Did Bill Clinton Endorse Network Marketing?

A reader sent me a video that has been making its rounds onFacebook. Apparently all the network marketers are promoting this one in an attempt to add validity to the MLM business model.

The thing is, Bill Clinton DIDN’T endorse network marketing. He endorsed direct selling. There is a difference.

On the video, when Bill Clinton says the words “direct sales,” the words “network marketing” appear. No doubt the person circulating this version of the video wants those two phrases to be interchangeable.

But direct selling means just that: selling directly to the consumer outside of a retail location. Think AVON. Think Tupperware.

That said, it is true that most of the organizations that are members of the Direct Selling Association have a multi-level component to their business, meaning if you recruit others into the business you make commissions from the sales those recruits make in addition to your own sales.

The endorsement of direct selling is not an endorsement of the pyramid-like structures of network marketing companies, although many of the people envolved in these MLMs are really trying to make it so.

Here’s the video. Enjoy!

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The “Direct Sales = Better Products and Service” Myth

How many times have you heard that Mary Kay products are so much better because of the superior ingredients and personalized service?

Lots of MLMs promote the belief that somehow their products are better because they aren’t available in stores. Because you get personal service that you don’t get in retail environments.

And that direct sales is THE way to go when it comes to marketing products. In fact, it’s the wave of the future.

But I find it all hard to swallow.

The REAL thing that direct sales is good for is getting a bunch of people to hawk your products without having to pay them a salary or benefits.

People have been buying facial cleansers for years and somehow managed to figure out how to wash their face without having to invite a bunch of friends over to their house for two hours .

Just a thought on this Saturday…  

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Just a Few Bad Apples

We’ve often heard the response from active Mary Kay consultants that bad experiences in Mary Kay can be blamed on a few “bad” directors or consultants in the company.

I finally realized that there’s a communication problem here.

The women who have had unpleasant experiences in Mary Kay aren’t saying that the directors and other consultants they encountered are necessarily bad people. It’s their behavior, the required Mary Kay speak and attitude, that is horrible.

There are more than “just a few bad apples” in Mary Kay, and they share many of the following behaviors:

• pushing consultants to spend more on inventory, Seminar and other events than they wanted to
• asking consultants to give up a Saturday morning with their family for a recruiting brunch
• placing phone calls to consultants asking them to place an order so “the team” can make production
• encouraging new recruits to take out a loan to pay for thousands of dollars of inventory because it’s a “business expense”
• teaching consultants that anyone who even questions the things you do in MK is simply negative
• trying to convince quitting consultants to try to sell their inventory rather than send it back to the company
• misleading women by stating that it “only costs $100″ to start a Mary Kay business
• encouraging women to join Mary Kay for a hobby or personal use, then telling them they should purchase inventory and other items because it is really a business and needs to be treated as one
• informing women during the recruiting process that there is a dire need for consultants in their geographical area, when in fact, if anything, there are too many
• pressuring consultants into attending meetings and functions at times that are usually reserved for the family or encouraging them to reschedule family events so that they don’t interfere with Mary Kay events

These are just some of the things that we hear over and over from consultant after consultant.

The whole structure of the MLM and the promotion from corporate makes most women in Mary Kay adopt the same techniques and behaviors.

It’s not just one or two people behaving badly, representing Mary Kay poorly. It’s a common pattern.

They have to buy into the “dream” of Mary Kay in order to keep going. That means the HAVE to promote orders and recruiting and meetings and such. It’s part of the MLM business.

Mary Kay consultants who say that the negative things others experienced while in the company can be attributed to a few bad people are right if they mean that there are a few women in MK who do things that are ethically or morally questionable.

However, the common rah-rah and pushy behavior and is part of the majority of those who buy into the pink dream.

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True or False: Mary Kay Isn’t MLM, It’s Dual Marketing

FALSE.

Mary Kay Inc. claims that their business structure is based on a concept called “dual marketing.”

They define it as separating corporate management from independent contractors. That definition, however, is the basic definition of independent contractor. An independent contractor is not an employee of the company and doesn’t receive any of the benefits of a hired employee. Read more

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What is MLM?

MLM stands for Multi-Level Marketing. It is also commonly referred to as Network Marketing, Relationship Marketing, One-on-One Marketing, Face-to-Face Marketing and Dual Marketing.

MLM is a way of selling products or services through distributors. In order to become a representative for the company, you sign an agreement and are also usually required to purchase a “starter kit” which contains training materials and a limited amount of full-size and sample-size product so that you can begin getting orders.

The aspect that distinguishes MLM from other businesses is that you make money not only on the sales of the company’s goods or services, but you are also encouraged to recruit others to join the company as a distributor. You then make commissions on the sales of those you recruit.

Many MLMs come dangerously close to being blatant “pyramid schemes” On a pyramid, most of the sales of products are made to the distributors, not to consumers in general. So really, the distributors are the customers. If a MLM pays commissions for recruiting new representatives, this should be a red flag. State Laws state that a MLM plan should only pay commission for retail sales, not for recruiting.

Even so, in most MLMs, the sales of the product seem to be secondary to recruiting new reps. Why? Because the turnover rate is so high. People sign up as representatives and then change their minds. Or they try it for a few weeks and quit. Without constantly bringing in new recruits, the company would soon be out of business.

The problem for many who join MLMs is they are led to believe that they will have success as so many others have. In reality, the vast majority of representatives not only flounder and quit, but lose money. Serious flaws in the fundamental design of these companies sets people up for failure at a home business, even as the company continues to thrive off of new orders from new distributors.

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Other helpful MLM educational sites

Here are some links to sites with additional information about Multi-Level Marketing (MLM).

www.falseprofits.com An expose and analysis of the MLM industry. Pay particular attention to this article, entitled “A Disguised Pyramid Scheme.”

www.mlm-thetruth.com Dr. Jon Taylor’s extensive research on the MLM industry. There is a 5-step evaluation you can do yourself to test that business opportunity you’ve been thinking about.

www.pyramidschemealert.org Lots of information about the deception and harm of multi-level marketing and pyramid schemes. Be sure to read The Ten Lies of MLM.

www.rickross.com The Rick Ross Institute is a nonprofit group that studies destructive cults and controversial groups. There is a huge databaseof articles, court documents, and essays on hundreds of groups.

www.quatloos.com An educational website run by the Financial & Tax Fraud Education Associates, Inc., a non-profit group. Lots of information here and a great forum.

www.vandruff.com “What’s Wrong With Multi Level Marketing.” Recommended reading.

www.ftc.gov The Federal Trade Commission has an entire section dedicated to educating and informing you about business opportunities and MLMs. Be sure to read The Bottom Line About Multilevel Marketing Plans.

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