Former WFG Agent - Should I retire?

[DHK]

If there is no product being sold to people outside of the organization, that's an illegal pyramid. So, if you're (being general, not specifically 'you') just recruiting and selling policies to people who have signed up... that's still internal consumption, not product retailing.

Internal consumption model led to the downfall of MonaVie (and obviously others).
MonaVie - Wikipedia

For MLM, I put it like this. I talk about the McDonald's model.

Let's say you bought a McDonald's franchise, and you look around and you have:
- No inventory
- No customers
- No employees

"Gee, business is bad. What should I do?"

MLM says "Go build another one." (ie. sponsor another person.)

If little to no product is being sold to end-users, it's a pyramid. And I saw exactly that with MonaVie. I was asked to take a look at it, but there was NO emphasis on retail sales and I pointed that out. I think he said something like "you recruit your customers". Good acai drink, but poor business model.

 

[Guest - 73894]

I've sold a ton of policies to people I DIDN'T RECRUIT, so everything written previously makes no sense.

 

[toolbelt]

What? Explain the pyramid thing because it's confusing.

If more than 30% of an MLM's sales are/were/will be made to those pursuing the "Opportunity" itself, then by legal definition, it is a pyramid scheme (Koscot rule). Whether or not it's been investigated or charged matters little. Now if 20% of your revenue comes from internal consumption of products, and an additional 10+% comes from selling seminars, online access, conventions, training/marketing materials, in spirit, its still contravening written federal law.

 

[toolbelt]

For MLM, I put it like this. I talk about the McDonald's model.

MLMs are like tool companies running schools to learn how to run a house construction business. While keeping everybody focused on how top hammer a nail, its much easier to sell them a hammer or saw. The only people that got rich during the gold rush were shovel manufacturers. And they did everything in their power to make people believe "there is gold in them hills". If people were told that the value of any gold they found was less than the price of a shovel, they'd soon realize how the profits are really being made, and by whom.

 

[Guest - 73894]

So does this mean that every company is a pyramid? A lot of companies have Conventions and have training/ marketing materials. Everybody is doing one big pyramid!

 

[DHK]

MLMs are like tool companies running schools to learn how to run a house construction business. While keeping everybody focused on how top hammer a nail, its much easier to sell them a hammer or saw. The only people that got rich during the gold rush were shovel manufacturers. And they did everything in their power to make people believe "there is gold in them hills". If people were told that the value of any gold they found was less than the price of a shovel, they'd soon realize how the profits are really being made, and by whom.

Sounds more like college recruiters to me.

The problem isn't that they're selling "hammers and nails" or even that they can learn how to run a "house construction business" or "selling a dream". Every infomercial does that stuff.

The flaw is in the MLM compensation model itself and how you don't make much money on your own efforts. In order to collect a decent income, you HAVE to recruit others - perhaps build a team of 100, 200, 300... or far more for YOU to earn the $10,000/month or more.

The problem that the insurance MLMs have, is that their contracts start new people off at (generally) 25%. The upline keeps the 100%+ difference (and what value to THEY bring for that compensation?)... but the new rep only gets 25%. How do they get a higher %? They have to recruit (and I'm sure a few other things).

I'd rather just sell insurance and keep my own earnings for myself. At least it's a legal, moral, ethical, voluntary, and regulated ponzi scheme.

 

[DHK]

So does this mean that every company is a pyramid? A lot of companies have Conventions and have training/ marketing materials. Everybody is doing one big pyramid!

Not every representative for every company is also a recruiter to "sell the dream".

 

[toolbelt]

So does this mean that every company is a pyramid? A lot of companies have Conventions and have training/ marketing materials. Everybody is doing one big pyramid!

Ask McDonalds how many Big Macs it sells to employees and how many it sells to regular retail customers. Hint......if most of their sales were to employees, there wouldn't be a need a drive-thru windows.

 

[DHK]

Now, there IS a guy that's reportedly earned $70+ million in MLM. And when I heard this interview, I knew that HE was doing it right - with proper expectations.

It's been a while since I watched it, but I remember him saying that "the opportunity is to earn an additional $500 - $2,000 a month"... and find others who want to do the same. By keeping the numbers smaller, expectations simpler, and focusing on their own efforts... he built a massive team.

The problems come in when everyone has the desire to earn $10,000+ per month.

 

[toolbelt]

Sounds more like college recruiters to me.

The problem isn't that they're selling "hammers and nails" or even that they can learn how to run a "house construction business" or "selling a dream". Every infomercial does that stuff.

The flaw is in the MLM compensation model itself and how you don't make much money on your own efforts. In order to collect a decent income, you HAVE to recruit others - perhaps build a team of 100, 200, 300... or far more for YOU to earn the $10,000/month or more.

The problem that the insurance MLMs have, is that their contracts start new people off at (generally) 25%. The upline keeps the 100%+ difference (and what value to THEY bring for that compensation?)... but the new rep only gets 25%. How do they get a higher %? They have to recruit (and I'm sure a few other things).

I'd rather just sell insurance and keep my own earnings for myself. At least it's a legal, moral, ethical, voluntary, and regulated ponzi scheme.

All valid points, but its still doubtful most Indy offices could survive strictly by growing their policies-in-force by 9 or 10 low face value term policies a year using a selling force of 25 agents, plus 75 trainees?