Todd Durrant’s Random Thoughts
Follow the efforts of a creative, crazed entrepreneur.

“Hey, I’m working with a new company and…”

Last week I got a call from a neighbor and friend.   He’s a very nice, hard-working guy, and I had no reason to run screaming for cover when I saw the name pop up on caller ID.   After a brief conversation he said something like this:

“Well, the reason I’m calling is because I’m working with a new company and I need to do some training and would like your feedback.”   OK, that’s fine, I’m happy to help him out, but replied that I don’t know anything about safety inspection, which is his regular job.   Within seconds and a couple awkward moments, I figured out that this was likely another friend who wants to sit down and talk about “some new company” (usually the name is undisclosed until they show up at your door) which would undoubtedly end up being multilevel marketing (MLM).

I worried for a few days because I said he could indeed come over on Wednesday evening.  I was running over the scenarios in my mind.  How could I be nice, show some support, but express that I’m not remotely interested in whatever it was he was going to pitch?   He’d said that there would be a “trainer” with him too, since he was new and would be learning the ropes.   So, there would be a complete stranger meeting with me too, most likely that person would be more hardened and willing to argue my objections.   Let me relieve the tension right now by saying that Wednesday night rolled around and my buddy showed up with his “trainer” and it wasn’t exactly MLM.  It was a financial advising company that sells a blend of mortgage loans, insurance, etc.  Whew!  I still had to sit there for about two hours going through the pitch, and of course the accompanying offer to become a sales rep and “join the team” because I too could easily make an extra $1000 or more every month for a couple hours of my time.   In that way, it was a bit like MLM, because you’re never asked just to buy a product, but to become a salesperson for the product too.   But at least I wasn’t being told it was best to buy my shampoo through a mail-order chain of command.

Let me back up.  I don’t want to upset any of you wonderful readers who may be complete fans of MLM’s.   It’s a business model that appears solid enough to stay.   There are people who are completely devoted to multilevel marketing and it’s supposed benefits.   It’s just not a model that I find appealing, for several reasons.  Those reasons are based on my own personality– so take them for what they are worth (not much).   First of all, I like the idea of buying the product I need easily, and preferably at a low cost.   If I want dish washing detergent, or toilet bowl cleaner, or hair care products, or whatever, I go to the local supermarket and buy the stuff.   I usually pick whatever is on sale.   Bingo!  I’m done.    Often, with MLM companies, you are asked to plan ahead for what products you’d like, order them from the “sales rep” who signed you up, and then wait for the delivery.   All of this comes at a nifty higher price than you’d pay on the shelf, but of course, that is because it is “higher quality”.   Hey, I run a mail-order store, so I know there are some things you have to buy and wait, but not common household supplies.

Yes, the prices are higher, but that’s also because the rep who signed you up needs to make something from your order, and the rep who signed up THAT rep, and so-on.   Everybody gets a cut, so everybody makes money because you’re willing to pay a bit more for superior products.  Right?  That’s the idea anyway.

Now, understanding that many of us don’t want to go out of our way to order toilet paper in advance, using old newspaper while we wait for that next shipment to arrive, many MLM companies focus on a single product, and usually that product is associated with some miraculous health benefit.   It can be consentrated juice squeezed from a berry only found on some remote Pacific island.  Or maybe it can be a powder made from some little flower or whatever.   But the ONLY way you can get said product is through your rep who signed you up.  So, you pay that $30 for the bottle of juice, so everybody gets their cut down the line.   You’re encouraged to become a rep because it will help you make money from the people who YOU sign up, thus allowing you to get a little kick-back to help you buy more of the juice yourself, so it’s like you get a discount.  Right?   Now, what problem do I have with this?   There are a couple.  First of all, I once had a friend come over, who I respected and still do, trying to pitch the juice to me.   My oldest son has type-1 diabetes (juvenile diabetes).  My friend instantly showed that he had no clue what the difference is between type-1 and type-2 diabetes because he tried to explain that if my son were to take a gulp of the juice every day, he wouldn’t need insulin anymore.   He would basically be cured.   Um…that could no sooner happen than an amputee growing back a leg from drinking this berry juice.   My wife and I tried to explain, but he smiled and said he had read of cases where people could stop taking their diabetes medication (of course, for type-2) because of this juice.   As he left, he gave us a free bottle.  We used it, upping our son’s insulin dosage when he had any, because of the added carbohydrates in the juice.    It actually tasted pretty foul.   But we never ordered a $30 bottle of juice.

Here’s the other problem, besides some of the claims– if this stuff were so beneficial to the health of mankind, then put the darn stuff on the shelf where the vast majority of us can buy it!  Put it there for a good price too!   Regular distribution is so much more convenient, and affordable!   But no, you can’t buy it on a shelf.  You can ONLY get it by being one of the lucky insiders who has been contacted by a rep.

OK, here is another problem I have with MLM in general.   I’ve met those who offer the general products, or who offer the special, life-saving products, and those who sell the telephone services, and everything.  But of all those people I’ve politely let into my home, not ONE of them has EVER made a living working for those companies.   Not one.   Now, I’m not saying that there aren’t people who DO make money with it.  I’m sure there have to be.  After all, don’t they have those kinds of millionaire reps give talks at their rally conventions so everybody can get excited about selling the product?  So, they must exist.  But of the rank-and-file salespeople I’ve met, every one says the same thing when I’ve asked if they are making a living with this.   “Oh, I’m just starting, but I WILL be making money, once I get a few people signed up…”

Yes, they tell you that you’ll make a living, better than that old job you’re working now.  But they aren’t there yet themselves, so it becomes a bit hard to believe.   In fact, looking now, of the people I’ve met who I still keep in touch with, most of them have long since given up on those MLM’s.   I suppose after they have been at it for a few months and get that first “paycheck” with a $100 commission, they think, “why I’m a throwing away my time with this?”

OK, here is my last gripe about the MLM’s.   If you are one of the brave souls who decides to make a go of it– yes, you are going to succeed!  You’re going to make that $5000 per month and move on up the ladder!   Well, unless you are a social butterfly of the highest order, you’ve pretty much burned through all of your contacts within the first few weeks.  Pretty soon your friends aren’t looking you in the eye because they’ve either told you “no thanks” or they are worried you’re going to want to pitch your stuff to them.   I can’t say this is always true.  I actually have one friend and neighbor who came over to see if I was interested in the products.  When I said “no thanks” he just said, “OK” and didn’t act the least bit disappointed.  He is an even better friend now than he was then, and is one of the nicest people I’ve ever met.   I’ve never felt like that pitch put a wedge in our relationship, and he never brings it up anymore.  He has never left a feeling that I’m a lesser friend because I didn’t support his business.   So, it isn’t always the case, but I think it would be accurate to say that MANY times there is a wedge once you’ve tried to sign up a friend to be part of your MLM chain and they don’t buy it.

OK, here’s the best one I can think of (by “best” I mean “worst”).   I got a call from somebody and didn’t recognize his name.  “Hey, Stephen,” he said, “remember me from Skyline High?  We hung out together!  I just thought I’d give you a call because you were always such a cool, smart guy!  I wanted you to know about this company I now work for…” CLICK!

My first name is Stephen, but for my entire life I have gone by my middle name, Todd.   If this guy used to hang out with me, he would have known I am Todd.  I guess he was just looking through an old yearbook or phone book, or something nutty.  If he had gone that far down the list to start cold-calling people he could at least PRETEND to know, then he must have already burnt a lot of bridges, or at least doesn’t have a lot of friends.

Sorry if I offend anybody.  I really don’t mean to!  If you’re making a living with an MLM company, then congratulations!   Hopefully you’ll continue to make a living and even get rich.  I’m cheering for you!   But maybe reading this will help you understand how some of the rest of us feel.  We just don’t get it.   I’ll keep going to the store and buying cheep toilet paper, and I’ll buy cheap fruit juice and pretend like it gives me super-hero strength or something, just to feel extra special about it.   I’m just not going to join the club and sign up, so maybe let’s just be friends and you don’t ever call me with the “I just joined a new company and I’d like to sit down and talk with you about it,” pitch.  OK?

I will say though, if this financial guy and my neighbor come back and show me how I can be debt-free in five years, I MIGHT actually go for it.  Maybe.   But I’m not sure that will happen.   I only had one strange moment during that two-hour visit, and that was when the trainer was showing me a mock-up scenario based on a real customer they had helped.  He showed how the family had lived in their new house for a year and owed $195,000 on the house, owing for 29 more years.  They also had $40,000 in consumer debt (car loans and credit cards).  This company had combined their loans into one, and now the family was paying $500 less every month on the same debts, and had a new home loan worth $241,000 that would be paid off in 16 years instead of 29.    They put that extra $500 saved every month into a retirement plan which could net them over a million dollars when they retire.   “Now, wouldn’t you admit that is a great change?” I was asked.

I pointed to the new loan amount and explained my concern.   You say they now owe $241,000 on their home?  “Yes, but that’s because we combined everything into one lower payment.”   So, I’m guessing, based on the fact that they owed $195,000 after living in the home for a year that the home was near $200,000 or maybe as much as $220,000 when they bought it.   “probably”   Then these guys are horribly upside-down on their house now, if you over-appraised the house so that they could qualify for a $241,000 loan!   “Oh, we don’t do that!  We only give out a loan up to 90% the value of the home,” he reassured.   Then, they must have made a huge down-payment of, oh $60k or $70k to buy the home a year earlier?  In which case, they weren’t too bad off to begin with.  Right?   “Um, yeah, they must have had a huge down-payment.”

You see, if you combine your loans into one mortgage payment, I don’t care if you’re saving $500 per month on your payments if you now owe more on your house then it’s worth.  Because if you ever have to move, you’re in a world of hurt!   “Gee honey, we have a $241,000 loan on a house we can only sell for $210,000!  What are we going to do?  We are so screwed!”

That’s enough random thoughts for today.


PS.  It should be noted, I may be approached more often by MLM reps than most people, simply becuase I’m a business owner, so they always come at it with the angle, “Hey Todd, you are a businesss owner, so I know you’ll love this, because it is basically running your own business.”   OK, I whole-heartedly admit, I make very little on my music business.  I’m at least as broke as many MLM reps.  But I sell something I love, and I sell it to people who willingly come to me to buy it.   For some reason, it just feels different.   There…now do YOU want to sign up to sell CD’s under me?   [wink wink]


One Response to ““Hey, I’m working with a new company and…””

  1. […] “Hey, I’m working with a new company and…” « Todd Durrant’s Random … […]

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