I once knew a guy who decided he would sign up and be part of a network marketing scam. Now, at the time he enrolled he didn’t realize that he was getting into a scam, but after a couple months he just knew he had.
Jack worked as an industrial contractor during the day, was recently divorced, and really needed to make some extra money part time. He met a guy named Sam who was involved with a network marketing opportunity that featured a premium line of personal care products.
One day, Sam presented his business to Jack. Because he had been looking for a way to make money, Jack jumped on board and was determined to be successful and earn some extra income. He loved the concept of network marketing and thought he could do well.
Being new to the business, Jack took the traditional route. He wrote up a list of 100 people he knew, and narrowed the list down to what he considered the best 30 prospects. These were the ones he thought would be just great in the business, and the ones he thought most likely to sign up with him.
Jack got busy and started making appointments. Within a month, he had presented his business to 20 of his best 30 prospects. By the end of his second month, he had personally shown the opportunity to 15 more people.
In these two months, here is what happened with the 35 people that Jack prospected.
- 6 people signed up, and of those 6, three did absolutely nothing and only one actually sponsored anyone else
- twelve of the 35 told Jack, in a nice way, that they weren’t interested in “pyramid schemes”
- the other 17 simply weren’t interested at the time
In addition, in those two months….
- Jack spent $550 on products, advertising, and sales materials
- got one small check from the company for $10
After two months, Jack decided to quit and declared that he had been sucked in by a network marketing scam. What really happened here? Was this business really a scam?
The truth is, Jack treated his business like a lottery. He wasn’t looking at a long-term vision or plan for his business, but rather wanted to recruit a few people and hope some of them would take off and make him rich. He thought that presenting his business to 35 people was enough of an effort to earn a pretty big check.
When he wasn’t pulling in the money after two months, he quit and justified it by saying he was the victim of a network marketing scam. This is sad, because this happens and gives the industry a bad name. One problem is that people are recruited and told they can make easy money with little effort. Jack put in more effort than many, but still stopped far short of his potential.
As MLM leaders, we need to be sure that the prospects we enroll understand that this is a business, and like any real business it will take work and a long term vision and focus to be successful.
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About Eldon Beard
Eldon, you got me there with that title. I thought that we had to choose between the two options.
Having said that, I have come across a couple of network marketing opportunities based around the lottery. I think they were setting up syndicates to cover as many numbers as possible.
Unfortunately there are far too many people who are just like Jack ask me how I know?!). They obviously have to take responsibility for their own actions but I think there is a lot of pressure put on from sponsors who do sometimes claim that it is easy money because of their own enthusiasm and not their wallet.
Thanks Trevor. A lot of the problem with people like Jack is little to no training on expectations. If people knew up front what it takes to get a network marketing business launched and into momentum, fewer would sign up, but those who came on board would be better prepared to hang in and succeed.
I have been in networkmarketing for so many years. It did not grow magically, by luck or lottery as you said. I have invested money in self-development in order to get better and better. If people are not willing to take the time to become knowledgeable in their products or services; it is easy to have an excuse and blame somebody else or the system. Eldon, this is such a great article ! Thanks for sharing.
Thanks Alicia, I appreciate your insight and applaud you for taking the initiative to invest time and money into personal development!
I will be the first person to tell you that when I come across a home base business or a selling network, that focus more on getting you to buy in to the pyramid structure of people and not the actual product that is being sold, red flags fly all over the field for me. The reason why I say this, is because there are a lot of people out there who would like to make a little extra money for themself and their families. So they look for this opportunities. I believe that there are the few that understand that it will take work on their part to achieve this goal. They also have the burning desire to motivate themselves to act. Then there are those who want the same, but not understand how much work they really have to do. These are the poelpe who get caught.
They will get lured in with the idea of making money with the idea it will take only a few hours a week. This idea that they have is usually the sell pitch that got them to the site in the first place. Then this is back up with not, how great the product really is, but they own dreams about what they what out of life for themselves. So they go for it, invent their own money into it, and over time they find that selling the product is not as easy or as profitable as they were lead to believe.
This is where they go back to the person that got them started, for help and to epress their fustrations. This is where they get the reply, “if you really want to start making money then you do not want to sell the product, you what to sign up other people to sell the product”. When you get people to sign up under you, you make money. When they upgrade, then you make money. When they get other people to sign up under them, then you make money. When those people under them up grade, then you will make more money. So they do this and they may start seeing some money come in because they have got others to sign up. But if they believe this is all they have to do, they are going to fail again. This is because there is no true development of people going on, just I concept of how you can make money by not doing anything, but the minimum performance requirments.
Now if they want to believe this, that is their fault, but you do have to understand how it is being sold to them. The technique that are being used against them, and true motivation of the person you got them started in the first place. There is a saying that, “90% of the politicians on capitol hill make a bad name for the 10% of politicians that really want to do a good job for others. I am sure this is the same for “structured selling networks. Because with anything opportunity it is what that person is willing to put into it, that will determine their gains. It is just that sometimes it is sold, delivered, and represented in an ill fashion. Which can be seen as a scam. On the other hand it is not a lottrey ticket, it is work, dedication and commitment.
Thanks Marcus for your insight, I appreciate it!
Excellent post Eldon,
I once heard Mike Dillard say that he has been part of a number of different Network Marketing companies, participated with a lot of affiliates and some worked out well financially and some haven’t but he has NEVER been scammed.
I believe that the term “scam” is really more about someone not taking responsibility for their actions. If they label something as a scam, then it lets them off the hook of either feeling like a failure or actually having to work and think long term.
I agree Paul, in many cases crying “scam” is just a way to shift the blame for failure somewhere else.
Eldon,
Good reminder about the importance of treating this as a business and that success will not come over night.
Thanks Marti, not treating it like a business pretty much ensures failure.