Wednesday, December 14, 2016

MLM Basics: Why is MLM so... addicting?

Many people who are NOT in MLM wonder WHY MLM seems to be so addicting to its participants, and even as members lose money month after month. After all, an "entrepreneur" is supposed to be making money, right?

MLMSkeptic has studied the issues, and it is clear that the participants are not merely valuing the economic benefits from MLM (for there is minimal evidence of such enrichment except for a few near the top), but actually SOCIAL and MENTAL benefits that came with the MLM participation. It is the social and mental benefits, not the financial, that keeps the members in despite their minimal economic gains.

Those social and mental benefits can be divided roughly into three types:
  • Sense of belonging (family and group dynamic)
  • Sense of being something greater than oneself
  • Sense of accomplishment  (recognition)
Let's discuss each one.

Sense of belonging (family and group dynamic)

Many of the articles that tout the benefits of MLM emphasize the camaraderie of the group and team. There are even articles that tout "come for the opportunity; stay for the relationship".

One such leader asked the question:
Have Your “Why” Established. This is very important. This is your major driving force, your reason WHY you decided to make a move and become a network marketer. It could be family, financial freedom or even time freedom.  
It's not an accident that the author talk about family being a driving force, but have you ever wondered which family did he mean?

He probably doesn't mean YOUR family. Not your wife/husband/partner, not your father/mother, not your children.

He probably means your SALES/NETWORK family: your upline, your downlines, your lateral marketing folks.

But doublespeak is a standard tactic in unethical network marketing.

So how do you know if your specific network marketing is ethical or not? You don't.

There were plenty of examples where families have been torn apart because half of the partnership saw and recognized the hidden dangers, but the other half was already in too deep to see the forest for the trees. It will take a huge jolt for someone to recognize the threat to one's family from cultish-MLMs and some just sank deeper and deeper.

One example was when a wife, who's in MLM was talking with her MLM female friends, and the topic drifted to the husband, who was not in MLM.  One of the so-called female friends suddenly suggested that the husband is such a loser for not joining the MLM and the wife should leave that loser of a husband. Clearly, the husband is what's holding the wife back from true success. Wife was shocked into silence. WHICH does she value more... her family (husband and children)... or her personal success for a few dollars? And what sort of people are around her that would suggest NOT placing her family first?

Another example was the tale of "RogerWilco", who relayed a story about how he was right beside someone who believed she was successful in her MLM career, when in fact, she had been losing 20-50K PER YEAR as an "executive director". In the almost ten years he had been at her side, she had lost in excess of 250K and despite numbers in black and white, she refused to give up on her dreams, even when threatened with the ultimatum "I am leaving".  So he did.

Cultish MLM is addicting because it replaces your family with a pseudo-family that CLAIMED to love you while reaching into your wallet every month.  Basically, you're PAYING for affection, much like paying hookers for sex.

Sense of joining something greater than oneself

A lot of MLMs make members believe they are joining some sort of a revolution or higher purpose.

Vemma (pyramid scheme shut down by FTC) used to have a "Young People Revolution" program that specifically goes after college aged (or younger) kids.   When Vemma ran into trouble, the founder jumped to a different company and tried (and failed) to recreate the organization with a slightly different name.

Herbalife marketed itself as a "nutritional" solution in countries with virtually zero obesity even though those are weight-loss products in North America. Yet the sales people there are not shy spending a month's salary on a SINGLE can of "nutritional supplement powder".

WakeUpNow had a company rally its own marketing director claimed "was not a good measure" of what the company is though the members loved it.  The company self-destructed no long after it was profiled by NPR's "This American Life" podcast.

Every participant who paid into these schemes believed they have joined a great cause and they are going to do great things. Some people never stopped believing even when they were forced out as they were squeezed dry.

Sense of accomplishment  (recognition)

MLM itself often tout their "sales leaders" as minor celebrities, complete with the pageantry of award ceremonies and such.  As an example, Mary Kay is well known for its huge spectacles which are deceptively called "seminars" where new sales rep who reach some minimum goal are showered with praise from the crowd. It is very intoxicating and "inspiring".  And all the major international MLMs have similar award ceremonies yearly or more often, held at exotic locations more appropriate for vacations than some actual business.
Mary Kay convention, all the "ruby" folks getting recognized (date unknown)

However, Mary Kay Ash herself have talked about "dollar recognition for a 10 cent ribbon". In other words, people will do crazy things for these "prizes" just because they are there. People will make "sales" for thousands just to get some trinkets you can get from Amazon for $20.


Once you looked past MLM's initial attraction, you will realize they have most of the characteristics of cults that use social and mental benefits to keep its members that are most vulnerable to addictions under control.

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