From: noring@netcom.com (Jon Noring)
Subject: Re: Selective Disclosure (was Re:  LOOKING FOR GOOD MLMs (?) )
Organization: Netcom - Online Communication Services  (408 241-9760 guest) 
Date: Wed, 14 Oct 1992 01:28:40 GMT

In article paradis@sousa.ltn.dec.com (Jim Paradis) writes:

>I've been largely a lurker in the MLM debates.  I watch them with keen
>interest because I'm interested in starting my own business.  However,
>you might call me an "MLM skeptic".  I don't dismiss them out of hand
>as some folks do, but I'm not completely sold on the idea either.
>
>Anyhow: Jon's article prompted a few thoughts:
>
>>1.  Because I've looked closely at this business, I see that it is a great
>>    business, and if others see it as I see it, then they may want to get
>>    involved also - if they see that it would meet some need in their life.
>
>As you said, Jon: an "MLM believer" will believe that s/he has looked
>closely at the business and found it outstanding.  An "MLM naysayer"
>will argue that the believer has been supplied with misinformation.

Of course, I said that somewhere else in my original post.  There are
definitely two sides to just about everything I've stated.


>I think the truth lies somewhere in between these two extremes.  The
>question is: where can information about any particular MLM be found?
>Plenty is to be had from the promoters of the MLM itself, but like any
>sales information, it's bound to be biased.  There's plenty of horror
>stories to be told by the naysayers, but they too may have axes to grind.
>There is *some* truth in all MLM stories (e.g. Amway probably *is* a
>$30B company, and there are some organizations that probably *do* practice
>deceptive sales practices), but where can a prospect go for some relatively
>unbiased information?

That is tough, I'll admit.  I make sure that my prospects see all aspects
of my business, including the Sales and Marketing Plan, the support system,
the legal aspects, the product line and pricing, the history of my company,
the code of ethics etc., etc.  I also tell them to go see their CPA, CFP,
attorney, etc., for second opinions and to get a Dunn & Bradstreet Report
on Amway, but not too surprisingly none have taken me up on my
recommendations.


>[I know, I know, there's at least one fellow out there who's producing
>an "MLM newsletter", but how do I know there are no conflicts of interest
>*there*?  I occasionally receive investment sales pitches that are dressed
>up to look like magazines... but strangely enough at least half the articles
>speak favorably about the XYZ Fund...]
>
>>2.  But, if I drop the name of the MLM too early, before giving them specific
>>    information, then there's a good chance that the "steel door" principle
>>    will take effect and I will not be able to share with them my information
>>    and they will make this negative decision before getting all the facts.
>>
>>3.  Thus, I must give them information about the business, but without giving
>>    them some name upfront that will give them an emotional, rather than a
>>    factual basis for making a decision. 
>
>Well, Jon, what about the fact that *not* giving the name or nature of 
>the business can activate some steel doors of its own?  That it sure
>does in my case!  Whenever I hear someone talk about an "incredible
>opportunity", and talk on and on about how "this is an important business
>that services vital needs" and how "advancement potential is unlimited",
>without *once* mentioning *either* the name of the business *OR* the
>nature of the work involved, I immediately get suspcious.

Very true!  It's all in the approach.  Here's one example of what I've told
prospects, and what is said is true and actually gives a more accurate
picture of what this business is all about than saying it's Amway:  "I'm
presently expanding my consumer-based marketing business here in the U.S. as
well as internationally with the advice and help from a group of successful
businessmen who've formed a training association called INA, International
Networking Association.  Have you ever heard of INA?  (Usually 'no'.)   My
own marketing company represents over 500 major corporations (I usually name
a few) with about 12,000 products and services, and the current growth rate 
in U.S. sales through our mega-network this year is projected to be well over
40%.  I am looking for sharp and ambitious people who want to get into their
own home-based business, with the task of expanding both a wholesale and a
retail marketing network, which is done essentially person-to-person, just as
I am talking to you now.  The interesting thing about our bonus-structure is
that one can develop, if successful, something akin to residual, or an
on-going, willable income.  Anyway, it would take too long here to discuss
the details, but how about if we set up a time, say at a coffee shop or at
your home, where I can sit down with you and give you all the details of the
profit structure of my marketing network as well as the companies that I
represent?"

Anyway, this has worked for me (or something like it) and I've never had one
complaint that I didn't give them enough information as to what it's all
about.  If you still have problem with what I say in my approach, then I guess
we'll just agree to disagree.


>I think that's the real complaint here... it's not that you omit the *name*
>of the business, but that you seem to obscure *ALL* concrete details about
>the nature of the business.  If you don't want to call it Amway, fine.
>But when you make your pitch, at *least* say something about what I'm going
>to be doing to earn my money!  e.g. "You know, there's a lot of opportunity
>in the home products business.  I know of one relatively painless way to
>break into this market.  Here it is..."

Actually, that's an approach I've used also (you'd be good in network
marketing, I'll have you know :^) ).  Let me reiterate that it is all
in the approach, and how well the training organization trains the new
people.  I would wish that I could just walk up to anybody and say, "Do
you want to look at the Amway program?  It's great!" and show the plan to
most of those that I asked.  But alas, we have to contend with the
misconceptions about the business, and the "Steel Door" principle I talked
about in my original post.  The Amway business, and any MLM, is a simple,
but not an easy business.  Those who build a successful network definitely
EARNED every penny that they make.  If it were much easier, Amway, or any
other MLM, would not need to pay out the lucrative bonuses that they do.


>>Now, for point three above, those who support MLM would call the curiousity
>>approach a process of selective disclosure;  opponents would call it deception.
>>But is it deception?  For those of us who hold the facts we do about this
>>business, the answer is no.  In fact, many, including myself, would justify
>>this with the statement that telling them the name before the facts would
>>actually be misleading them since they may come to, what we believe to be,
>>incorrect conclusions about the business.
>
>Well, nature abhors a vacuum.  If you present a prospect with an information
>vacuum, s/he is going to fill in the details... and quite possibly get the
>wrong message... either one of "Ah, it's only a scam... and since he's telling
>me nothing about it, must have something to hide!" -OR- "Gee!  Here's my
>opportunity to Get Rich Quick!!  Sign me up!!!!".

Agreed.  I've learned this first-hand more than once;  I'm guilty as charged.


>If I were to build an MLM organization, I'd likely do it in such a way that
>*everyone* I signed up knew *exactly* what was going on.

I do this in my business.  My people, before signing up, are told exactly
what it takes to build it successfully, since that is the most profitable
approach for me (I wrote a whole "exposition" on this once, and if enough
people ask me I'll repost it.)  For example, I'll ask them if they would
like to go 'direct' in one to two years - they usually say 'yes'.  Then I
tell them that we must then show this program to at least 100 people who are
at your ambition level and above in the next 1 to 1.5 years.  Of course, I
tell them that we work as a team, and that 100 in 1 year is only two per
week, but that we must be consistent (as a sideline note, statistics show
that only about 5% of all Amway distributors show the plan anywhere near
this level, the rest show it a lot less, I've never even done the business
at this level - I've shown 130 plans in essentially three years and I'm still
flirting with direct - so close ;^) .)


>Like I said, Jon, I'm a skeptic, not a naysayer.  I'm not flaming MLM's
>here... just one approach to them.  But tell me: how much lattitude does
>Amway give its distributors in their sales approach?  F'rinstance, if I
>were to start an organization and were to start my sales pitch with, "HI,
>would you like to join Amway?", would Amway let me do this?  [I know you
>think it's not the most *effective* way to show the plan, but would Amway
>let me do it this way if I wanted?]

I appreciate your skepticism.  Yours is one of the few intelligent posts
I've seen by those who have difficulties with MLM.

You'd be surprised that Amway keeps a strict hands-off policy and does NOT
tell its distributors HOW to market the products and the program, they leave
that up to the distributor training organizations that have evolved over the
years.  But Amway does require that whatever approach is used must meet a
fairly rigorous Code of Ethics, and that the prospect be given a FTC-approved
Sales and Marketing Plan (the infamous SA-4400) which outlines the bonus
structure and which gives some disclosure statistics as to the success of the
"average" distributor.  I can't say this about other MLMs, that is, whether
the parent company takes an active role in actually training their
distributors on the 'hows'.

One more note on the distributor organizations.  There are at present about
200 in the world of Amway, and there are substantial differences in their
techniques, approach, etc.  Some are very successful and rapidly growing,
others are languishing.  Some are highly retail oriented, others are highly
network oriented, and others are somewhat balanced.  It seems odd to an
outsider to see these differences, but that has been one reason for the
robustness of the Amway business over the last 30 years.  In essence, Amway
let's the organizations, rather than Amway itself, lead the way in marketing -
Amway concentrates their efforts on the product line, the legal mumbo-jumbo
the integrity of the bonus structure, and the enforcement of the Code of
Ethics.

Jon Noring

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