What This Blog Is About

What This Blog Is About

Most web sites and blogs about Direct Sales / Network Marketing / MLM focus overwhelmingly on the negative - what's wrong with it, bad experiences, scams, etc. This blog is different. While we discuss the Three Fatal Flaws and other problems with current industry practices, our focus is on positive and pragmatic SOLUTIONS.

Our Vision: To reform and transform this noble and time-tested industry into a positive force for good that powerfully and effectively serves and supports the best and highest good of people, community and planet.

Thursday, July 16, 2015

Our Industry's Three Redeeming Qualities

You may be wondering why, given the current state of the Direct Sales industry - fatally flawed business practices, 98% failure rate and horrible reputation in the mind of the public - we should bother to do anything to save it? 

Because, our research revealed that the Direct Sales industry possesses many unique qualities, unmatched by any other industry, to positively touch and impact people's lives and serve the best and highest good of people, community and planet. 

Let's review a few of these qualities.

Redeeming Quality #1: Direct Sales is uniquely positioned to contribute to the health and well-being of people, community and planet.

Unlike greedy, profit-obsessed corporations with their impersonal big-box stores and web sites, Direct Sales is all about people helping people, joyfully working together one-on-one and as a team for the true benefit of customers and each other. As Robert Kiyosaki says "...it's a humane way of doing business...heart to heart, soul to soul, business to business, let's help each other out."

In our industry we only succeed when we help others succeed. As we take care of ourselves and take care of others, we create the conditions that enable our community, our local economy, the environment, and the planet to flourish.

Redeeming Quality #2: Everyone needs to use products that are good for them and good for the planet.

No more wasteful, ineffective and toxic products that poison our bodies and the environment.

We teach our customers how to transition to natural, safe, effective products that support their essential needs and promote optimal health and well-being. Every time our customers use the products, they feel the satisfaction of knowing they're making a real difference, serving a higher purpose and being kind to themselves, their loved ones and the planet.

Redeeming Quality #3: Companies can learn, grow and evolve in consciousness.

Direct Sales companies we've studied are realizing that the old System-based way of doing things no longer works. They are asserting more control over distributor organizations, placing more emphasis on customers and setting standards for the training and development of their distributors.

What's exciting to see is that many of these companies are models of responsible corporate citizenship and sustainable, environmentally-friendly manufacturing. They support their local economy, hire local workers, use local suppliers and give generously to charity, thereby setting an example of what's possible for businesses of all types to achieve.

Despite the current state of the industry's business practices and reputation it's well worth saving. No other industry can match Direct Sales' ability to empower average people at the grass-roots level while contributing to the overall health and well-being of people, community and planet.

Wednesday, July 15, 2015

Stop Pushing The Damn Business Opportunity!

The public is tired of the old approach to Direct Sales/Network Marketing/MLM as taught by The System. It simply doesn't work any more - and it's killing our industry.

People must stop using the old, tired and ineffective approach if our industry is to survive.

One of my relatives was asked by the husband of a friend to meet for coffee. It was the same worn-out presentation: My wife and I just started this exciting new business selling ... here are the great products ... you can do this too ... here's how much you can make ... just get five people to join your team ... blah, blah, blah.

My relative has been approached dozens of times in the same way, is tired of hearing it and simply says NO whenever someone asks. Even if the product is potentially beneficial, the constant focus on recruiting and money destroys any possibility of further discussion. 

A colleague recently told me that if she is asked to go to another home party, she's "gonna scream!"

Another colleague said he is tired of being invited to attend opportunity meetings for the latest "miracle" product and promise of getting rich.

People are weary and wary of the hard sell, the alleged miracle product and empty promises of easy, big money. 

No wonder our industry suffers from a 98% failure rate and horrible reputation.

We must concentrate on serving CUSTOMERS first, not pushing our damn business opportunity on everyone!

Tuesday, July 14, 2015

Fatal Flaw #3 - Systems Don't Work

In the Direct Sales/Network Marketing/MLM industry, new recruits are told that simply following "the System" and talking to lots of people are all they need to do to be successful. Those who fail are often accused of not working hard enough or not "surrendering" to the System to the extent they should have.

This attitude is reflected by a recent roundtable of network marketing gurus who said, "Some Reps blame other factors when, in fact, they just aren't working as hard as they used to."

Baloney. The 98% failure rate for "Reps" has almost nothing to do with how hard they are working or not working, talking or not talking, surrendering or not surrendering. They fail because of a fatally flawed business practice called the System. 

What is The System?

The System is supposed to be a simple, duplicatable process for building a Direct Sales/Network Marketing/MLM business. In a nutshell: Sign up as a distributor, buy a few products, get a few customers, make a list of 100 friends/family/acquaintances, invite them to a meeting, present the business opportunity, sponsor a few to become distributors and teach them to do what you just did. Like a wave on a pond, your team will duplicate and grow exponentially, making everyone insanely rich.

Note: Some distributor organizations take it a step further and incorporate their training and motivational programs, web sites, books, DVDs, rallies, reunions, etc. into the basic System. These activities are completely separate from the direct sales company itself, and may become parallel businesses that generate more profit for the upline leadership than the actual sale of the company's services and products to customers. We will discuss this unethical, deceptive and unnecessary practice in another blog post.

Why Doesn't The System Work?

On the surface the premise of a simple, duplicatable System sounds reasonable. Many industries employ best practices and standard operating procedures to run efficiently and effectively. In practice, however, the System that's evolved and become almost universally accepted for Direct Sales/Network Marketing/MLM is fatally flawed and unworkable. How do we know? Because, if it worked as promised, we wouldn't suffer from a 98% failure rate and horrible reputation in the mind of the public.

First, Systems mistakenly focus on recruiting instead of customers. They forget that the main purpose of any business is to SERVE CUSTOMERS, because without customers, there is no reason for a business to exist. No valid and legitimate business anywhere on Earth prioritizes expansion over customers like Systems do, not even in the franchise world. 

Let's apply the logic of a System to a well-known franchise. You're excited about Subway sandwiches and decide to purchase a Subway franchise and open your first location. What do you do after opening?
     a) Make a list of 100 friends/family/acquaintances and persuade them to open their own Subway franchise
     b) Learn how to attract large crowds of satisfied customers so your business becomes wildly successful and profitable

The answer (b) is self-evident. Only after learning to build a successful and profitable franchise in one location would you consider opening other locations. Those of us in Direct Sales should do likewise -- there is absolutely nothing special about our industry that exempts it from operating like any other business in the world.

Also we should be aware that the Systems' almost single-minded focus on expansion (as well as the almost cult-like gatherings and exclusivity) feeds accusations of pyramids and Ponzi schemes. Direct Sales (person-to-person sales of services and products) is NOT a pyramid or Ponzi scheme but the perception of this behavior overshadows the reality.

Second, One-size-fits-all Systems go against human nature. The intent is that anyone, anytime, anywhere can plug in and duplicate themselves without any special training, experience, advantages or resources. It's a nice idea that just doesn't work in the real world.

Why? We're not robots. Not everyone wants or is able to do the same thing at the same time at the same pace and in the same way.

We must remember that people have different reasons for going into business and the specific goals they want to achieve. Not everyone wants to build a team. Some people want to make friends, have fun and earn as they learn. Some simply love the service or product and want to share the benefits with others. Some want to supplement their income with a few extra dollars. Some want a modest size business to reach a personal goal. Some want to build a world-wide empire. While Direct Sales is versatile enough to work for all these people, monolithic and inflexible Systems do not. Forcing everyone to function the same way sets them up for failure.

Author Darren Hardy, whom I respect and admire for his excellent book The Compound Effect, released an audio program targeted to the new network marketing recruit. In it, he parrots the System dogma by saying that we should forget everything we've ever done or learned or achieved, and simply follow the System and "don't mess with it." He exhorts us to don't think, just do. I completely disagree with his dangerously flawed advice. The proof is in the pudding. If blindly following a System was so effective, it wouldn't fail 98% of the time.

Besides, we are unique individuals. We have different dreams, goals and objectives. We possess an infinite variety of strengths, weaknesses, abilities, desires, backgrounds, skills, etc. Our differences define us and give us power and the ability to contribute in our own special way.

In the book The Go-Giver, character Debra Davenport says that "the most valuable gift you have to give is yourself." Another character illustrates the point that "All things being equal, people will do business with, and refer business to, those whom they know, like and trust." Author and master salesperson Jeffrey Gitomer asserts that our individuality is our competitive advantage in the marketplace.

Direct Sales is all about person-to-person business, building relationships and community. We cannot replace our empathy and uniqueness with a cold, rigid System and expect anything other than failure.

Another important point is that sales and team leadership are very different skills. People who can lead teams may not be good at selling services and products. People good at selling may not be good at leading teams. In the corporate world, few Salespeople make competent Sales Managers - they are entirely different skill sets. Perhaps that explains why the majority of successful network marketers are married couples, where the wife usually focuses on customers and the husband on team building; working together they cover both bases and increase their chances for success. Rare is the single person who can effectively master both skills.

There is nothing wrong with guidelines, best practices and standards for business operations and conduct. Our point is that no System, no matter how simple or carefully designed, can work for everyone, everywhere, every time. Nor is a System a valid substitute for years of hard work, sweat, tears, skills, learning and experience that come with success in the business world. Ask any entrepreneur.

In the New Paradigm, Systems do not exist. We focus exclusively on individual empowerment, relationships and community. We recognize that everyone is a unique person with unique dreams, goals and objectives. Training and mentoring is personalized and customized. We teach new team members how to design and create a successful and profitable stand-alone business by attracting and serving a solid base of happy, satisfied customers. Then, if they desire and when they are ready, to expand by building a team of their own. All is done in a supportive environment of joyful service to people, community and planet.

Friday, July 10, 2015

Fatal Flaw #2 - Hype And Disappointment

"It will bring tears to your eyes!" My wild-eyed acquaintance was bubbling with excitement, having returned from a rally where the Big Earner Leader made an earth-shaking announcement about an "upcoming incredible new product." He gleefully added that his company was The Best Thing Ever and ran off to inform his team.

It turned out that the "upcoming incredible new product that will bring tears to your eyes" was another over-priced version of products already sold by a dozen direct sales companies and every big-box store in town. Later I learned that my acquaintance, and the team of fellow employees he signed up, are no longer involved with the company and bad-mouth the industry every chance they get. 

Sadly, my acquaintance had fallen victim to Fatal Flaw #2, Hype and Disappointment - the most cruel and egregious flaw of them all.

Direct Sales/Network Marketing/MLM is famous for wildly over-promising and woefully under-delivering. We've heard the jokes: "MLM stands for Moms Losing Money" and a hundred others. However, the disappointment, hurt, financial loss and devastation is no laughing matter. The Internet is filled with thousands of stories of people who, in good faith, became involved in our industry to help themselves and their families, and ended up with crushed spirits, hopes and dreams...and in many cases, empty wallets. Each story reinforces the negative stigma and chips away at the credibility of our industry.

Why do so many people fall victim to hype and suffer the resulting disappointment? There are many factors; let's examine a few.

First, most people get involved because they genuinely want an opportunity to control their own destiny and create a better life for themselves and their families. While some may be driven by the desire to "get rich," the majority simply want to meet their basic needs and feel more financially secure in an uncertain, rapidly changing world. They trust that the industry (and the team they joined) will deliver on its promises. Unfortunately, 98% of the time it doesn't.

Second, it is easy to get in and easy to get out. Starting a Direct Sales business requires little up-front investment, $100 or less, and if it doesn't work out, not much has been lost. Compare to the enormous cost and risk of starting a traditional business with all the planning, bank loans, storefront, employees, regulations, etc. - way out of reach for the average person. The ease of entry and exit is one of our industry's competitive advantages...and one of its greatest weaknesses.

We contend that the low barrier to entry encourages rapid turnover, tire-kickers, lax commitment and poor choice of those who are not a good fit. We do not advocate raising the cost of entry; we want the industry to remain accessible to all. Instead we prefer a more thoughtful and wise approach to teambuilding and stricter standards for the selection of those whom we sponsor.

Third, it's often a case of the blind leading the blind. We may be recruited by people who are themselves just getting started as entrepreneurs and have not yet mastered the attitude, mindset and skills necessary to build a successful and profitable business. Ask any business owner - the learning curve is not something one can master overnight.

In our industry, recruits are told that simply following "The System" and talking to lots of people is all they need to do to be successful; that somehow, "The System" substitutes for years of hard work, sweat, tears, learning and experience. When people fail, they are blamed for "not surrendering to The System" or not working hard enough. As we shall explore in our next blog post, Fatal Flaw #3, the concept of a "duplicatable system" is delusional, bogus and unworkable. 

How do we identify and avoid the hype?

Very simply, when we hear these words from the smiling Big Earner on the stage or the Acolyte at the coffee shop: "It's easy and anyone can do it." "You can become wealthy in only two to four years." "If [Big Earner Name] can do it, you can too!" "Talk to everyone you know before someone else does!" "It's a ground floor opportunity." "Our company/service/product/compensation plan/etc. is the best." "God wants you to do this." and dozens of similar exhortations...run away as fast as you can.

Rule of thumb: If it sounds too good to be true, it most likely is!

Building any successful and profitable business takes years, especially if one is embarking on the entrepreneurial journey for the first time. If anyone tells you otherwise, it's disingenuous and pure hype. Walk away - no matter how seductive their pitch.

Instead, find an individual who tells you "it's not easy, and not everyone can do it." "Building a business can take three to five years, and there are no guarantees." "I've built a successful, profitable business - let me share my wisdom and experience with you." "Let's do this together, in the spirit of teamwork and service." In other words, rational, pragmatic, down-to-earth, reasonable statements that mesh with what we know to be true in the real business world.

In the New Paradigm model we recognize that Direct Sales/Network Marketing/MLM is no different from any other type of business, and that solid and proven practices (plus lots of hard work, persistence, education, mentoring, personal growth, attitude, mindset, skills and so forth) are necessary to build a successful and profitable enterprise that enables us to achieve our goals as we serve the best and highest good of people, community and planet.

Thursday, July 9, 2015

Fatal Flaw #1 - Lead With Greed

"If you get into business solely to make money, you won't. If you try to make a real difference, you'll find success." -Richard Branson

Have you noticed that presentations of "The Plan" (business overview/compensation plan) focus almost exclusively on the money? 

The typical pitch is enticing. "All you have to do is use a few products, get a few customers and recruit a few distributors. Then you teach them how to do the same. It grows exponentially: 5, 25, 125, 625. In a few years you'll earn $100,000 a month! If [Big Earner Name] can do it, you can too!"

Leading with greed is one of the fatally flawed business practices in our industry, for two key reasons.

First, it sets misleading, outlandish and unrealistic earnings expectations. 

Everyone may ooh and ahh at the big numbers and fancy titles presented by the smiling Big Earner on the stage, but the truth is that most people will never earn those lofty incomes. In fact, the vast majority of Direct Sales distributors earn less than a few hundred dollars a month. A small percentage earn a livable income and a tiny fraction enjoy the lifestyle of great wealth and freedom so prominently featured at rallies, opportunity meetings and articles in company magazines.

Also, it's important to mention that the 98% who dropped out probably lost money depending on how active they were and how much they spent on items other than products, such as travel to conferences and rallies, catalogs, brochures, web site subscriptions, their upline's motivational materials, etc.

I've often wondered why the measure of success in our industry is big money and free time. What if we don't want an extravagant lifestyle? What if we have more modest goals and expectations?

For example, one of my sponsor's team members got into the business to earn enough to pay their phone bill and their mother's cable bill, and they accomplished that goal. For them, that's success, and I enthusiastically applaud their achievement. Other people want to earn extra income to pay down debt, increase savings, travel more often, whatever their unique personal goals may be. That's how THEY define success, and to me, that IS success.

Why must we constantly focus on the Big Earners and their lavish lifestyles? Instead, let's present a wide range of stories featuring real-life people who achieved modest personal goals. It's realistic, believable and relatable, counteracts the greed-focused marketing that our industry critics rail against, and provides real-world examples of what's possible for average people like us to achieve.

Second, and more important, focusing on the money detracts from how we earn it: Serving our customers. 

Customers seem to get short shrift in our industry (although, thankfully, this attitude appears to be changing). However, as any successful business owner will tell you, if we don't have customers, we don't have a real business. 

We must remember that we exist to serve our customers, and through them, our community and the planet. The money we earn is the result of the service we provide, and the amount we earn depends on how many customers we serve and how well we serve them.

Money is our scorecard, our reward for a job well done. It's not the job itself. As Jim Rohn said, "We get paid for bringing value to the marketplace." Our primary focus should be on providing value, not keeping score - our customers know the difference.

When we lead with greed and focus on the money, potential customers appear to us as a giant dollar sign - and they feel it. Customers buy from us because what we have to offer meets their needs. It's all about them, not us. They buy for their reasons, not ours. And, not everyone wants what we have to sell. Our challenge is to find those for whom our service or product meets a need, solves a problem, makes life easier, brings joy and satisfaction. Only then will we make a sale and be compensated accordingly.

Let's avoid the lead with greed trap and maintain proper perspective of the role money plays in our industry - and every other industry, too.

In the excellent book "The Go Giver," the character Ernesto says, "'Does it make money?' is not a bad question. It's a great question. It's just a bad first question. It starts you off pointed in the wrong direction. The first question should be, 'Does it serve? Does it add value to others?' If the answer to that question is yes, then you can go ahead and ask, 'Does it make money?'"

The New Paradigm takes Ernesto's "serve first" philosophy to heart. We place service to people, community and planet first, knowing that rich financial rewards will be the result of our hard work and contribution.

Imagine how much good we would accomplish, and how wonderful and profitable would it be, if the entire Direct Sales industry did the same?

Tuesday, July 7, 2015

Our Industry's Three Fatal Flaws

Recently I gave a speech about our project to reform and transform the Direct Sales/Network Marketing/MLM industry. The part that generated the most interest and reaction from the audience was "Three Fatal Flaws." Audience members were quite vocal and emotional because of their overwhelmingly negative experience - another indication of how poorly the general public feels about our industry.

Before we begin, it's important to reiterate that the Direct Sales model itself isn't responsible for the 98% failure rate and horrible reputation; it is the way the business is practiced. The basic business model, person-to-person marketing of services and products, is proven and solid. Instead, corrupt, unrealistic, unsustainable and in some cases fraudulent practices are the cause of the industry's woes, wreaking havoc and unfairly creating the perception that the business model itself is flawed.

While there are many problems with the industry's current business processes and practices, our research identified what we call the Three Fatal Flaws:

Fatal Flaw #1: LEAD WITH GREED - Focusing on money first and setting misleading, outlandish and unrealistic income expectations.

Fatal Flaw #2: HYPE AND DISAPPOINTMENT - Over-promising and under-delivering: It's easy and everyone can do it; mansions, fancy cars, free time, world travel, fire your boss, become wealthy in only 2 to 4 years. In reality, 98% who try, fail - leaving a trail of bitterness, betrayal, humiliation and anger.

Fatal Flaw #3: SYSTEMS DON'T WORK - Just follow a one-size-fits-all duplicatable system, talk to enough people and you'll be rich; don't ask questions, surrender to the system and do as we say; buy our motivational materials and attend rallies to prove your commitment. No legitimate and successful business in the world works this way and it's the biggest reason that people fail.

We will describe each fatal flaw in more detail in upcoming blog posts. Then, we will shift focus to design of the New Paradigm, the prototype for a higher-purpose venture that uplifts and empowers people, community and planet.

For now, think about your own experience with the industry. How have the Three Fatal Flaws affected you? What would you do differently? What do you suggest as solutions and/or alternatives?

What Are We Striving To Accomplish?

Author and educator Robert Kiyosaki is a huge fan of the network marketing industry because, in his opinion, "it gives the average person a chance ... to build an asset that can set them financially free."

That's music to my ears, because I am one of those "average" people. I don't have a fancy college degree. I work a corporate desk job, sit in rush-hour traffic, pay my rent and provide for my family as best I can. I've had successes and made mistakes. I'm one of the 30% of Americans who have modest savings and little to nothing in their retirement account...and, like them, I feel insecure about the future.

(Yes, I take full responsibility for my choices over the years. Wisdom comes with time; I would make different choices given the chance. However, I can't go back and do it over again. All I can do is make smarter choices now.)

This isn't my Dad's economy. Things now are tougher than ever: decent paying jobs outsourced to foreign countries, massive student loan debt, high cost of living, declining wages, income inequality and the enormous fundamental changes caused by technology, globalization and corruption by the billionaire class.  

What can a 50 year old man realistically do to catch up? Work two jobs? Start a new career? Cut living expenses to the bone and save every possible penny for the next 15 years, or as long as I remain employable, and hope no major medical problems occur that wipe it all away? 

Wages alone won't do it. The next best way is to start a business. With what capital? A traditional business or franchise costs $50,000, $150,000, quarter-million dollars or more just to get off the ground. Definitely not an option - not only do I lack a big chunk of cash to invest, it would take decades to save that much money or to save part of what's required and hope to get a bank loan for the rest. Even if I could, there is no guarantee of success.

Robert Kiyosaki is right: When one evaluates all the options, direct sales/network marketing appears to be one of the few viable options (or perhaps the only option) for someone in my position to start a business. It requires little up-front investment, can be built part-time, promotes personal growth and enables one to positively impact people, community and the planet.

However, the industry suffers from a 98% failure rate and a horrible reputation. So it's not a guaranteed ticket out of financial insecurity - otherwise everyone would do it and be successful. Fixing the root causes of the failure rate and reputation is one of our major objectives, as described in the Manifesto.

What we are striving to accomplish in this project is to prove that it can work. That someone like me, with no special advantages, wealth or skills, can build a modest business in my spare time and earn at least $500 per month net profit.

Some of you may laugh and say, "$500? That's all you want?" No, I would eventually like to grow it beyond that point in order to reach my goals, but it's a reasonable place to start. Did you know that an extra $500 per month would make a huge difference for the average American family? It certainly would for me. What would the extra income mean for your family, and how would it feel? Why not start there?

Monday, July 6, 2015

Direct Sales Industry - Room to Grow

Although it seems that everyone knows about the direct sales industry, there is room to grow. Did you kinow that, in terms of market size, our industry comprises a rather small part of the economy, at least in the United States?

In 2014, about $30 billion dollars in services and products were sold through Direct Sales distributors. Compare that to the e-Commerce (online) market, around $425 billion dollars, and the gigantic size of the overall Retail market, $4.5 trillion dollars.

Another figure to boggle our minds: Total consumer spending is about $12.5 trillion dollars per year, approximately 70% of the entire $17.7 trillion dollar United States economy. (Now you know the main reason economists pay so much attention to how much money you and I spend - it's a primary indicator of our country's economic health.)

Getting back to Direct Sales, what the above numbers mean is that our industry's size is only 7% the size of the e-commerce market and a minuscule .6% (six tenths of one percent) of the entire retail market...and a tiny fraction (.2%) of consumer spending nationwide.

We definitely have room to grow!

More interesting statistics about our industry:

  • There are about 15 million distributors
  • Average annual sales per distributor is $2,000

Imagine if more consumers chose Direct Sales as the way to purchase services and products they use every day. What would that mean for us? Let's say 10% of retail spending went through Direct Sales instead of big-box stores and online web sites. Average annual sales per distributor would explode, from $2,000 per year to $300,000! What would that mean for you, your family and your team?

(Side note: A key part of our project's educational outreach is to encourage participation in the Buy Local and Buy American movements. Properly positioned, Direct Sales could play a leadership role, bring tremendous value to customers, community and planet - and benefit accordingly. More on this later.)