MLM and the Myth of “Duplication”

You may have read a rant I wrote in a previous newsletter, My Career as an Enthusiastic, Naive Ambot. It chronicles my path from 21 year-old Amway recruit to successful 31 year-old guy with business sense, and the scars that prove it. The short assessment is: It was a priceless experience because I cut my teeth in sales. I developed a lot of skills I use every day.

Downside was, virtually everything they told me was a half-truth. Like the idea that I even owned a business at all. (I had legal title to absolutely nothing.) Now I’m just glad I never scored any big points in that game, because when the thing caved in, the clunk was heard ’round the world. Heck, Amway (Quixtar) is still disintegrating, like a week-dead goldfish when its fins and tail are falling off and floating around in your aquarium.

OK, so anyway, the MLM industry is still alive and well. Most of it now is being done on the Internet and teleseminars instead of living rooms and hotel ball rooms, but it’s still being done. And I sometimes have consultations with people who are doing MLM; this stuff comes up regularly. Just today Mendy and I were talking about this. There are some realities that all of us, whether in MLM or not, should be privy to.

Duplication is Bad, Bad, Bad. In MLM-land, the key to success is duplication. Hundreds, thousands of people duplicate your efforts and that’s how you multiply your time.

Truth is, duplication in marketing is always bad, not good. Duplication is, by definition, copying a USP. When you copy a USP, it’s not Unique anymore. It’s the same. It’s dilution of your biggest asset. Duplication in marketing is commoditization. Being a commodity is bad.

Realize this: Duplication in manufacturing is great. Duplication in printing is great. Duplication of systems and processes is great. It makes 20,000 McDonald’s restaurants possible. But remember, McDonalds may have 20,000 franchises but it’s only got ONE marketing department.

Duplication is an Illusion. Think about this: Any time you see someone who’s really successful in MLM, it’s because he or she is not doing the same thing as everyone else. It’s because they’re not duplicating. Not because they are!

It’s not just that they’re working harder, either, although they may be running Mach 2 with their hair on fire. At the bare minimum, they have more personality, more flair, more magnetism, more charisma. They have a unique voice, a unique story to tell, a uniquely compelling energy.

As often as not there are other things too. They have a slightly better, “under the table” compensation plan. Perhaps they’re using different tools than everyone else. They’ll still stand up on stage and tell everyone they’re a ‘product of the system’ and they ‘just followed the pattern.’ But I eventually came to realize that every time Dexter Yager stood up on a stage and crooned, “You can aaaaall pass me by!” – he was saying that because it was impossible to pass him. You couldn’t beat him running through the maze because he owned the maze. (Duh.) Every time he’d say “This business is not saturated!” – he was saying that because it was saturated. (Duh.)

Recruiting Costs Real Up-Front Money. If you’re going to replace manual labor with automation, you’re going to go negative (many hundreds of dollars at least) for each person you sponsor. You can overcome this with organizational momentum, but it’s expensive up front. Your marketing blade has to be razor sharp.

Candid Advice to an MLMer: Last fall I had a gal in my coaching program who was selling nutritional supplements online, buying Google ads and selling products retail. It didn’t take her long to discover that the click prices have risen to a point where a person running a retail MLM business can’t make a profit just acquiring a customer. Here’s what I told her:

I used to do something similar back in 1997 (offline not online).

These thoughts are in no particular order.

-When you do marketing to promote your MLM business, it reveals the true cost of acquiring a customer, which is somewhat hidden from you in the conventional way of doing MLM. Suddenly the cost to get a customer has a real number and you have a benchmark for seeing how much those customers are worth, how long they last and how profitable they are.

-In most MLM companies, the person who actually acquires the customer doesn’t make money, they lose money. The person who recruited you makes money when you recruit. This leads to all kinds of promotions in which the upline convinces the downline to invest in marketing, not telling them that they’re going to go negative doing it. (That is compensated by the promise of how much those new people are going to recruit and multiply).

-In manufacturing, duplication is the key to everything. In electronic and print media, duplication makes mass communication possible. But in marketing, duplication is suicide. That’s because in marketing, the most essential ingredient is a USP, a Unique Selling Proposition, something that you can uniquely provide and guarantee. But marketing duplication, by nature, is the exact opposite of this. In marketing, the person with the USP wins and the people who duplicate that USP earn money for the person with the USP. Let me explain what I mean by this.

Let’s take a superstar in your business, a Double Diamond or whatever. He tells the world how he followed the system and made it simple and duplicatable and it led to success. That may be essentially true, but if he’s successful he’s doing something unique. Many times it may just be his unusual, attractive personality, his personal magnetism. Often times he’s getting a better ‘deal’ than most other people, or he makes more on tickets or tapes than other people, but the key to his success is, in part, that he’s NOT exactly the same as everyone else. He’s a little extra special.

That said, trying to be duplicatable is a very secondary motive for you. If you have 20 people duplicate what you’re doing w/ your Google campaigns, it’ll just drive the bids up. Not to mention if 200 or 2000 people do it.

What you want to do, from the standpoint of an independent business owner, is add unique things that differentiate you from everybody else so that when people click on your ad you have something to say to them that others don’t or can’t say. Then the world starts to tilt in your favor.

One thing I tell all my students who are MLM folks is the same thing I learned: Once you master marketing, you wake up one day and realize that you don’t need an MLM company in order to be successful. You know how to get traffic, you know how to say something that makes them buy, you know how to make the sale. So at that point, why would you settle for 15 or 20 or 25% commission when you could source the product yourself and make 60-80%?

There are only about ten thousand companies out there trying to sell products. They don’t know how to sell like you do. And some of those products are really, really good. When you’re the marketer, you’re in the drivers’ seat and you’ve got the goods. You can sell ANYTHING you want to sell. In retrospect, MLM was the thing that opened your eyes to a much bigger world – they cleaned you up, put a suit and tie on you, taught you some very important things, and now you’re the boss. Go to a trade show or something and find something you can sell – and sell it.

-With everything I said above, the long term focus of all your marketing is to constantly improve your USP. What do you add to the formula that others don’t? Why should they buy from you instead of any of the other 200,000 distributors? Especially on the Internet, which is a universe of niche marketing. This is a vital question to get answered.

Thanks for your questions, hopefully you’re OK with my frank and honest answers, and I look forward to talking with you on future calls!

I’ll never forget when the light bulb went on. I went to a low-key marketing seminar, big contrast to the hyped-up MLM seminars I was used to. It didn’t take me long to notice that a very large minority of people in that room (not just the speakers) were making six figure incomes or better, and they were not doing this by promising 1000 other people the moon and the stars. They were doing very niche-y, obscure, unusual things, and doing them very well.

I realized I didn’t have to play that silly duplication game any more. So I stopped. It’s been onward and upward ever since.

I’ll never forget the new sense of hope I had when I finally let go of something that was holding me back, and because of letting go, was able to see a whole new set of possibilities. Why duplicate someone else? The best way to have a Unique Selling Proposition is for you to just sell YOU.

To your success

Perry Marshall

Archived Comments

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  • Sherry Higdon says:

    Network Marketing is what I know. I was good at coaching people and working with the downline. I agree that there is ‘something’ about mlm that unless you have a unique niche you struggle. Unless you find a way to produce leads in a unique way you struggle.

    But I don’t know how to find something else to do besides that. Can you help? I’m open I just want to make money online. I can’t rest until I figure out how to make something work.

    I realize you are successful and you don’t owe anyone like me anything especially a second of your time. But in the event you could help someone who is desperate to realize ‘some’ kind of income coming in and willing to work 24/7 once I figure out SOMETHING. I’m not looking for pie in the sky, plug and play. I’ll work my guts out like I did with my previous mlm that got taken away from me because of someone else’s greed.

    But in the event you can spare some help to someone who is where you were ‘before’ you got started it would be greatly appreciated.

    Sherry Higdon
    502-969-7973 Home/Office

    Reply
  • Perry says:

    Sherry,

    The best advice I could give anyone is what I talked about at http://www.perrymarshall.com/pink-koolaid/ – the suggestions I gave Gia. Now… MLM is one of the things you have expertise in. Nothing wrong with creating something that bridges a gap between where you are and where you want to be. Starting with where you are.

    Essentially that means developing a USP independent of your upline. Maybe having a product independently of them – which you can sell online rather than through an organization.

    Also, I think a person who is truly good at MLM has a set of “uber skills.” It takes a highly talented person to be successful at MLM. Usually that means presentation and personal persuasion skills. Don’t be afraid to use them. Who says your venture needs to be purely online? Why not combine online with the skills you already have?

    The core of the solution is a thorough self inventory. The intersection of your developed skills with the hunger of a particular market that is not getting satisfied any other way.

    Perry

    Reply
  • Rick Louis says:

    Hi Perry;

    Excellent insight(s)/advice – Since your “Pink-Koolade letter & the System last month (thanks for the autograph!), I’ve been re-evaluating the business model I am working on.

    While it will include a select few (patented) products sold via MLM companies, that is not sustainable as a foundation element –

    Information products and related self sourced products I realize are the key to success because (beyond the margins) these provide a forum to brand and develop a USP specific to my vision of my market – sorta’ like ‘planet Perry’ is to you.

    Thanks for being ‘around’, and for your honest insight and sharing of same.

    Best Regards,
    Rick Louis

    Reply
  • Glen McNiel says:

    I heard something that made me laugh the other day, in a video by Merlin Mann, writer for 43 folders, & creator of “Inbox Zero”.

    He said:

    “Oh… The Internet is becoming this, this THING…
    Where it’s just people, trying to become successful on the Internet…
    by showing other people how to become successful on the Internet…

    It’s this un-believeably fractal ponzi scheme… very Escher…
    it’s a terrible ghetto of information out there…
    like a snake… masturbating it’s own tail.”

    Reply
  • Jorge says:

    Perry,

    Been there, done that myself… I cut my teeth in MLM myself… but now that I know how to market and realize that customer acquisition costs exists even in MLM, I’ve ventured out to source or create my own products and raise my profit margins…

    I guess I lacked confidence, but heck even Herbalife doesn’t make their own products… it’s a white label product being marketed by network marketers… talk about being entrepreneurial…

    Jorge

    Reply
  • Sherry says:

    I tried the mlm ambot path and although I have a retail sales background, it only took about 3 months to determine that I was not cut out for it. I find in many ways my retail sales experience actually stands in my way as I am used to customers coming to me with a purchase in mind, rather than convincing them they would like to check something out.

    Obviously I wasn’t on the advertising side of retail. I realize now that in many cases, it was the advertising that brought them in and they had for the most part already made their decision to buy something to solve a problem they were having. I just had to interest them in buying the product that the store I worked for was selling as that solution.

    Reply
    • Tyronne says:

      I’m a big fan of the funded proposal. Nobody gets hurt, 100% generic system systems and training for the whole industry.

      Reply
  • Phillip says:

    Perry,

    I think you have created an interesting niche and are a truly professional marketer with obvious brilliance and a gift for analysis. I do find it interesting that one of your complaints about the MLM industry is that they make their money selling information about how to do that business….. which is exactly how You make your living from the internet – selling how-to products. The hordes of people hoping to make it big on the internet will learn that MLM may spank the distributor, but a Google slap can demolish your entire internet “business” leaving you realizing that the information product world and the affiliate world are also “businesses” without assets or real ownership…. not too different from MLM except there is even less long-term stability….. unless you sell how-to products about internet marketing.

    Reply
    • Perry says:

      Phillip,

      Good points, but there’s a HUGE HUGE difference between me and the MLMers that needs to be pointed out.

      1) YES I am in the “book tape and seminar business.” Absolutely. I credit MLM for helping me become good at it, too. But I do not teach people to do what I do, to be in the same biz I’m in, or compete with me. The vast majority of my customers are scattered across literally 1000 industries. The examples in my books etc are rarely about doing “this kind of business.” They’re about butchers, bakers, candlestick makers.

      2) I have ALWAYS taught people that a “thin” online business solely dependent on Google is a disaster waiting to happen. For at least 7 years.

      3) People in MLM do not know that the only real money in that business is the tapes books and seminars and that everything else around it is just supporting structure. When people buy from me they know exactly what they are getting and what premise it’s being sold on.

      Reply
    • Jean Paul says:

      This is not true – Perry’s book on Adwords actually stopped me from losing more money.

      There is nothing wrong with selling tapes and seminars. The issue with MLM is that they lie and hook into people’s laziness and ignorance – and keep them there.

      Sometimes it’s necessary to appeal to greed. The problem with MLM is that it keeps the recruits ignorant.

      I could be wrong, but I doubt they spend a lot of time teaching recruits how to crunch their numbers.

      Instead they focus on believing and persevering and B.S.

      Perry’s stuff includes looking at your numbers – so if the product is not making you money you can tell by looking at your accounts.

      On the other hand, judging from the conversations I’ve had with people involved with MLM, numbers are not really that important.

      An Amway guy actually told me that “sometimes you should ignore the math because there is something bigger than that”.

      Of course there is. The balance in the top Amway execs accouts.

      Reply
  • Helen Wenley says:

    I totally agree with you Phillip! I have been with the same Network Marketing company now for over 10 years (I am still there because I love the products)- and the successful people I see are the ones who have their own USP for sure.

    Reply
  • zachary says:

    yeah sameness is all what is killing us without knowing.

    Reply
  • Tyronne says:

    @Glen Nice comment Glen, thats why you see a lot of crappy duplicate content on the web

    Reply
  • Ron Catron says:

    When all is said and done I think it really depends on the company as to how duplication works. I know a woman who tried 7 different MLM’s and failed at every one. But then she found a company that is a network marketing company but not an MLM with a proven DUPLICATEABLE system and now she makes 1.7 million a year. I know for a fact she duplicates exactly what she does to all of her partners. I think why most MLM’s fail is because the people brought into that business weren’t cut out for it in the first place but were sold a bill of goods and they bought it. I’ve been with the same network marketing company for 5 years and my wife and I duplicate everything we do. Why? Because that’s the company’s system and it works. Maybe we’re the exception but I don’t think so. Before we bring in anyone on our team we ask the question “Would I pay this person $50000./year” to go into business with us. If the answer is no we disqualify them and move on. And by doing this the quality of individuals we get is much higher and they succeed as well.

    Reply
    • Mary Blanc says:

      Mr Catron–Thank You for offering THIS Prime Example of A ” Krafted Sales Pitch”–as opposed to–REAL DEAL THOUGHTS & ANALYSIS posted above by Jean Paul on April 28, 2012 at 11:56pm.

      btw…
      Thank YOU–Jean Paul–Even MORE.

      P.S.
      Perry…
      I’ve eventually come to realize that the *Dexter Yager’s* of this world aren’t so much LIARS as They simply do NOT state *out loud* the whole truth of what IT IS … That They Are Thinking:

      “You can aaaaall pass me by!” – *when I’m dead.*

      “This business is not saturated!” – *it’s supersaturated.*

      Reply
  • Paul Eilers says:

    Another good article, Perry. Writing well is hard work. Thanks for sharing it.

    My thoughts are, why should network marketing be different from any other industry? Why not make a profit by getting customers? Why lead with ‘easy money’ and ‘get rich’, when you can instead reach out to the marketplace with your product or service?

    I market a product for parents who have kids that are picky eaters, like I do, and want to make sure they’re getting enough nutrition every day.

    That is my USP. No hype. No big words. No promises. No problems.

    I simply find other parents who are just like me, who also believe nutrition matters, just like I do, and who share the same values when it comes to health and nutrition.

    When I make my offer to someone, which takes less than twenty seconds, if they say any form of “No”, I quickly and courteously disqualify them and move on to the next person.

    People buy in their own time and for their own reasons. They don’t buy because I need to make a sale.

    No banging on someone. No convincing. No persuading. These things cause resistance as well as a lack of trust and respect – the two main reasons someone buys from you.

    If someone wants more information, I give them my website address. I use it as a cost-effective sales funnel. I also tell prospects the detriments of my product, without them having to ask for them.

    I use a radically honest approach with people. I determine whether there is a mutually acceptable basis for doing business, so there are practically no product returns and no refunds.

    I have found when it comes to marketing online, there is a big learning curve, so I prefer to primarily work offline. I get bored with Google AdWords and pay-per-clicks and Facebook ads, so I don’t do them. I believe it takes a certain personality type to make online marketing work. Maybe one day, I’ll hire someone to do that for me.

    Out of every one hundred customers I sign up, approximately one or two want to make money and build a business. They approach me about it, since I never talk about gettin’ rich or making money. I want all the repeat customers I can get and do not want to take a chance on losing a good customer, so I never bring up building a business.

    There is no System Money. There are no weekly or monthly meetings. There is no large up-front cost to getting started ($20). There is one rather small company conference a year, but I have yet to attend it, because I learn more from Perry Marshall and a select few others like him.

    This is what works for me.

    P.S. When I was in college, I too was in Amway. I was a young, naive and from a small southern town. I never thought of intentionally ripping off someone. So I never believed someone would purposely do it to me. Live and learn.

    Short-term, my Amway experience was painful and caused me a lot of challenges in life. Long-term, it ended up being a blessing in disguise.

    Reply
    • Perry says:

      Any MLM with a viable legitimate retail component is completely and totally fine. My position is the same as what the FTC said 40 years ago. Retail = good. Pure recruiting = bad.

      Reply
      • Paul Eilers says:

        If someone asks if I’m in network marketing, I reply, “Yes, but with a twist. Do you want to hear the twist?”

        Then I quickly explain my focus on direct sales and getting customers.

        “I help my company get new customers. When I get new customers, the company pays me. If the customer continues to order every month, the company keeps paying me. Just like cable TV – they have regular customers too.

        So I do the hard work of getting the customers once, and they keep paying me on the orders that come in. That’s a big reason I do this instead of some other kind of sales. How does that sound to you?”

        Reply
  • Jason Lee says:

    Great article Perry. Bought your book 80/20 btw, awesome stuff. I’ll shoot you straight and say that I share a story similar to yours. Love the industry though. And you’re absolutely right, it all boils down to your own USP in order to find success. I was really frustrated after finding out the truth of marketing only years later!

    Reply
  • Gavin says:

    Hi there, just to make a note here, Amway and Network 21 is the best business oportunity available. Check their results!
    Nothing is dying there as stated.

    Reply

8 Comments on “MLM”

  1. Hello Perry!

    Love, love, love this article! Why? Because it echos the EXACT path I was on when I first entered Planet Perry many, many years ago, 1999. I was promoting a nutritional supplement company the traditional way when I first signed up and because of what I learned from you (Google Adwords was still in it’s infancy and clicks were extremely reasonable) I created huge momentum, sales and success. Here’s the ironic part…the company shut me down and chastised me and my success!!! Imagine that…I was selling products at full retail and occasionally signing up a recruit who did the same thing. The reason? Customers and potential customers who were being introduced to the company and products by pink kool-aid recruiters drawing circles on the board at the local Holiday Inn were buying from my websites and sales funnels! Many of them told me that they just wanted to purchase the products and didn’t want to “build a business on the backs of the family, co-workers and friends.”

    Those “business owners” complained to the company that their recruits were buying and signing up from someone else on that damn interwebs. When I pleaded my marketing strategy case to the company, in a nutshell they deemed that what I was doing wasn’t “fair” to the other distributors since they didn’t have the same capabilities or knowledge. They suggested I conduct some sort of sharing or giving credit to the distributor who originally introduced to potential customer.

    Needless to say, due to your insights, coaching and guidance, I QUICKLY realized that I knew how to promote, market and sell products online. I proved that I could put X dollars into the Google machine and extract XXX dollars in business…and I would have a larger percentage of the sale for me and not the dysfunctional MLM company.

    Thank You Perry for saving me so early on…

    1. Mark,

      For Renaissance Club I’m planning a newsletter on “useful stuff I learned from Amway that I’m still using now” – and this will go in. Thank you for this great post.

  2. Hi Perry,
    An interesting duplication takes place within the Travel Industri: Take for instance mediaries like hotels.com and booking.com(agents). They put your business(the principal) on their homepage for a percentual fee of the revenue. The pros are that you will reach a whole lot of new costumers that you would never have reached before, but you will actually never “own” those costumers because the mediary-firm actually incapsulates your USP. Furthermore they may even add more to that USP so they will own you. You may even loose a part of your profit on your regulars as they will prefer to book direct through the mediary. This problem is also called the principal-agent problem. When time goes by you may have more costumers through your agents than direct though yourself. And if we are both advertising on PPC-marketing Google will extract all the profit. So this is a kind of duplication and that must be bad? But howcome does it work out anyway?

    It would be great if you could elaborate on this problem? How to remedy the addiction to the agents of they actually generate your traffic? You could 1) make a USP that even an agency can’t copy and 2) it must be important to your costumers 3) and you must be able to communicate it to your costumers.
    I really appreciate to hear your thoughts on this and I hope this will inspire you for the future.

    Ken Jorgensen

    1. This is a universal problem in the 21st century with Google, Amazon and Facebook ALL presenting some version of this problem to their advertisers. Bottom line is it means you need a USP that extends outside of what any of those platforms alone can sell your customer, and that the customer not only “has to” but WANTS to do business with you directly. In the long run you CANNOT afford to abdicate your entire customer relationship to intermediaries.

  3. Thank you Perry! I am unique and my products are unique. No one else can make what I make and share that experience with others. 80/20 is my goal. Thanks for the encouraging inspiration!v

  4. Hallo,Marshall,
    Have got it and ready carefully.The only thing remaining is for you to take me through on this USP.Am in Kenya and most of the services there in USA are not available here in Kenya,at your on wish guide me to be the first to launch that in the country!No much to say but hoping to here from you.In the country i registered a company which offer services and supply of goods to central,county governments and ngos that are operating in Kenya,i wish for this business to venture into deeper I.C.T
    Yussuf Wambua-Kenya.
    +254775159137

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