- Business and Employment
Six Types of Network Marketers: which type are you?
In my exploration of the multi-level marketing (MLM, i.e network marketing) world, purely as an outsider, I have met a lot of people, and they generally fall into six distinct types, and two major groups:
- MLM grunts
- MLM stars
- MLM coaches
- MLM supporters
And the outsiders
- MLM critics
- MLM opponents
I will go through each type and examine each in detail.
The MLM grunts comprise of roughly 96-99% of all MLM participants, by my estimate. If you just joined a MLM, you start at the "grunt" stage, and your upline is the "MLM Star" or a "Type II / Type III" (see below).
Unfortunately, this is also the most dangerous phase to be in. If you are to lose any money, you will do so in the grunt stage, where you put money and time and effort into a MLM, and get little or no return to break even, much less earn a profit. MAJORITY of MLM participants are STUCK in grunt stage. Their lifecycle is roughly as follows:
Type I: Testing the Waters
The Type I MLM grunt is just there to test the waters. After the initial "rush" to join faded, s/he are ready to stop participating. S/he may be retained for a short period, but is about to run out patience and/or disillusioned about the opportunity. A MLM Star needs to give some hand-holding ASAP.
Majority of the MLMers will quit as a Type I MLM grunt. They decided it's not a good fit, or they feel cheated about being mislead as to the potential of the MLM. These are the folks who complain the loudest, causing the Type III's to denounce them as "lack of patience", "lazy", and so on.
However, there are some Type I's who are happy where they are. They buy very little per month or year, just enough for him/herself, and maybe sell a little bit to friend and family. They are not interesting in the commission, just the products. If the company would let them keep the discount they dont' care if they are "inside" or "outside". There are really preferred customers, but often they are counted among the "Type I" grunts.
Type II: Chasing the rainbow
The Type II MLM grunt, perhaps encouraged by his or her upline, keeps trying. This type will keep losing money, but has more determination, and is determined to learn the business, good or bad.
Type II will continue to lose money, because they can be goaded into buying "motivational tools" and other tutorials that supposedly teach him/her how to sell / recruit. Instead of improving their bottom line, they go FURTHER into negative hoping they will "improve".
Type II may also engage in fishbowl-hopping, which is when they hop from one opportunity to another, thinking the "next" one will be a better fit for his/her skills, or be a better success, or run into an upline that will teach him/her something useful.
The Type II life cycle has three possibilities
- revert to a Type I if no success was found
- keep getting stuck in Type II
- mature into Type III
Type III: Treading Water
The Type III MLM Grunt has learned some sales and/or recruiting skills to break even. However, s/he lacks the charisma to expand his or her downlines to a respectable size.
Few if any Type III will mature into the next type, the "MLM Star".
A MLM Star is a "leader" who has accumulated a loyal group of downlines that s/he regularly meets, encourages, and leads. These folks make a comfortable living giving seminars at sales meetings, often "president" or "diamond" level affiliate, may have even written a book or two on the subject.
There are two general types: sellers, and recruiters (And a lot of shades of gray, of course).
The "Seller" MLM Star
The "seller" MLM Star is out to help the whole team, make everybody rich if he can. He will give personal attention to new members, motivate those who need it, praise those who earned it, and generally be a super-star that teach everybody how to sell stuff. Of course, he earns a great income doing so by living off his downlines' sales, but that's the whole point about MLM: teach your downlines to sell so they make money for you. He knows a lot about sales and management, and some recruiting.
The "seller" MLM Star knows marketing, about how to sell products, and is out to teach the downlines how to sell as well. Recruiting is entirely incidental to this person. His primary goal is to sell, and to teach others to sell.
The "Recruiter" MLM Star
The "recruiter" MLM Star, on the other hand, is really out to recruit, as they need to constantly replace losses of the Type I MLM Grunts who quit. They have recruited some Type III MLM Grunts as "sub-leaders" and is turning them into clones of themselves. Some of the Type I grunt recruits survive to mature into Type II grunts. If not, there's always another fish in the ocean.
The "recruiter" MLM Stars can turn even a normal MLM into a recruitment-heavy pyramid scheme by emphasizing the recruitment aspect over sales, and exploiting every bit of "self-consumption" and "autoship" and "starter kit" they can. Everything is about recruitment, instead of sales.
When one MLM is about to go under, they'll take the whole structure and jump to a new opportunity, everything still in place, upline and downline and tree and all.
Compare and Contrast
Seller stars create more seller stars, while recruiter stars create more recruiter stars. However, there seem to be far more recruiter stars out there, because recruiting people is much easier than selling. It's easier to recruit people because you can promise them income, while it's much harder to get people to SPEND money.
MLM Coaches are like MLM Stars, but instead of teaching just his/her downlines, they offer their lessons to any one willing to pay money. MLM coaches are mercenaries of sort, as they offer training for a price. They also come in two types: seller, and recruiter.
Most MLM coaches only teach lead generation and recruitment techniques. I.e. they are "recruiter coaches". They go by variety of names, such as "Attraction Marketing coach". Few will actually teach you how to sell the products. To many of them, recruiting and selling are the same.
Some MLM coaches are also MLM Stars, as they try to offering coaching as more income for themselves, as well as a recruiting tool (you need help with MLM-A? why not look at MLM-B?) That is an ethical issue that will not be discussed here.
MLM Supporters, such as MLM lawyers and MLM proponents, are a part of the MLM industry, although they are usually not directly involved as a grunt or a star. They are supporters of the MLM model, and they have a vested interest in seeing the industry do well. Thus, they are anti-scam, but they are often reluctant to condemn an opportunity that claim to use the MLM model.
There aren't aren't that many lawyers out there that specialize in MLM in the US. Off top of my head, I can only name five or six. Many of them have websites that will explain a lot of basic MLM law (in the US, of course) and are invaluable as reference. Just keep in mind they are out to defend the MLM industry against government regulators (which is the FTC, and sometimes, the FDA and state attorney generals), and rarely offer opinion on state of the industry and such, or to criticize one company, as they may be retained by that company later.
In other words, they can offer advice about law, but only in very general terms, and they cannot consult for you specifically, unless you retain them (with a big fee).
The MLM lawyers include Grimes and Reese LLP, Gerald Nehra, and Kevin Thompson.
Direct Selling Association (DSA)
The Direct Selling Association is a group dedicated to protect the industry. Each country has its own DSA, and they join "World Federation of DSA".
DSA members are required to adhere to code of ethics which offers a level of protection to the members and customers of such businesses. Beware of fake members, as some are known to use logo without permission.
There are many independent supporters of MLM, who do speak out against outright scams, pyramid schemes, and Ponzi schemes, but rarely critical of the big players in the industry, or the industry in general. They have an overall positive attitude toward the industry, and often consults for companies in the industry. Many of them compile reviews and offer advice as consultants.
Some MLM supporters will point out deficiencies of certain compensation plans, and some danger areas facing the industry, such as proliferation of scams, potential new legislation, and so on. Few, however, will denounce a scam unless it's already been charged by the relevant government agency with fraud and/or other violations of the law. Many of them are also dismissive of questions about the fundamental nature of MLM, on how closely related it is to the illegal pyramid scheme and Ponzi schemes.
Troy Dooley, Rod Cook, and a few others are definitely supporters of MLM.
MLM opponents are outside of the MLM industry, and does not involve itself except as vocal opposition. They oppose MLM altogether. They generally come in two types:
The anti-fraudulent product opponents
The anti-fraudulent product opponents are against products that are bogus, have little or no known benefit, or are just generally fraudulent. MANY of the alleged nutritional products fall in this category. MLMs, which is often used to push products that cannot be pushed through traditional channels, is prone to many "bogus" products, which naturally attracts criticism.
One prominent anti-fraud here is Dr. Stephen Barrett of QuackWatch, though he's more about bogus nutritional supplements, supplements that claims to treat condition / disease, and so on.
The anti-MLM-model opponents
The anti-MLM-model opponents believe that MLM is just a legalized pyramid scheme, and should be banned altogether. They have some statistics backing up their side, though it is often challenged by the MLM supporters and big debate still rages on today.
The most vocal of MLM opponents are Robert Fitzpatrick and Dr. Jon Taylor, though there are many others.
MLM Critic is someone willing to see the problems from all sides, point them out, and discuss them, instead of playing the black and white fallacy.
MLM critics are NOT anti-MLM, but their criticism of MLM's flaws often lead them to be lumped in with the MLM opponents and attacked by MLM supporters indiscriminately. Furthermore, MLM critics who go after scams and pyramid schemes are often attacked by defenders of the scam and schemes as "anti-MLM".
MLM critics are NOT pro-MLM, but their "neutrality" is often seen by some MLM opponents as "willingness to support a fraudulent business model".
As neutrals, MLM critics gets heat from both sides.
A MLM Poll
What type of MLMer are you?
Recruiting vs. Selling
As multi-level marketing is a type of marketing, the emphasis should be on marketing, or selling, not recruiting.
Furthermore, the main difference between MLM and pyramid scheme is how MLM pays on SELLING, not recruiting. By focusing on the recruitment, the recruiter stars are in danger of turning a legitimate MLM into a pyramid scheme. Furthermore, Recruiter stars are more attracted to pseudo-MLM scams that are recruitment heavy, as it suits them better.
Same for the coaches: recruiter coaches are far more common than seller coaches.
And they are doing it wrong.
I hope you have enjoyed my short analysis of the MLM participants.
Comments are welcome, though I reserve the right to deny them due to off-topicness, spam, or other reasons.