Wednesday, August 21, 2013

Will You Be The Greater Fool in MLM?

English: A Picture of a eBook EspaƱol: Foto de...
Sell eBooks to riches? Don't be so sure. It may be
Great Fool instead. (Photo credit: Wikipedia)
In the stock market there is this theory called "the greater fool" theory. Its believers state that many questionable stocks are worth buying, not because the stocks themselves are worth the price, but because s/he can convince a "greater fool" to buy them at an even higher price than they paid.

It seems quite a few shady businesses work the same way, esp. those that promise easy riches through selling eBooks and whatnot. One eBook author claimed she was sucked in by such a scheme, which promised easy money by selling eBooks. Turns out what she had to do was spam Craigslist with "income opportunity" ads just like the one that sucked her in (and those are flagged and removed as soon as they're found, so it's a constant cat and mouse game, as she had to constantly create new blogs, websites, URLs, capture pages, and disposable email addresses as they keep getting banned) just so that she can recruit other people to do the SAME THING. And what does she sell? The same thing that she "bought" from whoever sucked her in: an eBook that described and explained how to do what she's doing: spam the net to sell itself.

It's like a f***ing meme that won't die but should have long time ago. It self replicates, feeding on greed.

And a lot of MLMs that were recruitment heavy work the same way: by looking for "greater fools".

As explained many times before on this blog, Multi-level Marketing is about MARKETING a product or service. The term "multi-level" refers to how you get paid for doing things, but the fundamental activity is marketing (sales). Thus, any MLMer who talks about recruiting downlines and sign-up affiliates and stuff before they have a product or service to market, is, frankly, cart before the horse, doing it ass-backwards, so on and so forth. That doesn't stop some MLMers from going that route, because it is easier, and less ethical.

Which is easier:

a) Telling people they need to learn how to sell stuff, and talk to 10 people a day each and sell to at least 1 person a day on the merits of the products/service


b) Telling people they can make money by SELLING stuff, and talk to 10 people a day each and get at least one person to sign up on the merits of how they can get PAID by buying just enough to qualify to get paid, and look for OTHER people to join (just like you recruited him/her)

I think you'll overwhelmingly say (b), esp. in this sputtering economy. But that's just you looking for "the greater fool", isn't it? Much like that eBook author admitting that she was hoodwinked into looking for "greater fools" like she fell for it?

The Amway Safeguard Rules, with the "Ten Retail Sales" requirement, tries to ensure there is at least some retailing going on, but it may be a losing battle, because getting OTHER people to sell for you is MUCH easier than making the sales yourself.

But if everybody is trying to convince other people to join, who's going to sell ANYTHING?  Balancing the pressure to recruit against the need to sell had always been a fundamental dichotomy of MLM in general.  And I feel that many MLM businesses simply took the easy way out and did not try to promote retail sales by affiliates vs. "self-consumption" by affiliates, and sought to expand the market through recruiting more affiliates (who self-consumes) instead of more retail sales. This was discussed in one of my other articles: 5 fatal flaws of MLM, as flaw 2: conflict between active and passive income. 

The bottom line for you: does your desire for passive income (i.e. make money by finding other people who sell the stuff so you don't have to) inspire you to actually help your downlines make sales... or do you simply search for "the greater fool" and hope to clone yourself onto him/her, and hope s/he will go out and replicate the process?
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