The Multi-Level Myth

Julianne R. Frank
All rights reserved 2007©

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 an assortment of brochures and cardholders left by patrons, these 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 a seemingly endless stream of past and present clients whose financial downfall had been at the hands of such ventures. Several times a year, I’m confronted with the tale of a client who invested their life savings in one of these programs, only to have their hopes dashed on the shore of lost expectations.

Certainly there exists successful companies in the multi-level marketing realm. The cosmetic company, for example, is a Nasdaq-traded company that for over 100 years has remained a “household name”. But how many “household names” can you conjure? And how many of your friends, acquaintances and neighbors are involved, or are trying to get you involved, in a marketing programs that they insist will enable you (or them) to “get rich quick”? Finally, compare this number to those you know to have achieved, through one of these “opportunities”, early retirement, or who are driving the Pink Cadillac prize, or, to paraphrase an old sitcom, have “moved up to the Eastside”? I have encountered dozens of individuals who have trumpeted a multitude of multilevel marketing opportunities, yet I am only aware of one who has ever experienced some level of prosperity from participation in such a venture. He ended up going broke when the company changed the rules on him mid-stream. It should be not be surprising that the word “scheme” seems to inherently associate 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 fancily bottled, self-professed uber- 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 largest potential demographic appeal. After all, 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. Through this model, it takes only a statistically small percentage of the target audience to create profits at the top. It follows 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 I had seen ruined and the dollars wasted, the extent of the misery that multilevel marketing engenders seemed to me profound. Business failure is never pretty. But the end of a multilevel marketing career is particularly ugly; its psychological implications unusually devastating. These failures usually represent the bleak final chapters in desperate bids to be unleashed from the unfulfilling “day job”--- futile last resort pursuits of the “next sure thing”. They mark fatal tumbles from the rocky cliffs along the pathways to imagined Shangri-Las--destinations that looked so shiny from a distance, yet turned out to be ultimately desolate. The embarrassment and humiliation that typically accompany such failures are compounded by the fact that their victims usually drew in (and sometimes, took down) friends, relatives and neighbors. Integrity and self-esteem were vaporized along with financial security. And to add further insult to injury, the ignominious failure of multilevel marketing endeavors was 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 a chance (and possibly better) 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.

They would have done themselves and others a lot less damage on the way.

Julianne
June 2007

*Being something of a health fanatic, I had actually studied the drink, and discussed it with a nutritionist. The body cannot discern the difference between an expensive Brazilian Acia or a Maine blueberry. If you are considering investing in this drink, you might want to consider instead fresh pomegranate juice from your local organic grocer. You can always pour it into the expensive-looking wine bottle.