40: MLM Can Legally ROB You In Two Places...

Hey, the first thing you'll probably notice is that I am sick. I feel like crap; I'm not going to lie. My throat is killing me and I'm totally losing my voice, so I'm so sorry if ... anyway, I apologize. I promise that what? I say in this episode it's going to be great. How I say it, I apologize that I sound like I'm going through puberty right now. If my voice cracks, I promise I've gone through puberty already.
Guys, I'm excited for this episode. I've been doing a lot of studying of different downlines and different models from different MLM companies and the different things that are out there. What's kind of interesting about all of it is to see the way the market is shifting. You go back and you start to look at what MLM was 30 years ago before the Internet; even 20, let's look 20; even 10, when Facebook was still a brand new thing, and everyone was excited about it. I guess it's even longer than that now. Buy you go back to pre-Internet times, and it really was a network marketing thing. If you knew how to network with people, if you knew how to pitch to your different networks like it was truly in the true sense of the form and true sense of the word - network marketing.
Fast forwarding, this concept of the Internet gets put in place and people start learning how to market online. They're going and they're marketing to their friends. They get on Facebook. They're taken pictures of themselves at the gym like crazy. That always drives me crazy. They're going around and they're taking pictures of themselves. Whatever it is, they started to use social media to sell their stuff.
I'm sure you guys have heard of this little site called Amazon. If you guys didn't know, this thing about how Amazon got introduced; Amazon got introduced and they are so big. They're so big. You know what's funny about Amazon, Amazon has not cared to really even make that much money they dumped almost all of their money right back into ads, which is pretty amazing. All they care about is reach. They get very easy for anyone to buy pretty much anything online. Right now, the stat is that almost out of every dollar that is spent online, about 25 cents of that dollar is going through Amazon right now. That's huge; 25% of every dollar; 25 cents of every dollar that is being spent on the Internet as a whole is going through Amazon. That's crazy! Should we pause for effect? Pause for effect. But that's pretty intense.
Let's think about this as far as an MLM industry. The MLM companies have noticed the power of Amazon. They have notice how easy it is to get shipping out to people. The fulfillment that Amazon has mastered is incredible. They can ship stuff out to people really quick, two days, get it pretty much everywhere. That's insane, right?
What a lot of companies and a lot of MLMs are doing now, and these are two things, I just wanted to bring up really fast this probably going to become a quick episode, but I want you to take a hard look at the MLM that you are in. Ask yourself ... okay, and this going to be probably a touchy concept, and I'm not like a doom and gloom kind of guy. I'm not. But if you go back and listen to stuff that I've done in the past like you'll see that I'm not a doom and gloom guy. In fact, I really hate that kind of mentality. But ask yourself, "Is my MLM robbing me?" Ouch! It sucks to even think about that. Not the MLM, not the corporate, those guys will never do that to me. You know what I mean? It sucks for me to even bring this up. But I'm going to, because I want you to look at it. I want you to take a good hard look at what it is that your MLM is doing, and I want you to start checking out exactly how the money flows.
Let's look at this then. MLMs have realized that they can make all the money that they need to just by posting things on Amazon. How many times have you seen an MLM whose product is $80? You can see the same product being sold on Amazon for $55 by the corporate, by the MLM corporate. They head [inaudible 00:05:09]. They are undercutting the MLM distributors. The distributors go out. They do all the vetting. They go through, they find the people. They find the market. They convince the people of the product that people start buying a product. If those people just even go on the Internet and start searching for the product, which most people will nowadays, they will find a cheaper version of it. The distributor did all the work. However, the distributor gets undercut like crazy as the corporate sells for a cheaper price.
This is not like a small thing. In the entire MLM industry, this is a huge deal. A lot of this is happening to a lot of people now. This is happening in a lot of MLMs. And a lot of MLMs, in order to try and keep up with revenue and trying to hit their goals, this is a very common practice. And so, what I want you to do is I want you to go out, and I want you to search for your product or your service on the Internet, specifically E-commerce sites, if it's a physical product, which most likely a lot of MLMs are. Go check it out. Where else can your customers buy your product?
When I teach people, I'm the coach for a program called [Too Comical 00:06:18] Coaching. One of the things that we talk about in there is that you've got to know your competition as well as the competition knows their own business. Does that make sense? You've got to know their business as well as they do. This is part of that. Where else can your customers buy your product? Get really, really intimate. Get really familiar with that, because what it's going to allow you to do is it's going to help you figure out the talking points. If someone else is selling more than you are, is it the same or a very similar product, well it's not necessarily a bad thing. This is not meant to be like a Debbie Downer episode.
What you can do is start looking and say, "Why are they selling more than I am?" And you start figuring out those pieces and you take those pieces and you add it into your pitch; you add it into your product; you add it into your offer or the thing that you're putting out there. You can start to compete again in the market place. Does that make sense? I'm not trying to be all Debbie Downers, but it does suck that that is a very, very common practice. Not all MLMs do it. Almost all of them do it though, where they go in the undercut, the actual distributor, on like Amazon or something like that. It could be any kind of E-com store or anything like that.
Anyway, so that's the first way that MLMs kind of rob distributors now. And again, this is not meant to be Debbie Downer, doom and gloom. I want everyone to be aware of it. It took me a long time to become aware of it along my MLM entrepreneurial journey. Anyway, just understand that. As you start looking through comp plans, as you start looking through the actual products, if you've never really dove deep into those places, where else can people buy from ... I guess where are the other places besides you people can buy from. All right, so that's number one, undercutting you on Amazon.
Number two, when an MLM has its management as part of its downline, they are seriously undercutting you as well. I'm sure you guys have heard of stories where someone gets successful, they get a lot of people in their downline; they're selling a lot of product; they're doing really well for themselves, but they get cut out of paychecks pretty frequently. One of that reasons that happens is because MLM admin, MLM owners, are a part of the downline itself. What's funny is that for a long time, I thought that that was a normal thing, and it's not. Meaning it's normal that it happens a lot, but it's not like that's really bad.
What it does is it incentivizes the people in your upline to figure out ways to not pay you. What they do is they create these ceilings and they say, "Kaye, yes, you did x number of dollars in revenue." Let's put it into a point system though. Let's say that that amount of money equals this amount of money, which is much less and that's what we pay you on. They save this huge amount of margin. Those kinds of strategies get put in place mostly when an MLM's owners are part of the downline, because they know at some point they're only going to pay you so many levels deep, and they're only going to get you in for ... they don't want to pay out with this kind of criteria. That sucks. It's not fun when that happens.
The only reason why I'm bringing these two things up is ... I should probably stop talking here because I'm totally going to lose my voice. I'm so sorry guys. I am sick, sick, sick. Oh my gosh! I spoke at a conference last weekend and I went to bed at 4AM on two different nights. Just crazy. And I was up by 8 or 8:30 on both mornings also. I mean, I hardly slept. I talked like crazy, I spoke, I taught, I sold. I closed 28% of the room, just really, really fun. Anyway, totally a side story but it's part of the reason why I've lost my voice. I was giving it all, which is really fun, great feeling. But gosh, I should probably get off this thing quickly.
Anyways, the only thing I'm trying to say with this is that I want you to realize that there are things you can do about it. You don't need to sit idly by. In fact, I encourage you to not sit idly by. I encourage you to ... If you don't like the fact that your MLM, that a corporate MLM is undercutting you on Amazon or other places, say something. If it's really that big of a deal and you realize that you're losing out tons of money ... I mean that could kill your entire business. Literally. That could kill your entire business.
What they'll do, a lot of times, is if they can get you out, they'll just take whatever downline you created and put it under themselves. This is, again, not meant to be doom and gloom, this is just reality though. This is just what happens in most traditional MLMs. There are new ones out though with brand new models where that's not the case at all, where the owners not part of the downline at all; where there and incentivized to pay you as much money as they physically can. I mean really, really cool stuff.
And so I just wanted to point fingers at the certain places that I know that a lot of ... Especially if you're brand new and you just don't know any better, where you might be getting cheated. If you think that you're being undercut, bring it up. If you're being undercut on Amazon, bring it up. Talk about it. The second place, like I said, is that if the management is part of the downline, a lot of times they'll say they're not, but most of the time they are and at some point. Not under their own name. It will be under some weird LLC entity they created and held the position for themselves or like 12 positions. They're like triple dipping all over the place. Another is one is ... Anyway, they incentivize to create qualifications to pay you, especially if they're part of the downline, because now they're going to find ways to not pay.
I had a buddy once who was making, I think he still is, he's doing anywhere from $140,000 to $170,000, $170,000 a month. He's killing it clearly. When you get to that kind of level, your upline, the actual owners of the company, they're going to have a hard time not noticing you. Every once in a while, it's hard for them to ... Guys, it's capitalism. I'm just being a realist here. And I'm just saying that if you don't like something that's going on, like you've got to open your eyes. I know that sometimes we all, I get excited just like the next person. I usually lose my voice at conferences even if I'm not the one speaking because I get so pumped. I love doing what I do. It's super fun. I really enjoy it all.
But sometimes, you got to drop that, and you got to look at the realities of what's going on inside your MLM. If there's things that going on, you raise attention about it. When it's all said and done, what we're really doing is we're trying to change lives. We're trying to build businesses. Honestly, the businesses that you have is what really fuels your life. It fuels you. The marriage that you want, it fuels the house you want, it fuels the life, it fuels everything. It's built by the business you have. So take it serious.
If there's something that you see in there where it's like, "Man, this sucks," don't sit idly by. It is your job to be a squeaky wheel. If it comes down to it, ask yourself if it's worth sticking around. Are you going to really build a sustainable business on something you know is dishonest, that you're not happy with, or whatever it is. Be real with yourself. Have some cahonies about it and understand that this is a great thing to be a part of. But they're also, just like any other industry on the entire planet, there are some dark realities that can be there.
I'm just trying to educate a little bit if you've never heard of these things before. Open your eyes. Figure out where things are also being sold besides you, which can totally undercut you and kill your entire business. And then also try to figure out if your management is in the downline. And if so, are the uplines, the ones that are being successful, are they having restrictions placed on their checks? If so, time to get really serious and honest with yourself and have some face-to-face time in the mirror maybe figure out what you're doing.
All right guys, that's it. I'm sorry it's kind of a heavy episode, but I just wanted to bring that out there more for protection. I am not a doom and gloom like I said. I'm a very positive and forward-thinking guy, and I like action and progression. But I just wanted to go and show you maybe just a few places to make sure you're protecting yourself and hedging in a kind of risk that could be out there.
You guys are all awesome. I appreciate you. I love hearing back from you on this episode. I've really enjoyed that lately. It's been a lot of you guys. It's been fun. I will talk to you later. Bye!
Hey, thanks for listening. Please remember to subscribe and leave feedback. Would you like me to teach your own downline five simple MLM recruiting tips for free? If so, go download your free MLM Master's Pack by subscribing to this podcast at secretmlmhacksradio.com. ab8v3ca8