Monday, April 1, 2013

Bad Argument: The myth of "no saturation"

One of the simplest argument against pyramid schemes (and similar schemes that requires chain recruiting) is that sooner or later the market will saturate, and you run out of people who's not in the scheme and may want to be, i.e. "leads", "prospective members". That is why some of the more ridiculous counterarguments are against this specific fact. Some MLMers actually believe "there is no saturation".

First, let us examine the idea of "saturation", then examine the various counterarguments that MLMers proclaim.


Saturation in general refers to the condition when the market is "overserved", that there are too many sales reps competing for the same number of customers.

However, in MLM and chain-recruitment schemes, it could also refer to "lack of prospective new members" that will join because local market have been "mined out". Clearly, it is a valid and potentially disastrous condition for recruitment based schemes.

Consider this: Let's say in a town of 1000, 5%, or 50 may be willing to join a MLM. Clearly, the first guy in will try to reach all 50 people possible. And obviously the town can't take 2 or 3 different reps all trolling for recruits. There are simply no more people to be had. It is saturated.

So how do some of these diehard arguers claim saturation does not exist? Primarily through two arguments: international reach, and new customers.

International Reach

Some MLMers, when questioned about saturation, essentially replied that "company X is international, thus it can always reach more customers, and it can never run out".

This is like saying "Earth's population is infinite". It makes absolutely no sense. Yet it's an often seen argument. Here's one example posted to BehindMLM:

Or in text form:

one thing i’ve learned is, “Saturation” is impossible.
SWA is a global business and your gonna talk about me that it is inevitable that SWA will ran out of customers? Do you really think that there will be a time, that there are no available customers “LEFT” for this opportunity?
This type of thinking basically makes some pretty wild assumptions:
  • Everyone on planet Earth, no matter their circumstances, is a potential customer
  • When you ran out of people on Earth, there will be E.T.s to market to
Clearly, this logically makes no sense, yet you can *almost* see where they made this weird leap of logic... That they see that if a business is limited to a country the growth is limited, but if it can go BEYOND the borders, then growth will continue (for a little while longer, at least). However, this is basically betting "the growth will continue (forever)", or "momentum". Except there is no such thing. 

What actually happens is as the business expands into a market, that market will experience a short growth spurt, then things will slow down as that market reach saturation. Unless new markets are added, then that new market will also reach saturation in due time. "International business" has the entire world as potential customer, but it *will* reach saturation, even if you have infinite reps and infinite marketing budget. 

What's more, as ONE rep (in a thousand, in a million...) your own reach of the market is definitely finite. It may have been a bit further now with communication tools such as the Internet, but it is NOT infinite. Thus, any talk about the market being infinite is not only bogus, it is also self-denial. 

Any person who tell you that "market is infinite" is too caught up in MLM speak. 

There is also the matter of what is being sold. If we're talking consumables, i.e. that needs to be replenished, like food supplements, costmetics, and so on, then the market is a bit bigger (until the customer decides there's a better product for the price), but it's still not infinite (a person can only use so much product per unit time). If the product is not consumable, such as the "business opportunity" itself, then it's DEFINITELY not infinite. 

New Customers

One of the more novel (yet stupid) arguments for "no saturation" was encountered also on BehindMLM. The argument can be essentially distilled as:
People are born every day, therefore there are new people to market to every day
This sort of makes sense, and you can be excused if you were caught in the excitement and did not pay it any detailed attention. However, this is an euphemism for a much better known saying:
There is a sucker born every minute. -- misattributed to P.T. Barnum
Furthermore, consider this... How *does* new population "prove" that there is no saturation? It doesn't. A tiny new slice of market is added every day, but you ,may or may not be able to reach that new slice. You may reach one today, but not the next day. The more reps there are, the less chance you have to reaching that new potential recruit.


In both cases, the argument is refusing to acknowledge that something that rapidly approaches zero in probability is essentially impossible. They basically say "it's not zero" when it's about as close to zero as one can get. It may not be mathematically zero, but in "practical terms" it is.

That's denial, and that's all it is.

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