Monday, 29 October 2007

Multi-Level Marketing: A Personal Experience

A few months ago, a close friend introduced me to the concept of multi-level marketing (MLM). I attended what is known as an overview presentation and I was persuaded to purchase a starter-pack. The latter was aimed at giving me an idea of some of the products that the company sold; I also received some material about how to run my own business as a product distributor.

Multi-level marketing was presented to me as a way of becoming rich - very rich - over a period of three to five years. As the boss of my newly-formed company, I was expected to undergo a training phase that would help me to persuade other people to repeat what I had done; buy a starter-pack, buy the products, and sell the opportunity to others.

Apart from providing ample assistance to beef up one's business skills as a product distributor, the people who persuaded me to board the MLM bandwagon stressed the importance of personal development in order to succeed. This took the form of countless events, usually organised at extremely luxurious hotels, during which a "life skills guru" would come down from the proverbial mountain to enlighten the masses who had paid a considerable amount of money to discover how they could become ultra-rich. Out of curiosity, I attended some of these events. In spite of the profiles of the gurus present, I was not really impressed by what I heard. Most of the "wisdom" was a mixture of personal experience with undergraduate-level psychology. As a psychology graduate, the talks were useful to remind me of some basic principles that I had studied at university several years ago. The personal experiences were sometimes encouraging, but I have learned to interpret such tales very cautiously.

Human behaviour is frequently a product of numerous variables, many of which are still being studied by several psychologists all over the world. If a person had a god's-eye view of all the possible variables and of the ways in which they interact to produce a particular action, it would be very easy for that individual to replicate a behaviour. Sadly, it seems that we are still quite far off from being able to obtain such a broad understanding of human deeds.

During a personal development event, it is fairly easy to hear gurus saying that following a certain event in their lives, they "put their minds" to their goals, "worked extremely hard", and eventually succeeded. Apart from the fact that such terminology is quite vague, the fact that the listeners are not exposed to the god's-eye view mentioned above means that some key variables or some vital interactions among a number of factors might not be mentioned during a presentation. Let me give an example. If Bill Gates had to write a book about how he became so successful, there might be countless variables which he fails to mention due to the lack of detailed knowledge about human behaviour. Consequently, the reader who is interested in duplicating Bill Gates's actions to become equally successful might fail miserably unless all the essential variables are in place.

Although something small could always be learned by attending the personal development events, they were mainly a big waste of time and money for me. I, therefore, decided to stop attending.

There were, however, several business development events. Even though I managed to attend a few of these, I found it very hard to attend them all regularly. This was mainly due to the fact that they started at 7PM and normally dragged on for around two or three hours. After a day's work, attending such events was very tiring!

As the months went by and I was better able to analyse the development of my own business, I started formulating a number of observations. First, all my efforts to persuade other people to start their own business failed miserably. The reasons such individuals offered varied, but the general reaction was that this was just another of those schemes that promised huge wealth in return for relatively little work. Once a person had that perception, it was incredibly hard to change such beliefs. A great deal of the people I talked to had already been approached by others and they had already made up their minds about MLM ages ago. Second, in spite of all the big talk at the events about the potential of MLM to make one achieve financial freedom, I realised that even though I had already spent well over a hundred pounds on products and events, I had still failed to see a single cent roll into my pockets! This is not to mention the amount of time spent on the business, too. Third, even though the products had a lot of research to back them up, I was unable to notice any significant difference in the way I felt when I compared them to the products I had been using in the past. Since the products supposedly contained various beneficial ingredients, they cost much more than the ones normally found in an average supermarket. If one wanted to see some considerable financial results, it was essential to persuade people to start their own business and to spend, at least Lm 40.00 per month.

Although I eventually managed to convince a couple of close relatives to start their own business, they could not see themselves spending a minimum of Lm 40.00 every month. And this is one of the biggest weaknesses of MLM, at least the way that it has been operating in Malta thus far. Since Malta is a very small country and many people know or are related to one another, it is not so difficult for countless individuals to persuade others to spend that initial sum of money to start one's own business. The problems start when people are expected to be spending the aforementioned sum of money on a monthly basis and on products that are mostly food supplements, personal hygiene, and household cleaning ones. A full-time university student who still lives with his/her parents and even an individual with an entry-level job might be able to start their own business, but it is extremely unlikely that they will be able to spend a minimum of Lm 40.00 per month on such products. After having spent over a hundred pounds and after having persuaded two people to spend more than Lm 70.00 each, I only earned Lm 8.00 or so in return!!! At least, it was something, but there was clearly a huge imbalance when comparing my income with my expenses. This factor played a big role in pushing me to drop out of my MLM business.

At the beginning, I had decided to approach the business as a way to earn a secondary income. I had surely no idea of the many disappointing factors with which I came into contact as time went by.

Nowadays, I am no longer involved in the MLM business field. I think that I bailed out just in time. This is because the concept is reaching cult status here in Malta; the same quotations about success and wealth are being circulated all over the island in an extremely annoying way. It is becoming impossible to have a rational discussion about the weaknesses of MLM with the individuals who have transformed themselves into converts of this new religion. Furthermore, the greed element is so strong that I have often got the impression that a great deal of the people involved in MLM are only interested in making huge sums of money; they appear to have little interest in anything else. Given my political views, such greed for money makes me feel sick!

In theory, MLM sounds great as an attempt to earn some extra money. It seems to have worked out well for those people who had access to a strong social base consisting of individuals who already had enough cash to be able to spend, at least, Lm 40.00 per month. The personal development aspect appeared to work extremely well with those individuals who, devoid of any ideology to turn to, adopted the type of business I was introduced to as a new religion. In my case, I currently prefer to think about ways in which the members of every society can be guided towards a future whereby every person can be happy without having to depend on money.


La delirante said...

It always amazes me how you are able to put down in words so easily what goes in my mind with no specific order. I totally agree with your points and I think it was all a big blunder. I didn't study psychology but could see (when attending those events) that I was getting very little in return. I must admit I heard many nice things but nothing really life changing. I came across a very nice book too which would allow me to think better about a possitive approach to life.

I quite liked the part of the many variables that are involved in these successful people's stories. I had thought about it but again, you manage to put it so clearly.

Very nice post. Really enjoyed reading it. Keep it up!

David Cuschieri said...

Thanks a lot for your very sweet words! :)

beatnikchik said...

sounds like a pyramid scheme

Tomspry said...

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