Or.. What Makes a Good MLM Distributor?
Readers who have been with me over the years would be aware that I am not overly enamoured by the MLM model of marketing. A couple of years ago I was offered the national distribution of IonWays by David Forsyth, an old friend and now MD of IonWays. It was attractive.. I have to admit.. but no matter how Cassie and I turned the idea over in our minds, we couldn’t accept the ethics of MLM and therefore walked away from it.
Of course we questioned David at the time about the fact that almost all MLM sign-ups fail. That means the premise they used to sell their ‘starter pack’ was not fulfilled. Of course, most MLM converts have little interest in what they are selling beyond its ‘sellability’. But it’s always been patently obvious that people join MLM to break free of their particular income constraints. It’s a favourite of people who have been retrenched, and long term unemployed who have had a windfall that they hope may be leveraged into more money by joining up with the MLM company.
Call us oldfashioned, past our use-by date or whatever, but we think that if you sell something to someone it should be all about what the product is.. not what the product can make you. (Unless it’s an investment)
We base this on an observed cycle. Over and over and over the cycle repeats itself. Less than 5% of all those hopefuls who join up actually make a living. My friend David confided in me that of their 2000 signons at that time, less than ten were making real money. And this seems to happen for all MLM’s. It’s a symptom of the system, not the product. In a word, it’s a sacrificial system.
A few months later I had a call from David. He had a couple from New Zealand willing to pay him a huge amount of money for the rights to New Zealand and Australia and he wanted us to stock the ionizers and do the repairs. The answer was – of course – no.
I have also observed that almost all MLM’s fail within the first five years, leaving their thousands of devotees rolling in unsellable stock or with a downline that doesn’t exist any more. The ‘binary’ system used by many MLM’s also forces you to develop two downline ‘legs’. If you don’t, massive amounts of commission remain due but not payable. It’s my suspicion that this little-known rule makes the MLM company a packet because when I talk to many MLM guys their constant theme is how they are going to release all that income from their second leg.
So what makes a good MLM distributor and by default, what make s a failed MLM-er?
- A good MLM-er works very long hours – usually hours no employee would agree to. He or she does this because he believes in the ‘passive income’ principle; that if he can sign on enough people like himself, they will make him money ‘downline’.
- A good MLM-er holds meetings where – although the advert for the meeting may be all about water – he talks about money, how tough it is without it and how good it is to have it.
- He is an expert on selling to people experiencing scarcity.
- He is an infinitely good networker and will ‘hit on’ anyone he meets anywhere with carefully crafted openers like ‘What do I do? Well I’m running my own water business. How is it going? Incredible. My only problem is servicing all the people who want to buy my service. If only I had another person to help me…”
- It isn’t hard to understand that a good MLM-er has a thick hide. He can take a hundred knockbacks and walk straight up to the next person and repeat his approach. So he’s a specialist. That’s why there are so few of them.. and that’s why they make a lot of money. The system sacrifices lesser mortals upon their altar of more sales and bigger downlines.
It’s also not hard to understand that someone coming from a situation of relative impoverishment may not be the guy who will be a heavy hitter. Already reduced by his or her experience of life, work, retrenchment etc. they are buying in because it looks like their system will support them despite their lack of selling skills, organisational and networking ability. They know that the product is more expensive than other products of similar function, but they are assured by the heavy hitter that all they have to do is show it to their friends.
Naturally, inevitably, they fail because they are round pegs in a square hole. But the company is happy: they have sold another product at premium price.
I asked David how he felt about this. He looked up at the sky for a moment than replied that if the product was good, it was OK because the people derived the benefit of the product anyway. And I guess some readers will agree. I don’t, I can’t and I suppose that makes me someone who ‘just doesn’t get it’. Yep I just don’t get it.
There are three or four MLM companies selling electronic water ionizers. And if we were to try to see what the secret of success was for these companies it wouldn’t be hard to work out that the higher a price you put on your product, the better chance you have of success. Enagic USA proves the point. They sell a good but outdated technology for around $4000 when all others come in at about half the price.. but they are the runaway winners in terms of sales, compared to the MLM’s that charge less for similar functioning devices.
Why is this so? Well, for a long time I have understood that when we buy technology we don’t understand we tend towards buying the most expensive as a ‘hedge’ against our possible loss through ignorance. And an Enagic meeting uses this tendency by going all-out to denigrate any and all other brands, thereby locking up the audience between a high price and doom.
But it’s not just that. We all know that retail as we know it is dying. Selling something in a shop is getting harder and harder because more and more of us are going home and comparing what we see in the shop with what we see online. So getting someone to come to a ‘Water Meeting’ is a great way to break out of that nexus. You have the audience in the palm of your hand as you go through the step-by-step presentation – honed and refined at corporate level to have maximum and immediate effect. Signing NOW is the goal and every part of the presentation follws an emotional curve towards a peak moment of liberation through taking the step to ‘change your life’ by buying in.
So.. hard sell, carefully devised presentation, a promise of a brand new life.. and fear. The vendor’s fear that you will miss out if you go home and read what the internet has to say, and your fear that unless you pay $4000 you will ruin your bank account and possibly even your health by buying cheaper.
It works. The Enagic website claims sales of 5000 water ionizers per month. In this ecomomic climate, that’s amazing. Or is it? If they are really selling relief from poverty it makes sense.
Two weeks ago I purchased membership in a website that specialises in web marketing. One of the studies I accessed almost immediately was one on how to price your product on the net. It was backed up by actual tests the company had done. I won’t bore you with the details but it demonstrated that we purchase emotionally, not practically, and the object of the video was to find the emotional triggers that fostered frequent sales. And you’d be surprised at how easy it is to get sales by pulling on the strings of group acceptance, socialisation and yes, scarcity.
So MLM creates a closed environment where those tools are used non-stop in an hour or more of presentation. I’m not challenging their right to do this. All I always come back to is the ethical question. If you as a hotshot marketer absolutely know that they lady with the four kids counting out $4000 can’t sell for peanuts, and will never convince anyone of a $4000 decision, why do you do it?
Intriguingly, IonWays has NOT fixed on a retail price anywhere near Enagic USA. Their products are virtually identical in output and they have many more modern innovations on their systems. I know, because we sell the same unit as IonWays. They do their water parties, they have their weekly rah rah telephone hookups.. but from all acounts their sales are nowhere near Enagic and now they re selling portable water ionizers for around $130. They seem to be victims of the fear instilled against buying a cheaper product, and their strategy seems to be to go for an even cheaper entry point.
We are on the cusp of the biggest change in the alkaline water industry ever. Our new natural ionizers create similar or even better ionized water than all electronic systems yet they cost a tenth of the MLM models. But here’s the funny thing. They can’t be sold MLM because they aren’t expensive enough! The big hitters attracted to MLM wouldn’t be interested because they couldn’t make enough money! So we are exploring alternative ways to get this wonderful new technology into people’s homes. I sincerely believe that introducing these systems will mean the demise of the electronic systems for almost all sales. I think people with serious health issues will probably still go for the higher pH and ORP capabilities of the electronic systems.
We’ve been struggling for 12 years to demonstrate the value of a $1500 to $2000 water system. It wasn’t easy but thankfully we now have many thousands of happy users who believed what we told them about this water and took the decision and reaped the benefits. But they still needed to have the necessary money. Now we are seeing a explosion of interest simply because when you take the MLM fear factor out of the equation, purchase and ownership of this technology becomes a rational, easy decision – and thousands are making it.