Fog Creek Software
Discussion Board

How successful has MLM been?

I read one book of a creature last night about Copycat Marketing. It is pulp genre and I'd picked it up from a hawker on the roadside.

It led me to wonder about the success of Multi Level Marketing a.k.a Network Marketing, the get-rich-quick mantra of the twenty first century, the author vindicated after a trail of seemingly predicant, fault-finding lectures.

I reminisced, I bought into Amway in June 2001 or earlier, but never moved a nail to help myself create my organization. I just coudn't convince myself, let alone others. I bought the kit under the pressure of an overbearing assault from one of my elders. I thought it best to oblige him so I could go back to myself.

That booklet wasn't the least convincing and I was in for an unpleasant surprise after I'd finished a 100 pages, when I discovered he was touting his own interests in MLM in the garb of marketing wisdom.

Knowing the dearth of skills and the penchant I have towards selling, I began to muse, only to see how much truth was in what he said, about how others who were lured into MLM schemes and Amways, and Turets and Oriflames have been faring.

So those of you agressive subscribers out there, in the religion of Multi Level Marketing, this question is for you.

"Are you seriously making serious money out of it?"

Sathyaish Chakravarthy
Tuesday, February 17, 2004

He made the sale to *you*. Chi-ching.

That's how it works.
Tuesday, February 17, 2004

I bought the Amway bag of shit in June 2001. I read the book last night.

Sathyaish Chakravarthy
Tuesday, February 17, 2004

My friend got into a scheme like this, she was selling Jewellery.

They had a sales meeting in the city and wanted support (or someone who wasn't afraid to navigate the city after dark)  so I went with her.

It was hilarious.

This kiwi guy raving on and quoting quotes, and everyone clapping, and then awarding awards. There were only about 15 of us in the room. My friend won a sales award for selling a super doopa amount in her first month. She sat back beside me "I didn't sell that much" she whispered.
I continued to listen, heard him show how much money everyone would make because the US$.50 was buying AU$1 which was way exagerrated and annoyed me greatly that he would treat his sales people like fools (the real figures being US$.75 buying AU$1, which is a big difference, seriously).
He continued rambling, I starting laughing and could not stop.
Left with the excuse of going to the toilet and went to the bar downstairs for an orange juice.
It was good orange juice.

Aussie Chick
Tuesday, February 17, 2004

Exactly my point. MLM lives on because of uninformed one-time buyers... they buy into the crap, find out it's crap, and drop it.

But there's another uninformed buyer born every minute, so MLM drags on.
Tuesday, February 17, 2004

Hmm! I too should delight in orange juice more than MLM schemes.

I know about 3 guys who're into the Amway chain and two of them are doing it because they got nothing better to do, basically they're in between jobs. But it hasn't done them any good.

And the third guy, he's a sikh, an unrelenting hound and an example of an opportunist, has a mix of such schemes he's subscribed to and that's his bread and butter of life. He's doing *better than the unemployed*. But if you ask him, he'd never confess about how hard he's trying everyday.

I wonder how many people make money in these cartels. Not many as I can see. Lots of people go for the orange juice and peace of mind.

Sathyaish Chakravarthy
Tuesday, February 17, 2004

I know a guy that is independently wealthy (i.e. doesn't have to work) from his Amway ventures.  Well-liked guy, been at it for 30 years or so.

Dan Brown
Tuesday, February 17, 2004

> been at it for 30 years or so

He must have millions by now?

Sathyaish Chakravarthy
Tuesday, February 17, 2004

He's definitely a millionaire, but I'm not sure how much of that came from Amway.  He's also a popular local celebrity.  Rumor has it that he made all his money from amway, but I'm doubtful.  I'd bet he's made a lot though.

Dan Brown
Tuesday, February 17, 2004

>Rumor has it that he made all his money from amway, but I'm doubtful

I think so too; full of doubt. I think these syndicates get mileage for their prospecting campaign with having a millionaire or two in the ring to stand as a paragon of prosperity.

Sathyaish Chakravarthy
Tuesday, February 17, 2004

I drove charter/tour bus in a former life.  Once drove a group of MLM'ers from Mn to Nashville, TN for a convention.  They wouldn't really say what the name was, but they would not call it Amway. 

Interesting group of people, all pumped up.  On the way out they watched every underdog overcoming the odds movie you can think of.  I think I'll puke if I ever have to watch Hoosiers agaian. 

The convention was at the Opry Land and it sounded like the organization brought in some heavy hitters.  People that made a lot of money hawking the stuff and building their downlines, or at least posed as having done such. 

On the way back they were even more pumped to build their lines, everytime we pulled into a truckstop for fuel or a restaurant, they literally ran to the payphones to start calling people.  This was early 90's, it would be interesting to see that same group of people today. 

Tuesday, February 17, 2004

People were naive then, early 90's. I recall one American being imprisoned for the first ever MLM racket he started, collecting money offering a small percentage of the boodle to the contributors themselves, and encouraging them to do so.

MLM, I read, had been officially banned in China by the government.

Sathyaish Chakravarthy
Tuesday, February 17, 2004

I've seen two people do reasonably well at it, though not in money-making terms; rather, they got the products they wanted, and made a little on the side selling down the chain.

One was a childhood friend who's family did Amway.  They used Amway products, and sold a small quantity of them, which amounted to an additional discount for themselves on the product.  They never built up the distribution network Amway shills go on about, but they got things like laundry soap and motor oil at bargain prices.  They were happy with that.

Another was SunLife, a range of herbal supplements.  One of my mother's friends started taking the pills, along with her husband, and was quite happy with their effect.  My mother and some of her other friends tried them for a while.  Again, the original seller got a product they wanted, and cut their own costs a bit by selling some extra down-chain.

In both cases, the people didn't lose any friends by aggressively evangeling MLM or their product.  They just used it, and sold a little as well when someone was interested.  In those terms, I'd say they were successful, and weren't wasting their time.

Justin Johnson
Tuesday, February 17, 2004

So my point stands out, "It ain't the next big thing in marketing - of the reput of franchising or synergizing"

Sathyaish Chakravarthy
Tuesday, February 17, 2004

Gee.  Got an ax to grind Sathyaish?

Dan Brown
Tuesday, February 17, 2004

>of the reput of franchising

Fuck me! Corrigendum: of the repute of, or of the ilk or akin to

Sathyaish Chakravarthy
Tuesday, February 17, 2004

>Gee.  Got an ax to grind Sathyaish?

Hey, no seriously. I was just trying not to get carried away from last night's hangover.

Sathyaish Chakravarthy
Tuesday, February 17, 2004

The wierd thing is that it was banned in China because
it was seen as a potential political threat.  A friend of
mine in Shanghai went to one of their organizing
meetings once - at a soccer stadium - and there were
10,000 screaming people listening to someone exhort
them to go out and do this and that.  This scene was
repeated across China.

Since the guy wasn't from the government,
this was seen as Very Bad by the commies, who aren't
known for their ability to get anyone excited these

Tuesday, February 17, 2004

MLM is similar to the illegal "Ponzi scheme" except that they get away with it by offering a product that some people may want.  In my experience, MLM people pretend to be a friend until they find out that you are not going to buy into their venture, and then you don't see them anymore ( not a bad thing! ).  I would hate to abuse my real friendships by putting the MLM pressure on them.

Barry Sperling
Tuesday, February 17, 2004

Friend of mine got involved in Quixtar (the online version of Amway -- same people, different name) recently, so I took it upon myself to check it out.  I even attended one of the open recruitment meetings to see firsthand what folks were selling.

The person on stage was self described as a "retired ex-Amway millionare", but he was a talented motivational speaker and it was clear to me that giving these talks was his "job"; and he benefited at least three ways from giving them: recruiting more people to be (indirectly) his downlines, selling "tools" (cassettes and the like) to the already recruited, and an entrance fee they charged at the door to Quixtar associates.

He painted a rosy picture about how easy it would be to "find seven [people] to sell [to] seven [people]", how much people spend on household products each month, and how, once your "organization" was setup, there was literally no work to be done.  In reality the Amway/Quixtar line of products is inconvenient to use and slightly more expensive than retail products, and DEFINATELY more expensive than you'd find at Costco.  So you're stuck trying to sell a product that doesn't sell itself.  Because of that, Quixtar folks are more interested in selling the more lucrative Quixtar business model than the actual products.

Also there is the problem of too many associates going around selling to too few people.  A traditional business doesn't overhire salespersons for a territory; in Amway, the only to keep the world in equilibrium is that some of them must fail.  And fail they will.  If you take a look at the back of the SA-4400 (the first recruiting document they'll give you), there's some information they're legally required to provide to you: 1 in 210 "active" associates achieve an even modest income for one month out of the year, and 67% of all associates are "active".  And remember, these are all folks who at one time plunked down the initial $150 for the "starter kit".

Tuesday, February 17, 2004

Several years ago, a group of cheerful people started congregating in the parking lot of my company's building.  They were holding signs and whatnot and I noticed lots were wearing some form of stars and stripes.  I eventually learned that they were from Amway and they were "freeing" one of our employees from her job.  Evidently she was making enough (or thought she was) to quit her day job as a receptionist.  A very weird site.

So, that got me interested in Amway, because I knew little about it.  I did some research online and found a statistic that on average, each Amway salesperson LOSES money each year!  That factors in their startup fees, "optional" purchases of motivational crap and conferences.

A big fuckin' racket.  Like someone said, it's just BARELY not a Ponzi scheme, only because they sell products that no one wants.  Honestly, have you EVER seen Amway products in someone's house?  If you have, did that person buy them from themselves?

Tuesday, February 17, 2004

The problem I have with MLM is that selling the product itself is nobody's goal, it's "building a downline", recruiting salespeople who will feed you a commission for setting them up.

Success at MLM requires incredible showmanship,  sales and social networking skills. Most people who dabble in it wind up annoying everyone in their families and their acquaintances.

Bored Bystander
Tuesday, February 17, 2004

"21st Century thing"? I thought it was a 1990's thing?
Most likely it's a "new generation of people who haven't been burned yet" thing

MLM is decades old - Amway, Mary Kay, blue-green algae each represent a decade of the stuff. I understand one of the current scams, er, product lines is steak knives.

They are all snake oil, and all pandered by the same types of hucksters. The best sense of when you're in a MLM scheme is "this is too good to be true" (also look for high praise when the person giving it really doesn't have any reason to)


Tuesday, February 17, 2004

steak knives? vector marketing is one of the most infamous of them, they've been around for decades. (from their website it looks like since the mid 80s)

amway does have a few useful products. since i don't buy them, i have no idea how they compare to the normal stuff in the supermarket.

Tuesday, February 17, 2004

CutCo steak knives -- massively overpriced. they do showy demos on how the knives can 'cut through rope'. Well, so can all the rest of your knives. Also a 'lifetime sharpness guarantee'. Free sharpening, you only pay the $8 per knife handling fee, which is not only more than anyone would charge to sharpen, it's more than you'd pay for a good knife.

Tony Chang
Tuesday, February 17, 2004

You can make money doing MLM, but you have to work really hard, just like virtually everything else that creates success.

Most people don't have the interest or apptitude for the kinds of personal sales effort it takes to make a living doing MLM, so they sign up, and never go anywhere from there.

You can also be pretty sure that no matter how often you tell people "If it sounds too good..." and "There no such thing as a free lunch..." there will still always be large crowds signing up to get rich quick.

Getting Rich Slowly
Tuesday, February 17, 2004

MLM is so successful that it practically bankrupted everyone in Albania a while back.

But then again, it was a Ponzi scheme...

Tuesday, February 17, 2004

Goota love them huge margins. Enough for the entire downline to get a cut. you can find equivalent crap cheaper elsewhere.

And the ones who build their downline breadth first to maximize margin to the top and convince everyone it's better for them too.

Some people are more proud of selling to ignorant buyers than they would be if they could successfully sell to informed buyers. It's a zero sum game've got to lose for me to win!

Start a REAL business. Create Something!

fool for python
Wednesday, February 18, 2004

"Exactly my point. MLM lives on because of uninformed one-time buyers... they buy into the crap, find out it's crap, and drop it."

As Sam Walton said: they're not a customer till they buy a SECOND time.

The real Entrepreneur
Wednesday, February 18, 2004

I started an Amway business in college, and stayed in almost seven years.  For two years I was actually employed by an Amway "Diamond" whose family has become kind of a dynasty in that business on the US West Coast (think of the name of a famous yoyo manufacturer).  I was his Operations Manager.

I learned that higher-ups in Amway make their real money selling the motivational books and cassettes.  If you have a 1,000 person downline, and 500 of them buys at least one tape each week, at $2 profit per tape minimum, that's a lot of money.

Those who make a LOT of money in Amway have reconciled themselves to running a business that preys on the fears, hopes and dreams of the average joe.  They know absolutely that for every one person who makes any money in Amway, 199 others lose money - and it's the lack of initiative of the 199 others that make it that way.

The mantra, "Just keep buying tapes and books.  Keep believing in yourself and you'll eventually succeed" is a potent drug.  The person who is good at keeping people in the business, despite the fact that s/he KNOWS they will never succeed, will make a lot of money.  Ultimately, my wife and I could not bring ourselves to do that.

Karl Perry
Wednesday, February 18, 2004

> they do showy demos on how the knives
> can 'cut through rope'.

My favourite is the one where they cut through a tin can and then (gasp!) slice a ripe tomato -- making it the perfect knife for those late night bacon-tin-can-and-tomato sandwiches I suppose.

Mmm, bacon.

Eric Lippert
Thursday, February 19, 2004

I think some of the attitudes expressed here don't really represent the quality of products sold:

"MLM is decades old - Amway, Mary Kay, blue-green algae each represent a decade of the stuff.

They are all snake oil, and all pandered by "

"Exactly my point. MLM lives on because of uninformed one-time buyers... they buy into the crap, find out it's crap, and drop it"

Mary Kay is a popular cosmetics brand; I know people who have been happy customers for years.

Tupperware was another MLM (I believe) that sold very high quality products. It seems that if anything their demise has been the market demand for lower quality (and cheaper) products.

Pampered Chef is a new one I've seen recently with useful products that are not easily found at local stores.

I can't speak for the sales techniques of the organizations, but I see people who truly enjoy various products sold by these companies.

David Fischer
Friday, February 20, 2004

*  Recent Topics

*  Fog Creek Home