan 17, 2014 3:54 PM EST

Nu Skin is under investigation in China for its marketing practices. Bill Ackman may want Chinese authorities to look into Herbalife. And that could make him a lot of money.

...
Ackman, who famously took a $1 billion bet against Herbalife back in December 2012, is said to be planning a presentation making the case that Herbalife is operating illegally in China. This comes as Chinese authorities said they would investigate business tactics of personal care products maker Nu Skin.

Like Nu Skin, Herbalife relies on "multilevel marketing" (MLM) – where salespeople recruit others to sell their products – which Ackman says is basically a pyramid scheme that will eventually collapse. He is believed to have already lost about half of the $1 billion he risked when shorting Herbalife stock a little over a year ago. He has also publically clashed with one of Herbalife's largest shareholders, Carl Icahn, over the value of the company.

...
"Nu Skin was very aggressive over the last couple of years going into China," says Busch. "With Nu Skin, this was a problem because 50% of their earnings come from China. It was accelerating… Herbalife, not so much. Only about 10% of their revenue comes from there. So, it’s not as big of an impact but it was growing."

However, Busch says this latest investigation may nonetheless spell trouble for Herbalife, as well as other companies using multilevel marketing.

[Carpet_pissr]

I'm expecting to see someone release a documentary titled something like "The Cult of Herbalife" any day now.

[Alefroth]

Rough days for HLF.

Wonder how that will affect the Galaxy's 10 year sponsorship deal with them.

[Kasey Chang]

I'm expecting to see someone release a documentary titled something like "The Cult of Herbalife" any day now.

It's worse. It's real and it exists.