Multi Level Marketing and Enterprise Development

I went to a fascinating workshop last night organised by a multi level marketer and hosted at Shine in Harehills.

The evening kicked off with a series of presentations from the Business Link Yorkshire Ideas Team, Job Centre Plus and HMRC.  Three competent, wide ranging presentations.  For me, just too many talking heads.  Still I suspect all three were able to put ticks in boxes and they certainly gave the evening a solid air of credibility and professionalism.

After a short break things got really interesting.

We were presented with an introduction to Multi Level Marketing and how it differs from pyramid selling (pyramid selling is illegal and only those in at the beginning can get to the top, MLM is much more meritocratic in that if YOU do the work YOU get the rewards was the message I picked up).  The person making the presentation was a Multi Level Marketer for one of the largest MLM oufits in the world, Herbalife.  A little web research on Herbalife leads to some very mixed messages.  Clearly for many people it works well; they make money and enjoy good health.  The internet suggests that this is not everyone’s experience.

http://www.mlmwatch.org/04C/Herbalife/herbalife00.html

http://herbal-nutrition.net/st

http://www.club40.net/sales%20site/shop.htm

http://herbal-nutrition.net/goodfoodguide

After the presentation one of the current herbal life distributors told us how it had transformed her life and it could transform ours too.  We could make money while we are on holiday, get repeat business, never have to talk with strangers, enjoy low start up costs etc.  It all sounded too good to be true.

This was not enterprise education – this was recruitment.  This was not impartial and independent advice.  It was MLMers doing their stuff, recruiting more MLMers and piggy backing on the credibility of Business Link, HMRC and the Job Centre.

Finally we had a very brief and very credible presentation from Robert Looker.  He provided a balanced and professional introduction to the concept of the franchise.  Robert was open about the fact that he worked for Exemplas.  He did not point out that Exemplas were one of the partners behind Business Link Yorkshire.

I think Business Support organisations have to engage with MLM schemes.  They are in our communities.  The vast majority of those ‘Need an extra income’ signs fixed to lamp posts lead to MLM organisations.  We have to find ways of making sure that they add value in our communities and do no harm. MLM works for some people not all.  Its reputation is mixed.  Typically it requires you to have a network of friends with disposable income (not massively common in super output areas).

I don’t beleive the public purse should be used to provide a platform for any single MLM organisation – although it should be used to educate about MLM.  If the workshop had been an impartial ‘All you need to know about MLM’ then I for one would have been much more relaxed.  I was pretty shocked that one MLM outfit had established this platform of credibility to promote themselves directly into the community.  This was neither independent nor impartial.

I have been involved in the development of the Business Link brand for over 15 years.  I understand independence and impartiality.  I also understand how easily these brand values are compromised – and I think they were last night.

Developing more enterprising cultures in ‘areas of deprivation’ is difficult  and fragile work.  There are always ‘get rich quick and easy’ schemes looking to part people from their cash and we need to be very careful to help people make good choices as we prompt them to flex their enterprise muscles.  We bear a burden of responsibility as we encourage people to be more enterprising.

I  doubt that our responsibilities are best discharged by wrapping advocates for one direct MLM organisation in the shrouds of publicly funded  business support.  I am sure it is the herbalife agents who will be following up interest. I am also sure that it was the public purse that picked up the tab for the refreshments.

I am distictly uncomfortable.

Am I the only one?

Comments

  1. I completely agree with Mike Chitty.

    While there are one or two nice people associated with MLM, largely in my experience it is populated by sharks and scam merchants, appealing to people who want to ‘get rich quick’ with no effort.

    The nature of any pyramid scheme is that those at the top make money and those at the bottom lose it.

    All MLM-ers say “we’re not a pyramid shceme”, as pyramid schemes are illegal.

    But I would *never* get involved in MLM.

    Mike Southon
    Best-selling author and Financial Times columnist

  2. Gareth Sear says:

    Good blog Mike. I struggle with the concept of it making you rich, earn extra money etc. I work with clients from disadvantaged backgrounds who look at ways of supplementing their benefits, or try to look at ways of coming off benefits. These schemes are advertised a lot in local papers by people building their pyramid (er, I mean team). Recently I had a client who called several of these numbers looking for a business idea to make him some money so he can come off incapacity benefit. (He has mental health issues) They were all based on a well known household products catalogue. The figures were quite promising and I had a fair amount of work to get him to back up these figures and work out exactly how he will replace his benefits and get a return on his initial investment.

    Because of his own personal challenges it was difficult to get him to understand the income / sales side of it all, but on a positve note, because of his personal challenges he is an extremly organised and tencious person who is deternined to make this work.

    It will be interesting to see the results.

    I have had several enquiries from people wanting advice and support as a part of a MLM scheme and most of them fall into the category of being on some form of benefit and most likely from an SOA, looking at quick and easy ways of making money, to get them out of the benefit trap. Interestingly, it is the poorer parts of the community that some of these organisations say their products sell the best – especially during such current economic times.

    On the flip side when I was 14 I had a Betterware round, which for that age, made me a good amount of ‘pocket money’. Not sure on the legalaties of it at that age, but sure enough it was the ‘poorer’ parts of the community that bought the products.

  3. Mike,

    I am shocked at BL giving a public platform to an MLM operation.

    I cannot comment on Herbalife but know many who have lost out on MLM get rich easy schemes. I still get people approaching me asking if I know anyone in need of a job or second income.

    I shudder when they tell me at some point scheme members will not need to work any more as those “distributors” below them will produce commissions as part of their down line. Imagine income and no work. Sounds wonderful. Let me have some!

    Who was there giving the balanced view on how many have lost money they can ill afford on MLM schemes. Whenever I see a MLM’r who asks if I would like to earn a residual income I simply ask “how many customers do you have on your books?”

    So far not one has been able to answer the question. Any real business should be able to answer that very simple question.

    Without customers there is no business.

    I do hope that there is an agency out there that can offer impartial advice on MLM operations since those who are desperate to earn some cash are so easily led into false hope by those who neither care whether “distributors” succeed or fail.

  4. Mike,
    Shocking. Thanks for the heads up, re: SHINE. Although we cannot police every activity that occurs, we can do a better job of understanding what the use of the space is and if it is appropriate.

    This has likely been missed b/c Bizlink is the booking person(?). Regardless, I will be onto this today through Shine and BizLink. I don’t think the UK understands MLM. It is huge in the USA and it is not a good thing. 99% of MLM preys on vulnerable people looking to better their lives. A very select few operate like more traditional companies (Amway, Avon), but even their design allows the workers at the bottom to generate disproportionate profits with no risk to the corporation. This is dodgy territory.

    *Gov’t should not be sponsoring MLM activity*. Because it is a false economy design that creates mistrust among friends and incestuous networks of people all trying to sell to each other. This becomes dysfunctional quickly.

    The confusion is likely because traditional start up businesses operate much like MLMs in the beginning: selling to friends or friends of friends. HOWEVER, small traditional biz quickly realises this kind of selling is not sustainable and is unhealthy, so the small biz (growing or not) must look for new networks. MLM operations attempt to continue to squeeze existing networks, creating a client/server relationship that becomes strained. Additionally, the small biz returns a proportionate return or loss for your efforts, whereas the MLM funnels inordinate amounts of wealth back to a central corporation that takes little or no risk.

    I suspect bizlink are unaware of the massive downside of MLMs. I will reach out into my bizlink networks to educate them on the problem of supporting MLMs in challenging communities. I will also alert the Shine team so we can develop ways to avoid Shine being used for this purpose. This second issue is clearly more difficult as it presents a slippery slope; where do you draw the line (are religious orgs MLMs? some are!).

    Will keep you posted. Thanks for calling attention to this issue.

    Todd

Speak Your Mind

*

Follow

Get every new post delivered to your Inbox

Join other followers: