Techniques of Persuasion in MLM or Network
Marketing Companies
Andrew Paterson—03/2004 |
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Network marketing or Multi-Level Marketing
(MLM) is a system of selling used by companies
in which ordinary members of the public are recruited
as sales agents, not only sell products but to
further recruit more agents on the basis that each
person receives a percentage of sales, not only
of products directly sold, but of sales by those
that this person has introduced to the company.
In this manner, a network or hierarchy of sales
agents is build up, and provided a person has recruited
enough active agents "under" him or her,
the kick-back from the company can be substantial. |
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 OST
OF US have
come across somebody involved in network or multi-level
marketing. Although less popular in Europe, MLM is
big business in the US where it accounts for up to
$50 billion in total US annual sales or about 1% of
all goods and services sold. The concept of MLM is
particularly appealing in America because it has a
more entrepreneurial bent. |
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| There is a fine line between network or multi-level
marketing and pyramid schemes, which are illegal to
even take part in. The difference is entirely one of
emphasis: in pyramid schemes, the agent makes his or
her money primarily from signing up more agents, with
gimmick product sometimes being used to try to make
the scheme legal; whereas MLM schemes are basically
pyramid structures that reward individuals for overall
product sales. |
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| Most people who sell products via MLM are good and
honest people who genuinely believe in their products.
I myself have been signed up for a number of years
to an MLM company because I like the products, which
I sell at cost to friends and family (although I personally
stop short at recruiting anyone into a "downline").
MLM is a fantastic way of getting products out to the
public without relying on the goodwill and acceptance
of the retail distribution system, which strongly favoures
big, established companies over small, newer ones.
And instead of giving the trade margins to shops and
distributors, a percentage of these are given instead
to the agent for the contacts (and corresponding sales)
that they have supplied to the company. (I say percentage,
because the prices of MLM can still be relatively high
even though they are bypassing the retail markups.) |
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| But like any system that has the potential to make
a lot of money, MLM has quite a manipulative side.
I have personally lost two or three friends who were
distributors for network marketing companies because
they insisted on bringing in the products to our relationship,
so that every phone call became a masked sales pitch.
If you are a distributor for this MLM company too,
and especially if one of you is in the other's downline,
then a friendship around product sales can be sustainable.
But if you have little to do with MLM, or if, like
me, you want friendships that are non-conditional and
that revolve around life rather than business, then
you usually end up avoiding your entrepreneurial friend.
The result is that most MLMers end up with a network
of friends that includes many other MLMers |
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| The reason why MLM can work so well is that people
are much more likely to fall for a sales pitch from
a friend or relative, or a stranger in a home setting,
than they are from a stranger in a shop or market,
or an advert in a paper, magazine or on the Internet.
With the more traditional forms of selling, we are
on our guard. However, with MLM, the sincerity and
openness that we naturally resort to when that guard
is down is exploited big time, with the result that
the strengths of the product are less of a determining
factor than the particulars of our relationship with
that person, the setting, and our desire to make money
ourselves by joining this scheme. |
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| The last point is perhaps the most important: most
successful MLM distributors tend to focus on selling
the business rather than the products; the products
are incidental to the business. In fact, some MLM companies
can successfully trade in second-rate products because
they have such a great payment plan for the distributors,
and so the company can still do well, but usually only
during the initial growth spurt stage, after which
the company soon implodes. The problem when people
are primarily focused on selling the business rather
than the products is that the scheme looks more and
more like a pyramid scheme whereby little actual product
is being sold, and only those who have managed to get
into the company early enough actually make any money.
Pretty soon, most of those who are likely to fall for
MLM schemes have either signed up or rejected the scheme,
and it is much more difficult to recruit distributors.
As the products aren't good enough or aren't seen as
good enough to sustain the business themselves, the
result is usually stagnation and then bankruptcy. The
statistics speak for themselves: only 5% of start-up
MLM companies will be around in just 3 years time.
That is a dismal success rate to bear in mind for all
those who eagerly join new MLM operations. |
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| Because MLM is such a hit and miss operation, and
as almost all distributors are desperate to quickly
sign up more distributors to ensure maximum return,
the selling methods used by MLM distributors tend to
be quite manipulative and/or high pressure. Most present
images to the potential distributors of individuals
who have made significant amounts of money using the
particular MLM scheme, usually with pictures of cars
and quotes of huge monthly earnings. In this way, they
appeal to our greed, without informing us that it is
only a tiny tiny percentage that actually makes it
this big. Most people who join MLM companies (and we
are talking about 97% or more) make less money than
they put in purchasing products. But, like everything,
it is a gamble, and most people are willing to take
a chance. |
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| MLM also tries to appeal to our innate herd mentality
by giving the impression, invariably false, that everyone
is involved in MLM, that it is the marketing method
of the future, and that all the top business schools,
business newspapers and futureologists are endorsing
it. For example, many MLM companies have made the false
claim that MLM is studied at leading business schools
like Harvard, and that it has been praised by The Wall
Street Journal. In fact, there are no legitimate business
schools currently giving courses in MLM, and The Wall
Street Journal has never endorsed MLM. Also, figures
bandid around on the percentage of individuals who
have become millionares on the back of MLM are hugely
exaggerated. |
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| These sorts of exaggerations and false claims are
made because the MLM market is so competitive. MLM
companies present themselves as "caring and sharing" whislt
most of them run sales courses for their leading distributors
that trains them in the art and craft of seriously
manipulative selling. Of course, they will argue that
its okay to "encourage" individuals to purchase
products that are really going to make a positive difference
to people's lives, but this is a specious argument
because it makes the dangerous assumption that it is
okay to manipulate others if we think we know what
is best for them. (This is a justification for Big
Brother if there ever was one!) |
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| A few years back, I came across a closed-door training
program for top distributors that was being run by
a leading US network marketing company. I was a little
disturbed by how this company wanted its distributors
to manipulate their way to greater success, and I ended
up making four pages of notes which I reproduce at
the bottom of this article. These were shoved in my
desk draws for many years until I glanced at them the
other day and decided that they needed to be up their,
on the web, so that people involved with MLM can take
heed of the level of manipulation that can often lurk
behind friendly smiles, "caring" companies
and confident manners. |
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| Here are my notes verbatim, with no embellishment
or correction. Make of them what you will (some of
them don't make sense to me any more), but bear in
mind that these were an integral part of a successful
MLM company's training program for its top distributors,
a company that presents itself to the public as caring
and sharing, whilst holding closed-door trainings that
include this material. I have heard from a friend heavily
involved in MLM that these sorts of trainings are pretty
standard these days. |
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| NOTES FROM MLM TRAINING
PROGRAM |
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| Each new agent you find must commit
to the following: |
- Continue to use the products.
- Keep doing what friends do.
- Influence at least 5 new people each year to
take the products and become agents themselves.
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| There are only 2 addictions: |
- The addiction to control.
- The addiction to belief systems.
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Influence your friends to use these
products.
Influence anyone you sell products to to become an
agent for the company.
Influence your downline agents to continue being active.
Strive to attain an every increasing level of competence
and confidence. |
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| Do what friends do… |
| Causes to celebrate with friends: |
- Anything to do with the company.
- Reaching sales targets.
- Reaching a new level of rebate category.
- Becoming a distributor.
- Sponsoring a new agent.
|
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| Know the tools of influence |
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| Our vision is to be the largest
and most successful network marketing company in the
world, supplying our products to every person on earth
- our global family - and training leaders capable
of global stewardship. |
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| The most compelling motivation
on Earth is the desire to make a contribution. |
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| Acknowledgement is the best way
to establish rapport and the fastest way to change
a person's state. |
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| To be effective, you must be absolutely
certain that what you are selling adds value to the
person's life. |
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| The best sales people on Earth
know that if they don't sell the product they are actually
do the customer a disservice. |
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| If I believe something I no longer
question it. |
| If I doubt something I no longer
believe it. |
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| Certainty = power |
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| Make sure that people know what
the product is worth before they know what the price
is. |
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| Never use the word "but" in
response to on objection. |
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I am committed to expanding my
sphere of influence.
I am committed to destroying doubt and installing certainty. |
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| Expensive = Good |
| If someone objects that the products
you are selling are very expensive, reply to them in
the following manner: "I would pay ten times as
much because… ". Remember to tell them that
you get what you pay for. |
| Always sell the expensive products
first, that way others won't seem expensive but cheaper
in comparison. |
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| We should try to repay in kind
what another person has provided us. |
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| Surprise is an additional influencing
factor. Don't preannounce that you're giving a gift.
It allows the customer to erect barriers and minimize
the value of the gift. |
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| Take away their worries and you
will be successful. |
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| Get people to make small commitment
statements. |
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| We view a behaviour as correct
in an given situation to the degree we see others perform
it. Therefore, show pictures of different people using
our products, signing up as agents, and holding meetings. |
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| What you believe is what you see. |
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People like to buy from people
they like.
People like people who are like them. |
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People obey or respond to people
they perceive as being authorities. Use authority in
your presentation… talking about doctor's opinions,
teacher's opinions and professor's opinions. Wear a
suit and tie. Drive an expensive car and wear an expensive
watch. Take clients out to expensive restaurants. |
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