September 29, 2022 11:52 pm
September 29, 2022 11:52 pm

Pitch-Reverse Pitch: The (Not So Subtle) Giveaways That You’re in a MLM Pitch

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In Part 1 I took an analytical approach to looking at the expected value of Amway and other multi-level marketing (MLM) businesses. In this post I’ll look at the different elements that are commonly found in MLM pitches. Identifying these elements can clue you in to when you’re in a pitch and save you from wasting your time.

I’ve unfortunately wasted more time than I’d like by attending four different pitches. I first sat in on a MLM pitch back in 2012 when I was working as a line cook prior to enlisting in the Army. This first time was a learning experience which helped me identify a MLM pitch by recognizing some of the elements that give it away. Amazingly most of the elements I write about were present in that first pitch and repeated subsequently in 2014, 2018, and 2022. As much as technology has changed, nothing with the pitch itself has changed at all over this decade. The only difference I’ve seen is that the pitch can now be delivered at low cost over Zoom rather than in person. Here are a few giveaways based on my experiences that indicate you might be in an MLM pitch.

Cite their credentials and past experience when it is irrelevant

Credentials and past experience are often an effective way to establish credibility with an audience. Unfortunately, this is true whether or not the past experience or credentials are relevant. This logical error is known as the halo effect which describes the phenomenon where our positive impressions of someone spill over into areas that are not logically justified. An example of the halo effect would be to think that a well-paid physician is also an expert in personal finance. While they might be an expert in personal finance, it would be a mistake to assume they are an expert in personal finance just because they are smart and make good money. This can be a tricky technique because it is quite pervasive in our society. There is often a certain prestige associated with advanced degrees or an affiliation with prominent companies like Google.

In MLM pitches, recruiters will often try to benefit from the halo effect. For example, on the latest call I attended two of the recruiters in the team noted they had PHDs in healthcare fields such as pharmacy. While those two individuals are certainly highly trained in their respective healthcare fields, it would be a mistake to assume they are also great at selling health supplements and energy drinks. Another gentleman who led the meeting also talked excitedly about his time in the NFL. He clearly hoped to leverage the NFL brand as a halo effect as he focused less on his job as a scout and more on the players.

Tip: Consider whether a person’s work experience or credentials is relevant to the business you’re looking at and evaluate the pitch on its own merits.

It sounds too good to be true and there’s no time for questions

Most presentations are bound to create some questions and MLM pitches are no exception. Recruiters typically paint a rosy picture of how much you could make and imply it is easily attainable. They might also share details of their extravagant lifestyles driving luxury cars like Porches and how they threw away their alarm clock (who has an alarm clock these days anyway?) because they don’t need a job. Additionally, in the presentations I’ve attended there is always someone who has recently received a paid trip for completing some sort of sales/recruiting milestone. You’re never told how likely it is to achieve this milestone only that it’s possible and they’re just like anybody else. These acts are intended to demonstrate how successful the presenter has been. However, they also attract a lot of questions. Opportunities to make quick and easy money don’t typically exist for very long. If such an opportunity existed, then word would quickly spread like when Bitcoin rapidly rose in price in 2017 and literally everyone was talking about Bitcoin millionaires. Instead of a new opportunity though, your friend (who is recruiting you) is likely pitching a decades old company like Amway and proudly proclaims the long length of this company’s existence as a positive.

Of course, they’ll be no time for questions during the pitch nor any time at the end to answer questions during a call with your recruiter’s recruiter, otherwise known as an upline. The upline will almost surely have somewhere else to be and advise that you follow-up with your friend. Instead of saying no to the upline, you’ll be forced to say no to someone you likely know as a friend. If you do press for questions hard enough during a pitch, then you’re likely to get booted from the virtual meeting as I did a few years ago in 2018.

Tip: Ask questions whenever you have one. A good business presentation will either have breaks built in for questions or room for questions at the end. If a presenter has not indicated after a few minutes how questions will be answered, then it is entirely reasonable to just ask a question. Some questions to consider are: If this is such a good opportunity to make money, then why isn’t everyone doing this? Why bring me on, and why now?

Disrespect your time

Most recruiters for MLM businesses will know you personally and will spend some time catching up before delivering the pitch. However, instead of displaying their intentions quickly and delivering the pitch quickly, they will hide their true intention to recruit you. In my experience old friends typically reach out via messaging, setup a call and then ask to have a second call to talk about an “opportunity”. By the time you finish catching up on the second call you’ve probably spent 15 minutes messaging, another 20 minutes talking on the first call and maybe another 10 before your friend starts the pitch. It wouldn’t surprise me if on average an MLM recruiter spends an hour of time before they finally make their pitch. Even if you immediately reject the proposal to get involved in the MLM business, you’ll have still wasted an hour to do what could have been done in twenty minutes or less. If you do get pulled into the MLM business, then you’re likely in for more wasted time and money which could amount to tens of thousands of wasted dollars.

Hide the company or business model until the end

In every MLM pitch I can remember; the recruiter never opens with the company name. If your presenter hides the name of the company, then you can almost be assured you are in an MLM pitch. Normal recruiters operating in good faith simply don’t hide who they’re working for. When the recruiter does reveal the business, it’s always felt ‘off’ to me because it comes at the end. The company name and what you’re doing shouldn’t be some big secret, so why the delay?

In the pitch I attended a couple weeks ago I waited with the seven other recruits for 45 minutes before the upline started his presentation. Some of us were getting off work early to attend or taking time away from family dinners depending on our time zone, yet the presenter wasted the first 45 minutes with small talk and intros. Once he presented then he decided his time was more important and better served by attending a different meeting with other recruits rather than answering our questions. He closed abruptly by suggesting that we setup yet another meeting with our friends to answer our questions!

Tip: Respect your time. Your time is just as valuable as your ‘friend’ who is recruiting you as well as their upline recruiter. If they’re wasting your time, then request answers and leave if you are unsatisfied with the answers provided.

A warped sense of personal finance

I don’t know if this is also true for other MLMs but the Amway recruiters I’ve met are obsessed with Rich Dad Poor Dad. It’s a well-known enough title that most people interested in finance eventually skim through it just to see what’s there, but it’s certainly not the only book on the matter or the best literature around. Recruiters often lead with this book reference in an attempt to give them some credibility in understanding business and finance, but on further inspection many of their views don’t add up. For example, Amway recruiters often promote their business opportunity as passive income. The idea is that you’ll be able to convince enough people to work on your behalf generating sales that you won’t need to work. For sales income to be passive we’d need to assume that the people you recruit will never leave or have a drop in sales. This is an absurd assumption and it’s unlikely that any network of sellers you recruit will be stable especially since we found in Part 1 that the opportunity has a negative expected value. Truly passive income does exist and can come from something like a dividend earning stock, a bond, or an annuity. But depending on recruiting a revolving door of sellers is most definitely not passive income.

I’ve also encountered recruiters who ask why you wouldn’t shop at your own store? They reason that if you buy through your own Amway portal that you’re helping to support your own business. This is an entirely nutty notion that you should always purchase from your own store because it ignores the massive cost differences between Amway’s products and its competitors. Clearly one way to benefit your business is to use a cheaper supplier which shouldn’t be difficult since all major suppliers I’ve found are cheaper.

Tip: Read other sources of personal finance so that when someone pitches a MLM business you are prepared. One book I’ve always liked is The Bogleheads’ Guide to Investing. I’ll also be reading Buy This, Not That: How To Spend Your Way To Wealth And Freedom by Sam Dogen. Sam has been a writer I’ve followed for some time in the personal finance space and his book was released just last month.

Conclusion

Amway and other MLM recruiters will try to convince you that they have a golden opportunity but you’re unlikely to hear dissenting opinions during the pitch. Instead, you’ll need to watch out for some of the giveaways that you are in a MLM pitch. When in doubt on any decision I’ve always found it is best to sleep on any decision. The same opportunity will almost always be available tomorrow.

In the part 3 finale next week we’ll focus on the incentives of the recruit, the recruiter, as well as senior uplines and how they come together to create an exploitative system.

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