MLM Basic: Why Do So Many MLM Noobs Fail? Because They Don't See their TRUE role in MLM (as consumer, not seller)

DSA (US) Logo (Photo credit: Wikipedia)

Do you know what's the medium income of a direct-selling agent in the US, i.e. MLM participant? 

The median annual income for direct sales consultants in 2011 was $2,400, according to Amy Robinson, spokesperson for the Direct Selling Association.  (quoted from Forbes article)

Yes, that's ANNUAL.  That's $200 a month.  Most people make NO money from MLM, despite their hopes and dreams, car bonus, financial freedom, blah blah blah. Lots of "retire young, have fun", millionaire by 30, blah blah blah recruiting around. 

Do you know WHY they fail? They don't understand their role in network marketing. (And often, neither do you.)

Network marketing is still marketing, and marketing means SALES.

In sales, the objective is to introduce the product to people who may want it, then convince them they need it (without lying)

Finding the people who may want it is known as "lead generation" (and I don't mean recruiting downlines, just retail customers).

Convincing them that they need it and get them to open their wallet is known as "closing the sale".

As a salesperson, your job is to add value to the product, and value is more than just price.

Do you know why Avon and Mary Kay and NuSkin succeed? It's NOT just because their products are good. Their sales people were able to DEMONSTRATE the quality and value of their products successfully, at a competitive price and most have stock to be sold then and there. AND they often consult on what color goes with what skin tone, plus more makeup tips. Despite the cliche, products do NOT sell themselves, at least not at the beginning.

Are you adding value to the products
you are selling? Can you do more? 

Their sales people ADDED VALUE to the products through demonstrations and local retail and order taking and such.

Think about it. The entire act of retail is to add value. Even your local corner store added value by making products available to you just around the corner instead of some supermarket or club store miles away. You will gladly pay a little more for the convenience of walking around the corner than driving 15 minutes to get the same thing at a supermarket.

Sometimes, you may choose to buy local rather than through Internet vendor because you know you can almost instantly drop the broken item off at a local store and pick up a replacement instead of hassle of shipping returns. The local stores are adding value by their physical proximity.

As a MLM salesperson, what value are YOU adding to the products? (as opposed to your competitors, i.e. other MLM grunts just like you? )

Very often, the answer is... absolutely NOTHING. Remember, a lot of the MLM uplines emphasize replication, i.e. make clones of themselves. They teach talking scripts (either in person or Youtube videos), not sales techniques, not customer service, etc. And since everybody is selling the same products, NOBODY STANDS OUT. And with Internet, there is not even any geographical exclusivity. You can and WILL find more than a few MLMers trolling the same pool for "customers", since they tend to spawn from the same social circles.

You are the Borg drone. You... all of you, talk the same, sell the same, act the same, move the same.

Thus, you all have the same odds, nothing to stand apart.

So what does that do to your bottom line?

Scam Psychology: Sponsorships can be fradulent; the story behind Energee, Indy Car, and possible Ponzi scheme

In May and June 2014, a new energy drink suddenly popped up on the market called "Energee", backed by some "Integrity Asset Group", who apparently announced that they will be the primary sponsor for Bryan Herta Autosports's Indy Car, and they have the pictures to prove it. This is the announcement on BHA's website:

BHA announcement that Energee will be their sponsor for IndyCar, as of 09-MAY-2014

Yet less than 2 months later, 31-JUL-2014, BHA is suing Integrity for breach of contract.

BHA sues Integrity Assets Group, et al, 31-JUL-2014

That of course doesn't stop all the press releases, and publicity photos, announcements, videos...  Mostly to Spanish speaking folks esp. South America.

Spanish promoter touting Energee as "next best income opportunity"
promises bazillion more products like electronics, vehicle tires, and more

What happened, and why did IndyCar and a famous Indy racing team accept an unknown sponsor?

Lack of due diligence.

Let us do a little research into what is this "Integrity Assets Group" ...

MLM History: The (Not so) Secret Origins of Amway

English: Honda- Amway（AVCL）Hồ Chí Minh (Photo credit: Wikipedia)

You can't mention multi-level marketing without mentioning Amway, but do people actually know the real origins of Amway?

If you go to Amway's website, their timeline only goes up to 1950's, when Jay Van Andel and Rich DeVos founded "American Way" in Ada Michigan, and later shortened the name to Amway. But in reality, their history goes back a bit further.

Carl Rehnborg,
courtesy of nutrilite.com

Origin of Amway can actually be traced back to 1930's to a gentleman named Carl Rehnborg, founder of Nutrilite (exclusively distributed by Amway). According to Nutrilite's website, Rehnborg, who lived in China as early as 1915, had experienced much of the unrest during that uncertain era in Shanghai, and experimented with soup/broth made from various locally procured ingredients, including herbs, plants and vegetables, animal bones (source of calcium), and even rust from rusty nails (source of iron) to supplement the meager army rations at the time.

It is worth noting that Mr. Rehnborg was only verified to be a salesman for Colgate in China at some time (there are some doubts, according to some sources, that he may or may not be in China at the time he claimed) and has no verifiable formal training in nutrition. There are some unverifiable or self-referential claims that he may have been a "doctor of chemistry".  According to yet another source, he's "trained in biology and chemistry" but apparently did not have a degree.

Upon returning to the US in the 1930's, healthier than others due to the broth/soup (so he claimed) but broke, he started experimenting with the beginnings of multi-vitamin / nutritional supplement market. When he felt he had perfected the formula, he started "California Vitamin Corporation" in 1934 and started selling "Vita-6" (later "VitaSol") to friends and friends of friends. What was not mentioned was upon returning to the US (he had sent back his wife and children before the unrest in China started) Rehnborg apparently turned down a job from Colgate in order to pursue his dream, which caused his first wife and two children to leave him. His second wife died at childbirth with the child.

According to Carl's son Sam (from Carl's third wife) , Carl discovered "contrafreeloading" at this time, as the supplements given to friends for "trial" was left on a shelf and forgotten. When he started CHARGING MONEY for the supplements, then people really started wanting to buy them.  When people started referring people to Rehnborg to buy his products, Rehnborg told them that they should sell the stuff themselves, and he'll give them discounts. Thus is the seed planted for multi-level marketing.

Bad Argument: The "We shall see" parting shot and how it's linked to cultism

When defenders of a certain scheme ran completely out of viable arguments, they will often depart with a throwaway comment:

"we shall see"

It has several variations, like

"Time will tell"

"History will be the judge"

"Truth will prevail"

and such.

This is a pretty lame departing shot, as it basically demonstrate they have *faith* that they will be vindicated eventually, but they don't have any evidence to support their opinion right now, which makes that a BELIEF.

faith

fāTH/

noun

1. 1.

   complete trust or confidence in someone or something.

   "this restores one's faith in politicians"

   synonyms:

   trust, belief, confidence, conviction; More
2. 2.

   strong belief in God or in the doctrines of a religion, based on spiritual apprehension rather than proof.

   synonyms:

   religion, church, sect, denomination, (religious) persuasion, (religious) belief, ideology, creed, teaching, doctrine More

Note definition #2... "based on ... apprehension rather than proof".

That's exactly what happened here... they have only their own apprehension of how the scheme will make them rich, rather than actual proof. It's religious, rather than evidence-based.

The fact that many scheme promoters behave in a religious fashion have lead to cult experts in calling such schemes "commercial cults".

News Update 01-AUG-2014: Zeek Refund Coming 30-SEP-2014; More Zeek Winners Get Sued; Zeek Heads Reach More Settlements

Yep folks, this is turning into an all Zeek Rewards Ponzi aftermath update. And yes, I have links, which you should ALWAYS CHECK to make sure I'm reporting stuff accurately. (And if you don't see links, ask)


Zeek Refund Round 1 May Be Coming 30-SEP-2014

According to court documents as reported by ASDUpdates, Judge Mullens has approved the first distribution of refunds for Zeek Rewards, tentatively scheduled for 30-SEP-2014

Stay tuned to the Zeek Rewards Receivership website for actual announcement. Speaking of which...

Scam Psychology: How Scammers Push Your Buttons through your personality disorders

The Age of Uncertainty
(Photo credit: Wikipedia)

As the MLM Skeptic, it is rather interesting to see many people who are defending their particular scheme from criticism suffer from personality disorders (not that I am a professional of any sort regarding psychology). They are often self-obsessed and arrogant as well as intolerant of ambiguity, and lack of empathy.

Many unscrupulous multi-level marketers and scammers play to these personality disorders by claiming they are VIRTUES, not disorders. These disorders are, instead, presented variably as confidence, conviction, certainty, and "they are not us".

People develop coping mechanisms when their self-image was diminished. One of the most common coping mechanism is retaliation: when they feel devalued, they devalue others as a response. Scams often play up this personality disorder by encouraging it with "they are not us; they don't think like us; they just don't understand us". It is then followed with epithets like "They have JOB -- just over broke", or "they will stay wage slaves while we achieve financial independence".

Any one who questioned the person's choice (the scam, in this case) will be devalued, even if they are best friends and family, and even spouse. That's why "intervention" when it comes to scams rarely succeed.

Another coping mechanism people develop is equating conviction with certainty. Conviction is a collection of your strong beliefs about the morality of your choice and/or behavior. If you don't really have much conviction, you'll often adopt certainty as if it is conviction. Thus you'll also develop certainty about other people (and what you believe to be THEIR conviction or lack thereof). This comes across as arrogance and intolerance. Scams play up this aspect by creating fanciful stories about the critics asking questions, such as "you're just jealous; you're just out looking for hits for your blog; you must have hated the owner; you're the 1% out to fleece us the 99%".  After Zeek Rewards ponzi scheme was shut down in 2012, some started floating fanciful stories about "SEC doesn't have a case because they privately admitted to our lawyers". Others even explained to newspapers that Security and Exchange Commission does not know what securities are.

However, what people don't understand is very often, certainty is an ILLUSION.

Scam Detector: What is "Cockroach Theory", and how does it apply to suspect schemes?

cockroach (Photo credit: TomSpinker)

Ever heard of the "cockroach theory"?

It's quite simple, actually. When you see one cockroach, there's probably a lot more hiding nearby.

When applied to investments and companies, it means when you see one problem, there's probably a lot more problems that you are not seeing. (And you should jump ship ASAP)

The theory is also applicable to potentially shady opportunities, actually. If you are smart enough to read the signs, and not ignore them.

Let's take one very obvious example: Zeek Rewards. They were shut down by the Feds in August 2012. But signs had been there for MONTHS that it was in trouble.

Zeekler, the auction, had been in operation since 2010 (as FSC auction and later Zeekler) without an auction license (required in North Carolina, their home state). They did not obtain an auction license until March 2012! But nobody checked. That may have been a roach but nobody saw it. Because everybody assumed it's all legal.

Did you know that Paul Burks, head of Zeek, was performing as "the singing magician" before he retired from performing and started MLMs instead? You know magic is just deception for entertainment, right? That may have been a roach but nobody saw it, because they've been distracted. 

In April 2012 Zeek Rewards suddenly banned a dozen or so European countries from participating, and gave several bogus reasons, one even blaming the US State Department Office of Foreign Asset Control (OFAC) uttered by the head Zeek Paul Burks himself. However, this was all proven to be lies only weeks later. Turns out they were both hit with thousands of stolen credit cards and by Denial of Service attacks. And their system can't handle it. The lie was pierced by BehindMLM within two weeks. Is that a cockroach you see? Did you miss it?  

By June 2012 they apparently got a local TV station to report on their "success", and even got the reporter to state that the North Carolina's Attorney General office had deemed the business legal. (Wonder whose palm they had to grease to have that happen?)  AG's office was so shocked, they demanded the video be taken down and the text changed on the TV station's website. Oh my, another roach! Did you miss this one too? Or is that "I see no roach (negativity)?"