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May 1999


Upline Reviews and Recommends

Romantic Semantics: Deciphering MLM's Secret Language - Len Clements

Romantic: Imaginative, but impractical; not based on fact, imaginary.
Semantics: The study of meaning in language form with regard to its historical change.
  -- American Heritage Dictionary
Len Clements

How do these words apply to Network Marketing? Let us count the ways. Network Marketers have, over the last half century, evolved into some of the greatest spin doctors and word-smiths our society has ever created. We've become masters at romancing our semantics. That is, we as an industry have created this wonderful, albeit misleading and illusionary, way of stating facts. As paradoxical as that may sound (illusionary facts?), practically every line of every ad and every sentence spoken at a typical opportunity meeting now contains some degree of evidence of this. To wit ... "No, we don't accept credit cards. We're in the business of getting people out of debt, not further in debt!"

I didn't make that one up. A prominent MLM company made this exclamation several years ago-- after burning through 22 Merchant Service providers that refused to accept their account.

How about this classic: "We are absolutely debt-free!" Translation: "No one will lend us money!" Now understand-- I'm sure there are many MLM companies who are debt-free because they pay for everything with cash and can comfortably afford to do so. Good for them. But how do you know? Simply proclaiming yourself debt-free certainly implies that you're cash rich and financially prudent, but it could mean you can't initiate credit terms, or you've screwed so many of your vendors in the past they only agree to do business with you on a cash basis. The latter scenario would likely signal the death knell of the company. Yet, they could still claim "We are absolutely debt-free!" and be absolutely telling the truth. Another paradox: Dishonest honesty.

I've always loved this one: "We're approaching momentum!" If we were to make the logical assumption that all MLM companies will eventually achieve some degree of fast growth if they stay in business long enough, practically any company could make this claim. But what exactly is "momentum"? Is it 50% growth in one month? Is it 100% monthly growth over three months, or 1,000% in a week?

Let's take a look at one recent situation. A ten-plus-year-old company had never received more than 350 applications in a single day. That was their record. Then, one recent Thursday, out of nowhere, 800 apps swamped the home office. The next day, 1,300 more! Some of their distributors rode through MLMville yelling "Momentum is coming! Momentum is coming!" Was it? Well, sounds like it, doesn't it? But let's take a peak behind the scenes. This company had a $295 enrollment package (I've changed the details here to protect the innocent). They had also just absorbed the distributor base of another MLM company. This new influx of distributors were given a grace period to re-enroll and have the $295 fee waved. Guess when the deadline was? That's right. Five o'clock that Friday.

Pay no attention to that man behind the curtain.

Let's stay with this issue of "momentum" a bit longer. This is surely one of the most romanticized words in the MLM vocabulary. What exactly is "approaching"? A common MLM myth that continues to go in and out of remission is that MLM companies hit momentum when they reach $50 million in annual sales. The truth is, one company out of thousands over the last 53 years went into momentum at that point (Nu Skin around 1990). Not one before, not one since. For some reason, though, that's now the accepted benchmark by many MLM romantics. When they boldly claim that their company is going into momentum soon because they are "approaching $50 million in annual sales," are they being truthful? It's hard not to be. If that company had sales last month of $10, and sales this month were $20, they are, in fact, "approaching" $50 million in annual sales.

Rationalizing: Lying with a clear conscience.
That's the Clements Dictionary definition.

The word games some companies play to avoid the Multi-Level Marketing stigma are almost funny. Almost. Multi-Level Marketing: Multiple levels of people marketing. Pretty simple, isn't it? Yet there are companies out there that will deny ad nauseam, even to the point of legal action, if you refer to them as a Multi-Level Marketing operation-- even though there are obviously multiple levels of people marketing therein. What's so absurd about this is that their delineation from MLM is based solely on their making up a different group of words for things. For example, Melaleuca is not Multi-Level Marketing, they are "Consumer Direct Marketing." Market America is the "UnFranchise." Mary Kay Cosmetics is "Dual Marketing." And they don't have "break away" groups, they have "offspring" groups. They don't have "levels," they have "tiers."

I think I'll call the tires of my Mitsubishi "landing gear" and the body a "fuselage" and the cab a "cockpit" and the horizontal fin on my trunk a "wing" and then I can rightfully claim to be an airline pilot. Can't I?

Sarcasm: Mocking and contemptuous irony.

Here are a few other recent examples. I'll just run through them quickly.

"We're listed with the Better Business Bureau!" One of the most common ways a company gets "listed" with the BBB is by having complaints registered against it. A company chooses to be a member.

"(Fill in the blank) has previously owned/operated two multi-million dollar Network Marketing companies!" Mohammed Ali wanted to be "four time Heavy Weight Champion." Achieving this feat required that he lose at least three times. So, if so-and-so used to own and operate other MLM companies, what happened to them? They went out of business? They were shut down? The shareholders booted him out? He sold his interest and is now starting another MLM company in competition with his old company? The possibilities are myriad. None of them are good.

"Our products are listed in the Physician's Desk Reference." The PDR lists what you pay them to. The publisher "does not warrant or guarantee," nor have they performed "an independent analysis," nor are they "advocating the use of" any product found therein. That's straight from the forward of the 47th edition.

"Our product is a $60 billion industry!" In other words, you're trying to sell something everyone already possesses?

"We don't sell lotions and potions!" So you're saying you've intentionally avoided the one product niche that the largest, most successful MLM companies and the richest distributors are all involved in? That's a selling point?

"No meetings!" So you're saying you don't offer what has been proven to be the single most effective enrollment and training method throughout MLM history? This is a benefit?

"No selling!" So you're ... lying?

"Our infinity bonus pays 10% down to the first Platinum-With-Diamonds-In-It-Director in the leg." Translation: "Our infinity bonus pays down a few more levels and then it stops."

Mr. Webster and I have a very different definition of "infinity" than many MLM companies. I'm pretty sure infinity means doesn't stop.

Here are more illusionary benefits. . . .

"We allow you to enroll your spouse (or yourself) on your own first level!" An illusionary benefit based on the illusion that you're the only one that benefits. If everyone else has the same benefit, and they're all double-dipping, too, then sure, you'll get paid double-- on half the volume!

"No (or little tiny) monthly personal volume requirement!" So you create this big downline full of people all sitting around waiting for someone to order something. If you don't have to order very much, then they don't have to order very much.

"You can earn overrides on your own personal volume!" This essentially amounts to a rebate. Problem is, it's really just a tax-free loan to the company that you will pay income tax on twice! Think about it. You pay $10 of already taxed income for a bottle of vitamins. The company keeps it for a month, then pays you back $2 of your own money. They got free use of your money for a month, and Uncle Sam says that $2 is new income. You get double taxed instead of just buying your vitamins for $8. The company benefits in two ways: Financially, and the creation of good will. The distributors actually think they're doing them a favor!

Here's my all-time favorite: "We sell our service at slightly below cost, but we make it up in volume." I think we should pause for a moment on this one.


Okay, let's continue.

"(Fill in the company) was ten years in development!" Does that mean the founder thought about it for nine years, and spent the last year putting everything together?

"We're in prelaunch!" The birth of an MLM company is no different than the birth of a baby. You're never in "prebirth." Either you're born, or you're not. Either you're processing applications, shipping product and cutting checks, or you're not. "Prelaunch" is nothing more than a marketing gimmick to entice the naive newcomer to MLM who still believes there is an inherent advantage to "getting in at the top." Some companies have romanced this illusion for literally years! I know one company that claimed they were in prelaunch in their third year of business!

Statistics can be romanced as well. And when you couch them in well-played semantics, the results can go from ridiculous to dangerous.

"You can earn up to $90,000 per month, or more!" Read this very real ad headline carefully. It essentially covers every number from zero to infinity. The ultimate Truth in Advertising.

"Over 300,000 people have joined our company!" This was also a true statement at the time. Of course, the ad forgot to mention that 230,000 have since quit. Note, it doesn't say they have 300,000, it says that's how many "have joined."

Along these same lines, several less-than-five-year-old MLM companies today are bragging about their distributor base of 500,000-plus. The catch is, they are counting how many sequential ID numbers they have given out throughout their history. Each could lose 50,000 reps next month, and gain 1,000 new ones, and that number will go up to 501,000

Hype: To increase artificially.

Speaking of less-than-five-year-old companies, have you heard this one? "Only 26 (29? 32? 36?) MLM companies have made it to their fifth anniversary." The most ironic thing about this wholly incorrect claim (I have 79 such companies in my database) is that it was popularized by a leading distributor for a company that had not yet celebrated its fifth anniversary! The intent here, obviously, was to scare prospects away from less-than-five-year-old companies. The reality is that the vast majority of MLM failures occur in the first two years. So to then suggest that the vast majority fail within the first five years would be an accurate statement, would it not? But then, so would it be to say that the vast majority of MLM companies fail within the first 20 years. Of course, you'd only say that if you were involved in a 21-year-old company.

But the illogic of this scare-tactic propaganda goes even deeper. Even if the 26 company figure above were accurate, it still wouldn't really mean what it's intended to mean. Of all MLM companies that have ever existed in the last 53 years, the vast majority launched this decade! Of course there are very few old MLM companies. Using the same illogic can prove that the Model T Ford is better built and lasts longer than a Lexus. After all, of the cars still on the road after 75 years of use, almost all are Model T's and not one is a Lexus.

This one drives me nuts: "If you get four people who each get four, you can make $800 with just 20 people!" These types of pitches will even be referred to as "conservative." They also assume that every single distributor you enroll will enroll four others, and that the bottom 16 will never quit even though they have no downline themselves, in fact no one ever quits, and every single distributor in your downline always orders each month.

Conservative: Moderate; cautious; restrained; erring towards the negative.

And what about those really low attrition rates we keep hearing about? Is a 6% attrition rate good? Sounds pretty good-- if they're talking about last year, or over the life of the company. But how do we know that's what they're talking about? They could be referring to yesterday-- or last week. We don't know. They never say. Wonder why.

Reorder rates can be manipulated in much the same way. More than one popular program has recently claimed a "75% monthly reorder rate." Okay, so 100 people order in January; 75 reorder in February. Then, 75% of them, or 56 people, will reorder in March ... and 42 in April ... 32 in May ... 24 in June. . . I think you see where this is going-- 12 months later you'll have no customers left, and still be able to make honest claim to a 75% monthly reorder rate. Technically.


"There are liars, damn liars, and statisticians."
-- Mark Twain

The Aloe wars of the early Nineties saw its share of data romancing. One company said right on their 16 ounce bottle, "This bottle contains 100% pure Aloe Vera." A competitor had the product assayed and found that it contained one ounce of pure Aloe Vera and 15 oz of water and flavoring. They sued, claiming false advertising. They lost. The bottle did indeed "contain 100% pure Aloe Vera." As well as water and flavoring.

Sales figures have seen more romance than a Harlequin novel. One popular company claimed sales in the hundreds of millions. Upon closer review, I found that almost half of their "sales" were the training packages they were charging their distributors, not the product they were in the business of selling. In fact, "sales" included administrative fees, shipping charges, marketing tools, and other such items. I guess a sale is a sale. Another company recently claimed a monthly sales figure of $8.5 million. Of course, they were quoting "retail" sales ... and they have a 100% suggested markup. But since an eight ounce bottle of shampoo wholesaled for $12.50 ($25.00 suggested retail) and they have free distributor enrollment, their products are probably never retailed ever, so their actual sales were exactly half the number they were promoting.

There's an old saying, "If you torture the data long enough you can make it say anything." It seems you can romance it into doing your bidding as well.

Do we, as an industry, tend to romance our incomes, just a little? Like, when someone says to you "My income has reached $50,000 per month!" only they forget to mention that a third came from a downline that was given to them as part of a sweetheart deal with the company, another third came from a past downline that they moved over, and the other third came from the books and tapes they marketed to this prefab downline. Oh, and notice they didn't actually tell you they were making 50 grand right now, they clearly said their income "has reached" that level. That was in 1993. They're only making $5,000 now, and have $6,000 monthly expenses. Unfortunately, I'm only exaggerating a little.

I actually find it quite amusing when I hear these hucksters claim they were making some huge income in another MLM program and they just "walked away" from it to join this hot, earth-shaking, revolutionary new start-up deal. Obviously, there's always more to the story, like they sold their old downline, or their distributorship was terminated, or the company just filed Chapter 13. It's easy to walk away from a $50,000 check-- when it bounces. One "heavy hitter" called me recently - no kidding - to proclaim he'd just walked away from a one...hundred...thousand...dollar monthly income. Even if his story were all true, you know why I'd never want to be enrolled with this guy? Because I wouldn't want an idiot for a sponsor! Or someone who thought I was.

Folks, when my income gets to $100,000 per month, I'm going to brand my company's logo onto my forehead!

Please understand, I'm not suggesting every positive claim or impressive statistic about Network Marketing is bogus. In fact, as cynical as I've become about this business, I still believe the "pros" (professionals) outnumber the "cons" (convicts). The desperate, aggressive, over-zealous minority of Network Marketers out there just seem to be the ones that are always in our face. They stand out.

Network Marketing is good - very good. There's no shortage of positive information out there. I'm just balancing the scale. Take away the smoke and mirrors and the illusion loses its ability to persuade.

Romance the truth. It's okay. Hype is powerless against it.

LEONARD CLEMENTS has concentrated his full-time efforts over the last eight years on researching and analyzing all aspects of Network Marketing. He is a professional speaker and trainer, and the author of Inside Network Marketing, and the best-selling recruiting audio, Case Closed! The Whole Truth About Network Marketing. He is also the publisher of the Marketwave Alert Letter, an MLM analysis and watchdog newsletter, and the host of a weekly live call-in radio show on KSCO 1080. He currently conducts Inside Network Marketing seminars throughout the US, Canada and Mexico. Mr. Clements has been involved in Network Marketing for 19 years and is a successful distributor. For information about MarketWave, call 1-800-688-4766 or write MarketWave, 7342 North Ivanhoe Avenue, Fresno, CA 93722.

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Reprinted with permission from Upline, Clements Feature - May 1999, 888-UPLINE-1,