Lately, the “huns” have been out in full force around my town with their “who wants to earn an extra $300-$400 a month” posts. And every time, another batch of new people comment “me!”
And it might seem like the civil thing to do is to just turn the other direction, wish them luck, and not get involved. Except, I don’t think that’s the truly civil approach at all. The moral thing to do in my “bropinion” is to not wish people luck in predatory multi-level marketing schemes that leave most in overwhelmingly worse positions than they started.
People wouldn’t accept a position in which 85% of applicants are fired, and yet someone will talk those desperate for cash that those 85% just didn’t want it enough.
Oh yeah, well would you accept a sales position in which the leading seller made significantly less year over year?
I just don’t understand how these things won’t die.
For awhile, locally at least, it seemed like ItWorks had become forgotten, and then suddenly it came roaring (at least locally) back with some of my male Facebook friends showing interest at the amount of money they could earn.
But bros don’t let bros join multilevel marketing schemes, so I have to take some moment to educate where the “boss babes” don’t because:
- A) Bros just don’t join these things.
- B) I don’t want to see people get financially ruined.
Sure, Success Is Possible
Let’s get one thing out of the way. Yes, some people can be very successful with these, but that success comes at the sacrifice of most of the people in the down line failing. If the key to getting rich is to see everyone beneath me struggle worse than they started from something I sold them, that’s a pretty shitty way to live my life.
If you want to do better, we support improving yourself up the career ladder, but not at the expense of destroying people’s lives with these shitty MLMs.
Why are these MLMs so shitty?
Any individual that gets success from an MLM like ItWorks is an outlier. We’re talking less than 1% making livable incomes and yet 99% of them are claiming they’re bringing in an extra car payment a month of income.
That sounds awfully similar to a lottery winner claiming if they can win, so can you!
Granted, I realize all business is about competition and some businesses will succeed where others fail, but in traditional business, wages add liability to the bottom line that ties how people many people are hired to the demand – businesses don’t just hire and hire and hire without consequences.
Yet, with MLMs, new recruits are just piled on with as many new salespeople as possible with no regard for market saturation.
Do I realize that commission-based sales positions exist? Absolutely, but these MLMs are far more predatory than just people going door to door selling vacuums for a commission check.
If MLMs Were A Car Dealership
Most car salesmen get a commission per vehicle sold. If they sell nothing, they earn nothing. If they sell one car, they get a commission for one car. Maybe there are bonuses for meeting certain tiers, but in short, your work at selling cars is rewarded and you get paid for the work you do.
However, there’s a reason you don’t walk onto a car lot and get approached by 100 different salespeople. The dealership wants to have really great salespeople that represent their brand and that sell a lot of cars – that’s what keeps the lights on for the owners and food on the table for the salespeople. Since salesmen work entirely off of commission, it might seem like the dealership could just have as many as they wanted, but the dealership knows that the more salespeople they crowd on the lot, the more difficult it will be for their salespeople to make a decent salary.
Knowing their best salesmen will go where they can make money, the dealership keeps a tab on the number of salespeople per customer that tends to visit their lot. When demand lowers, even though their salesmen don’t have salaries, they are incentivized to get rid of excess salespeople to ensure their best remain.
But MLMs don’t take any of that into consideration.
Imagine the owner of the car dealership says “If you sell at least 50 vehicles each month, I’ll give you $500 per car! That’s $25,000!!! Wouldn’t that be great…but hey, listen, if you only sell 49 cars or less, you receive no commissions!”
That sounds crazy!
But you’re desperate for cash and decide $25,000 would be amazing! After all, how hard could it be to sell 50 cars in a month? The owner said it was easily doable if you just worked hard.
At first, you’re doing okay. But eventually, you start to struggle to sell 50 cars! One month you actually sold 52, but 3 people returned their vehicle, so you ended up only selling 49…you did a lot of work for nothing!!!
Heck, if you had known that in advance, you would have just bought two cars yourself from the used car lot for $5,000 and still came out ahead.
That gives your boss an idea!
He says “if you, as the salesperson, promise to buy two cars from the dealership each month at a discounted price of $2,000, you’ll get a commission for everything you sell all month!”
Now you just need to sell 4 cars to break even! That doesn’t sound as bad. Except, now you’ve got 4 extra cars to sell to get them off your hands…but you’ll just sell them at an even steeper discount if you have them too long.
Sounds ludicrous when applied to cars, and yet…
It gets worse!
Knowing his salespeople will be his most loyal customers (because they have to buy cars if they want to get paid when they underperform their 50 car goal), the owner of the dealership is now incentivized to fill the dealership with as many salespeople as possible.
Problem is, how the hell is a salesman supposed to sell more cars when there are constantly more and more salespeople crowding the limited supply of customers?
“But wait”, your boss says, “I’ll give you $250 for every new salesperson you bring on the lot and you’ll earn a commission not only from the cars you sell but also from a partial commission on the sales that person makes. Plus I’ll throw in a bonus each time they buy new cars themselves! It’ll be like running your own little dealership!”
Except, while the owner of the dealership continues to sell cars to his salesmen desperate to continue getting what little commission they can, you’re realizing it is becoming very difficult to sell cars with the influx of all the new salespeople rushing to meet customers as they walk on the lot. Not to mention, the market is becoming very saturated with the additional inventory of cars that the salespeople have purchased for their own inventory as part of getting their commission. And those people want to unload those cars cheaply!
Eventually, you realize it is a helluva lot easier to sell people on the idea they can make $500 selling cars than it is, you know, actually selling the cars.
You find yourself approaching customers and instead of telling them about the cars they can buy on the lot, you’re telling them they can get those vehicles at a discount if they become a salesperson for one low rate and that “if they sell 50 cars, they can earn $25,000!”
The thing is, even though just a short time ago you realized it was difficult selling cars, you become oblivious to that in your own success in building your down line. With this new system in place, your sales team is generating exactly the type of success your boss originally promised. You’d go so far as to say, it’s genius!
After all, your paychecks keep getting cashed and the dealership just keeps selling a record number of cars – but where are those cars going?
Because what you aren’t seeing are all the people that were late to the party and weren’t as early as salespeople as you were. Those people all have garages full of cars they only bought because they weren’t going to get paid if they didn’t buy them. And you don’t see that problem because you’ve been more concerned with using your own past performance and success story as a staple sales technique of “you can do it, too!”
All you know is the dealership is selling cars and you’re disconnected from the reality that the bulk of those customers are the bottom-most tier of the pyramid with an ever-expanding inventory of cars they can’t sell but are forced to keep buying just to get a commission for the few cars they are able to.
And how would you know any different?
They’ve been sold on the idea that their success is in their hands. Admitting they aren’t selling cars is an admission they weren’t successful – that’s an embarrassment.
And when you’re questioned on how this concept isn’t sustainable and is a pyramid scheme, you just point to “well, we’re selling cars!”
But are you really?
Are you selling cars to customers or selling cars as a prop of inventory to selling the idea of getting rich by selling cars?
Because it sounds to me like an awful lot of people at the bottom that don’t have people under them are going to be left holding the bag of inventory they can’t sell. And if that’s the case, then the people at the top aren’t getting rich selling cars at all. They’re getting rich selling cars to all their salespeople that need a product to sell so that they can sell the idea of getting rich to other people under the guise of running their own little dealerships.
And then one day, it just comes toppling down.
What Does This Have To Do With ItWorks?
As crazy as that car dealership example was, that’s exactly how ItWorks operates and asks of its distributors.
Just to be a distributor and get paid, you have to have a minimum “Personal Bonus Volume: (i.e. commission) each month. You could have thousands of recruits under you and if you don’t meet that sales volume, no revenue for you – that’s really messed up! So, to work around that there is an emphasis on setting up an “80BV Autoship” and in doing so becomes an alternative minimum – after all, you’re going to be moving so much inventory you might as well just have it automatically shipped to your house.
Problem is, if you aren’t able to sell your existing inventory to make the minimum sales quota, you’re going to be in an even worse spot when you receive even more excess products than you purchased so you could get paid in the month before.
That’s not how legitimate distribution systems work.
Do you think Wal-Mart just keeps buying products that sit on shelves unsold?
Do you think Wal-Mart doesn’t get paid for any of the products they actually do sell?
Why do you think ItWorks is so adamant about setting up automatic shipments just to receive a paycheck? If the products are selling well, wouldn’t distributors just want to rebuy and resell them without being forced?
Why Do I Give A Shit?
I absolutely despise predatory sales techniques that take advantage of already struggling families with promises of wealth that ultimately set them up for failure & predatory sales techniques that make sensational claims on the ability to cure people of their ailments and insecurities.
Part of keeping people out of poverty, including struggling bros that read this blog, is helping them understand predatory techniques that use the desperation of such situations against them. These techniques bait them with a better and greater lifestyle. This is challenging because often the same people selling them “success” are the same people they love and trust sharing photos to Instagram with their wads of “fun money they can have too if they just send a PM”. Conveniently left out are the storage rooms full of inventory.
I see so many people out there selling the idea of getting rich to people struggling. Families are spending their last hundred dollars on “5 Steps to Getting Rich” programs oblivious that the creator’s wealth is a self-fulfilling prophecy resulting from the sales of his “5 Steps to Get Rich”.
It’s easy to afford a Ferrari if you can use that Ferrari to sale other people on how they too can drive an exotic car.
And that’s why ItWorks bothers me so fucking much!
People are struggling and while I think most people selling these “opportunities” have good intentions, they’re ultimately using their own success to market to the lowest hanging fruit of people desperate for a change in their lifestyle oblivious that statistically, the people beneath them will not enjoy that same success.
These individuals ultimately end up not being educated on economics enough to understand why spending their last $100 on a “business starter kit” will likely end up with them only struggling more.
They just focus on “where else can I start a business with only $100” and “I’m going to be my own boss” and “all I need to do is sell 50 cars and I’ll have $25,000” with no regard to how difficult it really is.
So they find themselves putting in huge amounts of time promoting products they struggle to sell and when they realize they aren’t making shit selling the products, they shift their focus to the profits they can generate by selling other people to work below them and getting that commission from the $100 “business starter kit”.
Now, they’re generating some income and they begin to buy into that success, oblivious that the success is derived not from selling the underlying products but rather from the commission generated selling someone the same opportunity to get rich – notably leaving out the part on how the products aren’t really selling.
So, if the products aren’t selling, then the checks being cashed are coming merely from people buying into the down line and if that’s the case, you have a pyramid scheme.
Problem is, if the only way to get rich is to by adding additional distributors, you’re merely saturating the market further with new sellers competing for the same customers – someone is going to be left holding the bag – and I don’t want to be that person. I don’t want my readers to be that person either.
If I have to get rich by selling desperate people a path to riches, knowing I’m setting them up for failure with products that average fewer and fewer sales per year and where 85% of the people I sign up won’t make a profit because the products are sensationalized…then I don’t want to get rich from that.
I’m Not Pulling Those Numbers From My Ass Either
First, take note of the disclaimers.
None of the numbers on the chart take into consideration expenses. These numbers aren’t profits! That means the people that received $1 per month were taking losses and it also means that the person that received $3000 per month could have just as easily spent that much in expenses just to break even.
Without more information, it becomes very easy to sensationalize the numbers.
While it varies from year to year, in 2015 a whopping 81% of distributors did receive some revenue (even if but a single dollar), and a whopping 19% made absolutely nothing at all – this during a period when sales were booming!
Assuming those that were successful remained with the program, we start to see some startling trends. In 2013, the average basic level distributor was making $752 (revenue only) per month. By 2015, those numbers plummeted and only got worse.
On the high side, in 2018, someone received $2,828 a month, but since the average for that 80.3% of active members is only $47, it means $2,828 is an outlier and the vast majority of those people are making a lot closer to $1 monthly – and again that doesn’t adjust for expenses.
I’d assume all of those people were initially eager to make money and work hard in their newfound business. And yet, if so many people are losing the ambition to sell products or remain invested at the initial stage, what is it about the business that makes people eager for that extra income just give up?
If I had to connect the dots, I’d suggest that it is because the vast majority are only receiving $1 a month in commissions and they are losing money. They realize in hindsight they bought into a business without a great customer base and with a saturated market of distributors around them. So if all the people around you are also becoming salespeople, who do you sell to?
But Success Depends On How Hard You Work!
Because if you run the trend lines, you find that though the average time in the company increases, the average monthly earnings decrease. In fact, if you assume the hardest working person in the company is also the largest earner, at the lowest level the hardest working distributor in 2018 made 75% less than in 2016 and both of those made measly amounts compared to the hardest working one in 2013.
And if we assume the Ambassador Diamond level is the absolute hardest working group of anyone, then it is also interesting that year after year, this group’s earnings get cut dramatically.
Eventually, earnings will just wither up and die and I don’t want bros here to be a part of that!
Bros don’t let bros join MLMs! Not only because we aren’t huns, but because we don’t support businesses built on scams, so pass this along!
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