Multi Level Marketing and Network Marketing explained - vital information for the potential new MLM recruit.
ARTICLE SERIES: The Dynamics of an MLM Distributorship.
IDENTIFYING THE MLM CRISIS POINT
By Peter A Blood
BACKGROUND TO MLM
It is extremely difficult to truly comprehend the geometric progression recruiting systems used by MLM companies. If this were not so, MLM would attract a very different range of clientele as distributors. As MLM is primarily peopled by well-intentioned, generally intelligent folks from all walks of life, MLM has the proven, unique characteristic of being initially able to fool almost anyone, almost all of the time. That is, at least as far as joining an MLM is concerned. Millions of disgruntled ex-distributors can attest that this is not the case when distributors finally leave an MLM. Those who leave an MLM usually have very good reasons for doing so. Unfortunately, these reasons are never obvious to them before they join.
Illegal and Legal
The breath-taking reality is that MLM integrates an illegal marketing principle (an endless chain), with a legally acceptable selling principle (retailing of product). In the confusion generated by "sincere" posturing and legal argument over the past 50 years, many product-driven MLM's have so far escaped extinction by the judicial systems of many countries. (It is also true that many have not). Time is against MLM's in their current form though. Legal decisions in recent times have emphasized the need for MLM companies to re-design their operations to force distributors to make the majority of their income from retailing of product, not from their recruiting efforts. In this, the big distributor draw-card of MLM is being heavily threatened.
The response from MLM is to lobby the American legislature to have their currently questionable marketing systems acceptably enshrined in law. If we are "bordering on" illegal, so the reasoning goes, why don't we simply change the law to make our businesses legal?
In the meantime, if one wishes to make real money from the current structure of MLM, then you need to have a solid grasp of the dynamics involved, or you cannot hope to succeed.
The Potential Outcomes for a Distributor.
Rest assured, there are only two proven outcomes from the application of a geometric progression based recruiting system in MLM. You will either fail and waste your money as a distributor, as do 99.5% of people who enter it, or you will eventually become rich, as do the remaining 0.05%. To remain in MLM without rapidly achieving either end is to live with diminishing hope. The efforts of those who do live in hope fuel the incomes of those who are already successful.
Whether or not people enjoy using an MLM's products is immaterial. A discount buying group can achieve the same consumer ends as regards purchase and consumption of almost any product.
The reason for an MLM's existence, besides to make money for itself, is to offer the opportunity to make money to distributors.
Buying product, even cheaply, will not make you money.
Buying cheaply and selling at retail may make you some money.
Recruiting people and selling larger quantities at "wholesale" can make you a lot of money, if you know how to do it.
For you, the intending big money earner, recruiting is the only avenue to riches in MLM.
Worst Case Scenario
We all should know by now that if a geometric progression recruiting scheme were to follow its desired path on your behalf, and your plan was to recruit levels of just 5 people, then on your 11th level, everyone in the world would be in your downline. Sadly, the last few billion people to join could not possibly earn money, as there would be no-one left to retail to or to recruit. (This might happen sometime in the future though, when you have retired with your millions. Not your problem).
Logically, we all know too, that a totally filled recruiting progression is impossible to achieve for other reasons, including geographic realities causing distribution difficulties, political differences across countries, varying legal requirements from country to country, rampant poverty, etc, etc. So let's just take the available market that is not affected by these and other variables. No-one has even come close to to filling a progression, say, with the available population of the United States - or anywhere else in the world.
Pro-MLM-ers would protest that of course this would be so. Not everybody wants to join an MLM. However, that would definitely not be the message you would be given if you were considering joining as a distributor! You would be told that the market has only been "...scratched on the surface...", that there is "...abundant room for growth...", and that "...there's never been a better time than right now...".
The real constraints to distributor group expansion mentioned above are outside of the control of MLM. But is it possible for MLM itself to restrict the success of a distributor's efforts? Does uncontrolled and uncontrollable recruitment impact in any way on the individual distributor?
Most certainly, it does. In fact, the excessive competition within an MLM helps create an "anti-growth" marketing environment.
INTRODUCING: THE CRISIS POINT
So somewhere in between having no downline at all and creating a totally filled downline from the available pool of people, is a point, or points, at which progress (growth) is halted, or becomes minimal, in the recruiting process. We know this must be so because over a period of 50 years no-one has ever achieved the ideal. This includes the founders of the biggest MLM's in the world.
We will call this point "The Crisis Point". When you understand the reasons for it you will know that it can happen at any time, and that it's likely to happen many times, in your MLM career. You need to learn how to both recognize it and deal with it if you want to make big money. The Crisis Point is why tens of millions of ex-distributors the world over are ex-distributors. Don't let "failure" happen to you.
What exactly is this "Crisis Point"?
It is the point in time at which all the working MLM dynamics combine to cause an overwhelming market inertia in a given area.
When does the Crisis Point happen?
All the time, at different places and with different MLM's.
Where does the Crisis Point happen?
At any geographic location that is simultaneously targeted by competitive distributors. (Remember, all distributors, including those in your downline, are competitive distributors to you).
What fuels the Crisis Point phenomena?
The raw, explosive power of new distributors anxious to make their fortune in MLM.
What fans the Crisis Point to a white hot situation?
Any "new" approach, such as the promise of "no selling", or "auto-enrolling of new recruits via the internet". In fact, any descriptive or informational tool designed to create new interest will aggravate the situation.
The big question behind the Crisis Point is obviously, "Why does it happen?" In the answer to this question is contained both the reason why so many fail and the means by which you can succeed.
Why does the Crisis Point occur?
The MLM recruiting scenario is totally uncontrolled, by its design. It is also totally uncontrollable, by you or anyone else. MLM allows any and all distributors to recruit unlimited numbers of people. Because of this, MLM can create a "resource vacuum" in front of itself, sucking in (of course, no pun intended) distributor recruits en masse until, to all intents and purposes, there are no more eligible recruits to be had at that point of time in a given particular area. It happens when too many distributors simultaneously target a suburb, a region, a town or a city with their recruiting efforts for a period of time. It is inevitable that this will happen, because no-one is in a position to know enough to prevent it. It can happen in a relatively small way and it can happen in a very large way.
MLM companies keep their distributor information very secret. Only the courts have the necessary power to access this data, and even then, only in some circumstances. Distributors in particular are kept totally ignorant of the recruiting results of other distributors. The Crisis Point is created by this data being withheld from distributors. You will never know when other distributors intend targeting a given area, whether it be for recruiting or retailing of product. Nor will you ever know how many distributors already exist in a given area. Nor will you ever know how many dis-illusioned ex-distributors or retail customers exist in a given area.
What is the benefit of the Crisis Point to you, the struggling new distributor?
You will benefit to some degree when many other distributors outside of your group quit because they cannot handle the effects of the Crisis Points they encounter. Of course, you may also lose members of your own group to this phenomenon, but you should ignore this and press on regardless.
Avoiding the Crisis Point means doing all you can to avoid business confrontation with other distributors. This includes your own recruits, your very own, home-grown competition, who rely on you for information on how to grow their businesses. Will you tell them the area that is currently working for you?
You will need to find other areas to attack, as will they eventually. The problem facing you and your downline though, is that many other "established" distributors in other groups will be searching for exactly the same thing.
Do your research before you choose to advertise or seek recruits in a given area.
Your research may just as well comprise tossing a coin to choose a new area.
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