The Multi-Level Myth
I retrieved my lunch from the pickup area and wound my way through the busy Café lunchtime crowd, finally locating a stray vacancy at the window counter. As I spread out my fare, I noted on the counter all manner of brochures and cardholders left by patrons, touting all manner of business ventures. I counted among them no less than three entrepreneurial “opportunities” which I immediately recognized as multilevel marketing programs. One was a weight loss program. Another, for sales of a “miracle” healing drink. The third a well-known door to door cosmetic company. As I pondered these, there came to mind the myriad of past and present clients whose financial downfall had been at the hands of such ventures….individuals who had invested their life savings, only to have their hopes dashed on the shore of lost expectations.
Certainly there exists successful companies who rely on the multi-level marketing concept. The cosmetic company, for example, is a Nasdaq-traded company that for over 100 years has remained a household name. But how many such household names can you conjure? Compare that list to the numbers of obscure companies in which your friends, acquaintances and neighbors are involved, or are trying to get you involved; peddling products and programs that they insist will enable you to “get rich quick”? Finally, ask yourself how many people you have known to have truly achieved, through one of these “opportunities”, early retirement, or the Pink Cadillac prize, or who, to paraphrase an old sitcom, have “moved up to the Eastside”? Personally, of the dozens of individuals who have trumpeted to me a multitude of multilevel marketing opportunities over the years, I am only aware of one who has experienced some level of prosperity from participation in such a venture, and even he ended up a client when the company changed the rules on him mid-stream. It should be not be surprising that the word “scheme” seems to inherently associate itself with the words “multilevel marketing”.
As I ate my lunch, I looked again at the myriad of multilevel sales programs in front of me. I was familiar with the “miracle” drink, a handsomely bottled, self-professed über anti-oxidant concocted from “exotic berries”. Several people had touted to me the Ponce de Leon- like benefits of the elixir. Therein, I concluded, lies the rub. Everyone wants to look better or to feel better, which is why multilevel marketing always involves skin care or vitamins or weight loss or makeup or magic juice. Multilevel marketing must, by its very nature, proclaim its product or program to be unique yet at the same time to have the broadest potential demographic appeal.
The economic justification for participation must be based on a mass target, and to achieve a mass target, the target must have commonality of need. This leads to a statistically small percentage of the target audience necessary to create profits at the top, and to the logical conclusion that only a statistically small number of distributors will end up successfully generating those profits. The simple reality is that most multilevel marketing companies expect but a small percentage of their distributors to succeed. The business model is almost perfect: a constant turnover of enthusiastic worker bees disseminating product to end buyers while the company incurs little or no overhead other than downstream commissions, these payable only to those few who have succeeded, who in turn share must those with those lower on the food chain.
As I took mental inventory of the lives ruined and dollars wasted, I found myself aghast at the misery that I have seen multilevel marketing engender. Business failure is never pretty. But the the end of a multilevel marketing career is particularly ugly; its psychological implications unusually devastating. The failure represents the bleak final chapter in a desperate bid to be unleashed from one’s unfulfilling “day job”; the fatal tumble along the path to Shangri-La–a destination having looked so shiny from a distance. The embarrassment and humiliation that typically accompany such failures are compounded by the fact that its victim usually drew in (and sometimes, took down) friends, relatives and neighbors. Integrity and self-esteem are vaporized along with financial security. And to add further insult to injury, the ignominious failure of multilevel marketing endeavors is often by way of a prolonged and lingering “death”.
Had I known them before the fact, I would have advised each of my clients who was considering the investment of his savings in a multilevel marketing scheme to instead use those funds to buy a boatload of lottery tickets. In my opinion they would have had as good (and possibly a better) chance at striking it “big”. And even if they lost, they would have done so in an instant, enabling them to promptly dust themselves off, embark on the road to recovery, and soon enough chalk the whole thing up to a bad, but mercifully short -term, experience.
And they would have done, to themselves and others, significantly less damage on the way.