If you knew what network marketing leaders know, they'd have no business model at all.
I've always been interested in running a small business, but starting a business from scratch seems overwhelming. What do you need to do? How do you get clients? If only there were someone to teach you and train you and cheer you on when you are feeling down.
Enter network marketing. These companies promise you big income with little effort. They business is already made! You just need to show up and collect big checks!
So you sign up. Or at least I did.
I joined a multi-level marketing (MLM) company because I loved the idea of being able to go as far and as fast as I wanted. I always felt held down in corporate America and hated the idea of having to wait for someone else to pick me for me to move up. The fairness and the freedom appealed to me.
Within a year and a half I rose to Directorship – the top 2% of the company. Shortly after that I was promoted again, to Senior Director. Sounds pretty impressive for someone whose last title in corporate was “Senior Business Analyst”. I'd gone from analyzing business to directing it!
Shortly after rising to that level, I started to realize things were not as they had seemed on the path to get there. In our director's meetings we had the “big girl” discussions. About how we weren't actually going to be focused on working with our team and helping them be successful, becuase most of them would be quitting over the next few weeks. We had to keep recruiting.
Secret #1 – the turnover is incredibly high, and if you want to make any money at all, you need to not care that over 99% of the people you talk into signing up will fail. You need to be constantly recruiting and hoping the new people stay in long enough that they can't return the product from their initial order, because if they do, that gets deducted out of your paycheck. Which leads us to secret number 2.
Secret #2 – 99% of the people in your upline working their businesses full time are broke. The flashy lifestyle they are living that is supposed to be proof they are successful is fake. Their lifestyle is financed by a spouse, from savings, and from credit.
When I was in network marketing, we were actively encouraged to “fake it until you make it”. Shopping was encouraged. Expensive purchases were praised. Some day very soon our big payday would come, and we could pay off our debt then. Woohoo! In the meantime, our fake lives helped us and our upline “prove” how successful we were, thereby luring more people in.
“But my upline person showed me a copy of a check! They showed me a company publication that showed they'd earned a lot!” Yes, absolutely, that was probably true. But they show you that knowing that they can use your employee thinking against you. Did you see that big monthly check, multiply it by 12 months of the year, and compare it to your salary?
Yeah, so this is one thing network marketing and real entrepreneurship have in common – irregular income.
When I was a network marketing leader, the person at the top of our pyramid would give us copies of her income in the back of the magazine to hand out to prospects in an information packet. Some times the proof of income was from the latest issue, but sometimes it was quite old. When we ask for a newer version, we were told, “oh, my assistant made a lot of copies of this one, and we don't want to waste them. We'll give you the new one when we run out of the old one.”
So… you are making the big bucks, but you can't afford copy paper?
The real truth was, the reason we couldn't have a newer version is that was the last time she'd gotten a big check. If you didn't make at least a certain amount that month, your name and earnings didn't appear in the magazine.
So yeah, that big check was real, but the next month she might have gotten a bill from the company instead of a paycheck. That's right. If you had a company car and you didn't meet your quota for the month, the portion of the car payment you didn't earn would be deducted from your check. So there were some months as a Senior Director (not even the bottom of the top 2%) where I owed the company money for the privledge of having worked for them all month (oh, yeah, and with no benefits).
This kind of fake accounting continued on. The very tippy top level in the company was National Director. National Directors often did earn millions of dollars. But they had an unusual method of calculating this. When they brought these leaders on stage at our conference, they were presented with a plaque for lifetime earnings. So yes, she might have earned $1,000,000, but how many years what that spread over? $1,000,000 over 20 years is something you can do in corporate, and they'll give you health insurance to boot.
Now, to be fair, are there people who love the product, share them with friends, and make a little side money ethically? Absolutely. Is it possible for someone a bit more focused than that to naturally build and retain a customer base? Sure. Is it possible some of those clients want to resell the companies products and will join the team? Absolutely.
There are good people doing it the right way who can rise to the top, but like The Hunger Games, the odds are not in your favor.
99% of the people who sign up will quit in the first 30 days. Out of those who remain, 98% will never make it to leadership. Out of those in leadership, about the same ratio will make it to the level where they make a six-figure income consistently.
All of us think we are special. We think we will be in the 1% who don't quit after our friends and family mostly tell us no. Out of that 1%, we think we will be in the 2% of those people who get to leadership. And we think if we do, we'll be one of the handful of people who make good money long term.
The truth is, you are more likely to be hit by lighting.
If you want to start a real business but you want a mentor like what you are promised in network marketing, I can help. I know everything useful they will teach you, plus the stuff they won't. I've run successful businesses, and I'd love to mentor me. Yes, you'll have to pay me for my time and expertise, but at least you won't get stuck with a garage full of products you can't sell. If you are ready to get started, schedule a call and ask me about business coaching.
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