Ducking the Multilevel Marketing Bullet

by Dual Income No Kids on November 16, 2009 · 0 comments


A couple of years ago I found myself at Safeway late in the evening picking up a snack. Unfortunately, it was semi-busy and they only had one cashier working. While we waited, the gentleman in front of me struck up a conversation, eventually asking what I did for the living. I told him that I was a software engineer and he seemed genuinely interested. He mentioned that he worked in “e-commerce” and could use someone with my skills. I’ve been approached before to work on websites and such, so this wasn’t that strange.

We exchanged contact information and later that week he called him and said that he had a meeting at a local hotel with some of his fellow “small business owners” that he thought I should attend. That was an immediate red flag, but instinct didn’t kick in and so yours truly showed up anyway. When I got there, he explained in vague terms the arraignment and immediately that sinking feeling set it. This got worse as we were shuffled into a conference room, and once a the speaker began his pitch, I knew it was time to get out of there.

Here’s how the set up would have worked. We would buy in (literally; there were a ton of materials that had to be purchased, including “small business registration” fees) and would receive a catalog of common household goods – generic versions of the name brands. We would then sell those items – or buy them ourselves – and recruit other people to work under us doing the same thing. We would receive points for each revenue level we’d reach, based on our own sales and the sales of those working beneath us. Those points determined how much money we were paid from the parent company.

I felt terrible for being so stupid to fall for something like this. However, I may have been the only one in the room who felt that way. The speaker was great at getting everyone riled up. He talked about buying a dream car, or maybe, a dream car for every day of the week! (seriously) It was pathetic, but people were eating it up; this guy was certainly good at what he did. He paraded up the stage a bunch of people who talked about what a positive experience it was for them and how rich they were now. Not wanting to be rude I didn’t immediately walk out, but took the first opportunity to bolt out of there.

It wasn’t a complete loss though, and outside of wasting an evening, no money was lost. There were some interesting observations to be taken away.

* Freedom is the MLM buzzword of choice. A lot of people hate the grind of their daily jobs. The speaker harped on this “business model” giving you freedom, an idea that I think would be very attractive. The speaker obviously realized this and played on it heavily.

* Details are the enemy of MLM. I asked the guy who brought me at least three times what the initial costs were and he wouldn’t tell me. By this point, it was pretty clear what the deal was but I wanted to see how much information it was possible to extract from these guys. Answer: not much. The main speaker talked for at least an hour and he never gave any program details. I didn’t even know the name of the parent company.

* Cognitive Dissonance. The guy that brought me knew what was going on, that was pretty obvious, but he tried really hard to convince both himself and I that this was more legitimate than it was. Here was a textbook example of cognitive dissonance. Everyone knows that MLM benefits only those at the top, and yet people still sign up, banking on that glimmer of hope that somehow they’ll be able to make some money. It just doesn’t work that way.

For my part, I’m just glad I got out before I actually got involved financially.

Readers, do you have any experience with Multi-Level Marketing?

Michael

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