Monday, July 27, 2015

Scam Tactics: Two-face... being very different things to different people

One of the most memorable villains to Batman is Two-face, formerly district attorney Harvey Dent. After a severe injury that left him scarred on half of his face, he developed full blown schizophrenia: two completely personalities depending on which side is talking to you.

And guess what company is acting like Two-Face? Herbalife. To lawmakers, it's presenting itself as a company that's changing lives, and it's FLYING IN members from across the country to show them off in Washington D.C. to, quote, "talk about the benefits of Herbalife's science-based nutrition products. Members will also be sharing their own experiences and the income-generating opportunities available to Herbalife members through hard-work and dedication", as per Herbalife's own press release.

Why are a bunch of distributors talking "science-based nutrition", not scientists and nutritionists?

Furthermore, why are these 12 members talking about "income-generating opportunities available to Herbalife members" when Herbalife itself stated that 73% of members did NOT join Herbalife for income as a primary reason? Are 9 of these 12 NOT going to talk about the opportunities, as Herbalife itself claimed?
Herbalife rebuttal slide, page 91, circa 2014
Of course not. Herbalife flew these 12 in because they are bright-eyed and bushy-tailed enthusiastic distributors (sheeple?) properly trained in Herbalife's alternate reality. They may be telling the truth as they know it, but it's not "the" truth, and they sure do NOT represent the rank and file as Herbalife want Congress to believe.

In the meanwhile, Herbalife is hiring as many high-level government people as it can, as well as lobbyists. But that's not the other face. The other face is the Herbalife convention in St. Louis.

On July 10th, the Herbalife Extravaganza happened in St. Louis, where 25000 people packed into a convention center and cheer each other on... to buy more Herbalife stuff.

But you ask, wait, weren't the Herbalife distributors supposed to SELL the stuff? Indeed, that's what the attendees say, quoting from the above link:
"Based on interviews with convention attendees, the company appears to attract many people new to the retail business but looking for career changes."
But that's absurd, when Herbalife itself stated that 73% of distributors joined to get discount product purchase. Indeed, according to Herbalife's own income disclosure, "434,125 Distributors (88%) received no payments from Herbalife during 2012." That makes the median income effectively zero.

Sort of makes you wonder: How can Herbalife talk about "Our distributors are changing lives and selling a lot of stuff" on side side, then on the other side claim "Most of our distributors didn't join to sell stuff?"

There is only one explanation: Two-face. Indeed, consider this sentence, again, from its own income disclosure:
"51.0% of all sales leaders as of February 1st, 2011, requalified by February 1st, 2012 (including 33.5% of first time sales leaders)"
What happened to the other 49% of sales leader that did NOT re-qualify? They did not build enough sales volume to keep their sales leader status, which means they quit or they can't replenish their downlines that quit.

Considering that "sales leaders" only comprise 82K of that 424K total distributors, that's less than 20%. This suggests that the average number of downlines per leader is a mere 4.

Now you see why Herbalife *has* to adopt the Two-face strategy... It is like a shark... It must continue recruiting to replenish the people who quit, to "feed the churn". And it kept recruiting people through those conventions, and KEEPING them in, by teaching the new recruits to lie to themselves. And these people are LYING TO THEMSELVES: they buy the stuff, telling themselves they're going to sell the stuff... But what they really do is consume the stuff, "because I believe in them", thus, no refund! After a few months, they got nothing to show of it, except hoping their recruit keep going. However, their recruits (downlines) will probably quit because they eventually realized they had been lied to, and when these people realize they've been lied to, they will quit as well, and all these losses had to be replaced.

The only people who succeed are the ones who 1) got in early and built-up enough people recruiting people to "build an organization / team" that is self-perpetuating, i.e. the downlines can keep recruiting to replace any losses without too much personal intervention, and 2) retained enough downlines through charisma, intimidation, cult tactics, bribery, bullying, or whatever worked.

But the company don't care what tactics you used... As long as you and your downlines keep buying those products. They don't care if you retail them or not, as long as they get paid. You are the customer.

Then with the other face, Herbalife claim it is a legitimate company that does not live on lies, then picked a couple of the star pupils it had taught to come tell a tall tale to our elected leaders about how wonderful Herbalife is.

The question is... if I can see the contradiction... why doesn't everybody?

Or perhaps... they do see it, but they figure they can benefit anyway?

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