Driking the MLM "koolaide"

by 43 comments
For those of you who do not know what the reference to "drinking the koolaide" means it is a saying coined after the Jonestown Massacre where a paranoid delusional cult leader and his followers drank poison Koolaide in a mass suicide leaving over 900 dead including small children in the late 1970s.

I was on the set of a video shoot for a chiropractic pillow promotional production when two men that I will describe as "vultures" showed up and acted very strange and made some of the doctors and clients there for the shoot uncomfortable.

These "vultures" where there on the invitation of the Dr who owned the practice because he told them that they might be able to recruit some of the other doctors and client who would be there to join their berry juice network marketing business opportunity.

These guys were involved in a network marketing opportunity which marketed berry juice for $40 a bottle in bottles no lager than a normal wine bottle.

The users of this "high antioxident" juice tout its healing properties and are instructed to consume around a bottle of this $40 a bottle berry juice a week.

No inherant problem with that... if you like paying $40 a bottle for juice to get high antioxident intake which can also be obtained by consuming other lower cost more commonly available antioxident rich juices and even common concord grape juice...

However, these "vultures" hung out in the corner of our guest waiting area muttering amongst themselves about how they were going to take over various markets and perform MLM magic... for two hours!

And why did they hang out on our set for two hours when no one was interested in talking to them?

Because one of the actors had expressed interest and they wanted to give him a brochure.

So two people sat around for two hours to give a brochure to an actor with very little interest in their product or opportunity who after they left along with many of the other people in attendance commented no how uncomfortable these MLM recruiters made them feel and how much they reminded them of vultures waiting for a carcass to chew on.

The obsurde picture you get in your mind from this description is likely less obsurde then it was in person.

But even more absurde is the following quote taken from an investigative report on this highly successful berry juice MLM (network marketing) company:

"Meanwhile, most of the million-strong sales team is really just drinking the juice, according to MonaVie's 2007 income disclosure statement, a federally required printout of their distributor earnings. More than 90 percent were considered "wholesale customers," whose earnings are mostly discounts on sales to themselves. Fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week. And the dropout rate, while not disclosed by MonaVie, is around 70 percent, according to a top recruiter."

Quote from - http://www.newsweek.com/id/150499?GT1=43002
This highly successful Network Marketing company has a sales force of 1 million network marketers.

Of that 1 million less than 1% have earned any commission at all. Of that less than 1% only 10% earned more than $100 per week!

So lets put that in perspective...

Of 1,000,000 (one million) distributors less than 1,000 (one thousand) earned more than $100 a week in 2007.

Yet the company has reported (unverifiable) lifetime sales of approximately 1 billion USD!

The sad part is that the entire MLM (network marketing) industry is not much different with most programs, opportunities etc producing a 99% failrure rate.

Not only that the MLM industry is rife with various scams and ponzi schemes such as the current fiasco you can read about in this Business week article: http://www.businessweek.com/print/te...086_509247.htm

You are far more likely to win at the casino than to make a profit in MLM. Casinos on average pay out 2-3% of every dollar they take in...

Of course that is not a testimonial for the gambling industry because if you play $100 in a casino the house odds are that you will leave with $2-3 in your pocket having lost 97-98%

You are much more likely to loose all money you invest in a MLM and never see any earnings... more than 99% likely.

Now compare that to starting a legitimate online or offline business and the chances of success are far more likely.
#internet marketing #driking #koolaide #mlm
  • Profile picture of the author Melkor
    Amen. I was never more embarrased than when I discovered Dad had gotten involved with Herbalife...
    • Profile picture of the author Angela V. Edwards
      Originally Posted by Melkor View Post

      Amen. I was never more embarrased than when I discovered Dad had gotten involved with Herbalife...
      Oh, I did that, too. Was involved with that "Global Online Services" (or whatever) MLM branch of it. Lost thousands, and then didn't even get the $26 I earned. My "coach" kept it.

      In all honesty, the major reason I quit was because I just didn't have the heart to try to convince people in my economically depressed area to fork over that kind of money. They just don't HAVE it.

      Got quite a nasty-gram from my "coach" after I stopped working the program. Was called every name in the book, I think.
  • Profile picture of the author Lance K
    If all customers are automatically set up as distributors, it may be that the majority never has any intention of making money. They just want to drink the koolaide. So it is possible that the data could be skewed.

    Don't get me wrong, I think MLMs are about as cool as a pooper in a punch bowl. But I'll still look at stats like that and try to understand why they may be so far off.
    • Profile picture of the author Josh Anderson
      "If all customers are automatically set up as distributors, it may be that the majority never has any intention of making money. They just want to drink the koolaide. So it is possible that the data could be skewed."
      That is the problem with the MLM industry... they focus on selling the opportunity and false dreams rather than the product.

      It actually is illegal to force every consumer to become a distributor. They must retail the product.

      Also having heard the presentation this particular product is pitched in a strong way to be sold on a retail level.

      In the case of this product distributors must pay extra to become distributors so it is not very likely that 999,000 distributors who are making no money at all signed up just to drink the juice. Also note that to qualify to earn commissions as a distributor you must sell 8 bottles a month...

      So if a person were to sign up as a distributor for the sole purpose of purchasing off themeselves to earn commissions from sales to themselves (which is an idiotic idea that many in MLM industry fall for) they would have to consume 8 bottles of the stuff which retails at a suggested $40!

      People get sucked into the bizopp because of the dream of getting rich... not just because they think the juice is yummy... I tasted the stuff

      Under US law in order for an MLM opportunity to not be considered a ponzi scheme 70% of the revenues must come from retail sales.

      This is called the 70/30 rule.

      Most of the MLM companies in the health industry must at the very least put up the facade of being not just about the opportunity by encouraging their distibutors to retail the overpriced products and many will provide replcated storefront style websites for distibutors.

      However, they also artificially inflate product sales by requiring distributors to sign up for "auto ship" orders of product for their own consumption sometimes even attaching higher commission levels to the distributors forced auto ship requirements.

      At $30-$40 a bottle it is likely that order minimums and autoship requirements attribute for a large portion of the sales volume and many of the earnings of the various upline distibutors.

      This forced autoship could skew the earnings... in the favor of the company!

      Consumption of the product and earnings of the very few distributors who are earning anything are likely inflated by would be distributors who are forced to consume or order quanties of product beyond that which they would naturally consume had the autoship and minimum sales requirements not been in force in order to receive commissions.
    • Profile picture of the author YiKeS

      MLM = Many Lose Money

      that`s some powerful statistics Josh, the "vulture" analogy is spot-on and
      no matter what social networking site I`ve been on, seems it`s ALWAYS
      the MLM pushers that message you without asking to see if I`m
      "interested in my opportunity".

      An MLM program was what I did first online ... what a JOKE!!
      • I joined specifically because I could get a website (cookie cutter of course ... I knew no better then)
      • I made it potently clear that was how I had to market as I live in the middle of nowhere, am disabled so "door-knocking" etc was not what I wanted or could even do day after day at all
      • They promised to "teach me everything I needed"
      • Stupidly told them I was in debt and had to use my CC ... realize now the subtle questions they asked getting me to tell them exactly how much I could still use on the darn thing was so they knew how much more they could get out of me ... hindsight aye ...
      So what happened?
      • I got the website yeah ... even with two weeks under my belt I could tell the site needed changes made as I wasn`t getting traffic/signups/sales ... I bought the website ... 6 weeks later after getting the runaround I was told I was "renting it"! I was told "we don`t know how to make your website better ... OURS work fine! ... and No you can`t make any changes at all unless you WRITE ... not email .. write a real letter asking for permission to do so!! (Australia to head office in USA)
      • Then they said "Oh you`ll just have to go into your town and put up a stall and doorknock your neighbours and "suburbs" ... ummm ... there isn`t 10 000 people within a hundred Klms of me ... heck there isn`t 100 people within 10 mile of me ... lol... I`M DISABLED AND NOT ABLE TO WALK ABOUT ALL FRICKEN DAY! .... what happened to "work at home"!!???
      • Well they did teach me all I need to know to spot vultures like them I guess ... lol ... one thing my "mentor" "taught" me that stuck in my head though ...
      • Guess that`s why I was charged over $500 to join (buying a big pack etc) when I could`ve really joined for around $100
      • Guess that`s why my "mentor" made up my first order as I didn`t know what to get ... and got $500 worth of PROMO CRAP to give away for ***** sake ... MY PROFIT ... gone before I could even get the stuff!!
      • Guess that`s why they "conned" me to buy an even BIGGER pack so I "get a higher commission" ... (it "clicked" later on)
      So I have like $2500 worth of OUT OF DATE product sitting in my
      storeroom now ... well totally worthless now of course ... I joined
      to get out of debt and ended up thousands more IN debt ... vultures?

      YOU BET!!

      Christopher J.

      P.S. After I quit, friends I was trying to sell to told me the prices
      where simply to high ... lol ... now why is that? To keep those at
      the top of the PYRAMID in the big bucks! Even with a product,
      some things just should be darn well illegal aye.

      P.P.S. Due diligence isn`t possible when such a newbie ... I did
      research for a full week before joining ... after I quit I knew what
      to look for and boy did I find some horror stories then!

      P.P.P.S. I got in before my "coach/mentor" and abused heck out
      of her ... of course "We never gaurantee you`ll make anything blah
      blah blah!" ... ain`t finished with her, I have a looooong memory ... hehhe
  • Profile picture of the author vinnylingo
    Kool-Aid - Wikipedia, the free encyclopedia

    Kool-Aid is forever getting a bad rap. Flavor Aid is what was served at Jonestown. And I think that stuff would kill even if it weren't laced with cyanide.

    Give Kool-Aid Man a break, huh?

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