Why is it that businesses which pay other people to sell their product to friends and family have such a bad reputation when marketing experts agree that the most powerful advertising out there is word-of-mouth?
Well, as I and others have observed in the last twenty years in the industry, there is a trend that very well may be causing this bad wrap, if not at least a major player in contributing to it.
I’ll name it DEFAULT
It’s something we’ve all experienced. You get into a program and specifically fit it your needs. How wonderful everything is! The birds sing in the bright sunny sky. The blooming flowers fill your nose with lovely fragrance. Then suddenly, one day something terrible happens and all your settings are returned to DEFAULT. Frustratingly, there’s no way in the world to get your old settings back except by starting everything entirely over again. You lose hours, miss appointments, delay decisions, feel stressed out, and everything goes to pot. Why? Because of DEFAULT.
Nearly all businesses run on the pyramid plan-not just MLM types. At the top is the CEO, the president, the great leader. He or she has a few trusted associates who help run the show. These operate at the second level of operation, and usually receive a slightly lower pay. They, in turn, have others who report to them. And on it goes until at the very bottom, and at the lowest pay scale, rests the largest group, the factory workers, laborers, cleaner-uppers. To get from the bottom to the top of the pyramid is very rare in conventional business. But everyone knows that this is just the way businesses are run.
So then a network marketing business starts up and changes how things workso it’s advertised.
They sit down and draw circles all over a piece of paper while they croon to you. “If you just follow our easy plan, you’ll be able to take vacations whenever you want to, live like a CEO, travel all over the place, and have tons of family time. We have the best business plan out there!”
And so you try it and everything goes incredibly wellfor a short time. Then suddenly, a dark day dawns and you find that everything you’ve worked so hard to set into motion is gone, all gone, and everything has turned back to DEFAULT. You find yourself again at the bottom of the pyramid just like if you worked at your local retail store stocking shelves.
What people don’t know about most MLM plans is that they are designed to DEFAULT to the conventional pyramid business style, with few at the top enjoying high incomes and those on the bottom groveling, trying to make the system work. This is done by various methods. We will mention only four. They may be called by different names, but I think you will recognize them.
1. Jump-Start: Knowing full well that most people will never get beyond the initial “buy-in”, these companies push you to “tell all your friends and family” about the opportunity. This gives the company free advertising and quick profits from the “packet” that you had to buy.
2. Breakage: if you don’t meet your monthly quota then you have to forfeit your “bonuses” or “points” and then the company keeps the money.
3. Break Away: When you’re promoted to a higher level, you have to leave behind some of your earning potential that you worked hard for. The company will keep that money for their own pockets.
4. Exhaustion: The company wears you out quick by requiring monthly quotas of new people enrolled knowing full well that you will eventually get tired and give up. Because the average recruit will only be able to enroll 2-3 people, the new enrollment requirement is kept high. When you leave because you’re too tired, the company gets to keep all those new people and the money they’re bringing in.
This is a short description of some of the ways network marketing companies make the big profits. They are designed to cause your own businesses that had lots of earning potential to DEFAULT back to you being the little guy on the bottom of the conventional business pyramid.
But the good news is that not all MLM opportunities do this! Look for those who specialize in helping the “little guy”, who don’t use the mechanisms mentioned above.