Advocare, Digging Deeper into Market Saturation

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  Those of you that are familiar with my articles should know that I try my best to write without making it too personal. My last article pertaining to the Titanic might lead some people to think otherwise. It is not my intention to judge the users of programs such as Advocare, as I believe many of you are good people trying to make extra income. My articles are directed towards the company itself, because I believe the company, and some of the leading distributors, are intentionally being deceptive. Of course, that is my opinion based on a plethora of information obtained watching videos, and reading company documents. Now, I am not the type of person that likes to say something without having viable proof to back it up. So let me show you how and why I came to the aforementioned opinion.

Many of you might have already read the opinion released by the Judge handling the Vemma case, and if not you can find it here. The Judge found that the company was focused primarily on recruiting and that they used deceptive recruiting material. I do realize that the Vemma case is still unresolved, and there was more to it, but time will tell. Unfortunately I am not so sure, unless the attorneys wake up, the FTC will accomplish their goal. Yes, they are making the argument that commissions are based on recruiting, and the primary focus is on recruiting. But there is something more to the Multi Level Markets (MLM) that I believe they are not addressing. Anyone ever notice every year, the distributor counts never seem to change? Anyone know possible reasons why? If their business is so great, why are the distributor counts not increasing faster? Should you be concerned if they did increase faster? How about the Federal Trade Commission? Should they make the argument that each MLM plan is unsustainable if carried out to its end? That would be a viable argument; it was made in the Koscot case. The Judge called it an endless chain because it was a requirement if you wanted to earn commission. I think everyone should be concerned about the need to recruit. Let me explain further if you do not mind.

On Advocares website you will notice in 2007, there were 30,000 distributors, and that count has grown to more than 500,000. It is actually 517,666 according to their 2014 income statement. If you click on this link you will notice Advocare did not start including the distributor count until 2014, as all prior years seem to be void of such information. Why did they just start including that particular information? What was the actual increase per year, and how do those numbers compare to the actual deductions per year caused by Advocare and their legal team. For example, if I told you that we had 30,000 distributors last year and this year the count has increased to 40,000 what would you think? The average person would not think much about it. But, how many people a year are forced out of their distributorship for violations of rules and regulations? Were they given a written reprimand first? Did Advocare give warnings to stop what they were doing, or were they just forced out? Does the 517,666 number given by Advocare on the income disclosure include wholesale customers, also known as distributors? Do you know? Is it relevant to know? Let me put it under a different light for you, maybe you will be able to see it a little better. In the next paragraph I am going to show you first that many of the videos provided focus primarily on recruiting and little on retail. Then I will make the connection that I believe Advocare already knows, but will not share. Well, other than the little disclaimers indicating your income capability can be affected by "location" (here). Hmm, I wonder if that should be added to all the income disclosure statements? Go ahead a read them, but I think you will be hard pressed to find it. So let me get to the point.

Advocare and their distributors promote recruiting and the possibility of wealth if you just follow their system. What you earn is up to you according to Danny McDaniel. The video I provided tells you how you can earn $200 to $500 in extra income a month, or more. Yes they have the little disclaimer in the beginning but you would have to pause the video just to read the darn thing. Or you can go to this website. If you want to know more about Andy and Mandy you can click on this link. They also focus primarily on the importance of recruiting. If you watch the video "why do I want to be a distributor" you will notice the importance of recruiting retail customers over wholesale customers (AKA:distributors), sarcasm intended regarding retail customers. Goal one is to recruit 3-5 retail customers a week, goal two is to recruit 5-20 wholesale customers, and goal three is to help three people duplicate the process. Should the primary goal be to recruit customers? If so, should it not be your goal to recruit 5-20 retail customers, and not wholesale? Oh, that is right, I forgot, you would not get the commission from a non distributor, aka wholesale customer. Seems innocent, but they also completely forget to add the income disclaimer to that page, and most people will not be able to read the one added at the bottom of the video. They also recently removed some videos from their website and YouTube channel. Wonder why? Well, I know why but I am not concerned about that, I have already beaten that subject into the ground enough. They also repeat much of the same arguments McDaniel makes in his video. If you watch his video you will notice he also starts out at the advisor level. Everyone uses the advisor number, but seems to forget to include the fact you have to invest $2100 if you want to go straight to advisor and you have to recruit to gain commission. I am not concerned about that either at this point. Let me explain why.

If you go back to the McDaniel video you will notice he talks about going wide and deep, and draws a basic diagram of what your business might look like in a year. His theory is that you can only be strong if you recruit wide, and deep. He places serious emphasis on recruiting, and its necessity to be successful in the business. He relates it to the roots of a tree. The more roots, the stronger your business is going to be. Not selling, no sir. It is recruiting that will get you roots, and make your business stronger, although it looked more like a bunch of little pyramids to me, just saying. Now just sit down, and think about that for a second. Realistically if the business worked the way McDaniel sells it, it would look more like this diagram he drew in one of his other videos. Wide and deep is McDaniel's sales pitch. In that video there are over 100 people recruited on just the right side of that diagram. But that is not the point I am trying to make either. I want to talk to you about what happens if that plan really worked, and everyone worked hard to obtain that dream. Advocare does tell you it is possible, just read all the income disclosure statements as they all say the following, and I quote;

"Success from Advocare results only from successful sales efforts, which require hard work, diligence, and leadership"

I have no doubt that a persons effort will determine how much you could sell, if that is all everyone was doing. Unfortunately, many of the Advocare advisors are focused on recruiting, and Advocare encourages it. Let's take a look at Advocares plan drawn out by Danny McDaniel and see where that will lead us. Imaging if everyone was able to recruit three people every month, and those people could recruit three people every month and that continued. That is something that is not only promoted by McDaniel, but Advocare. Just watch the promotional video on how to obtain the rookie bonus here. You can even throw in 5 or 6 customers if you want. It would be equivalent to what McDaniel's and just about every other Advocarian is preaching. What do you think a reasonable person would think? Would she/he think that the distributor count would stay low because people drop out, or it stays low because in certain areas you will run out of customers? Will, or can the market saturate in such a way it actually takes the opportunity of wealth away from many people? Let me use my little city of Oswego as an example. If 10 people started recruiting three people each month (wholesale customer or distributor does not matter), how long do you think it will take to go through 20,000 people? At the end of seven months they would have recruited 21,870 people. My town population was only 18,126 back in 2013 according to Google. By the end of the year, if that recruiting trend was sustainable, they would have recruited 5,314,410 people. As you can see, the market each year will get saturated if the trend continues, making it almost impossible for some people to stay in the business. So what happens?

People are forced to drop out or just give up. Market saturation is a serious concern for anyone getting into the MLM business. It is a serious concern for any business. If you are not sure what market saturation is, please check out this website. Normally, a person starting a business can do things to overcome the problem such as utilize changes in technology, change your business model, and separate yourself from other similar business's. Most of which you as a distributor have no control over according to your policies and procedures. Well, you may have a little tiny bit of control. See, this is the problem I see with a saturated market. Advocare wins, you lose. The market only gets saturated for you, not them. The very few people at the top of the Advocare world win, you lose. That is just the fact. There is no way the business plan offered by Advocare, in my opinion, can support all the people. Why else do you think every year, only a small percentage of people make money buying Advocare? Look at those income statement again, and the answer is right in front of you. Let me take you into another direction for minute.

There are many people that believe companies such as Advocare should share more valuable information such as how many distributors were released in a year, total number of distributors that enrolled each month, actual turnover rate, number of distributors earning $0, and total number of active vs. not active distributors, and total number of distributors that are wholesale distributors (here). Some even think the FTC should require enforcing the 70% rule. I say the rule is stupid, unless you can ensure people are not just using friends and family names to help cover their inventory loading. It is just too simple to bypass. The only way you can put an end to the pyramid aspects of MLM is to put an end to commission based recruiting. Just sell the product folks. If the product is as good as you say, and in high demand, they will buy it. The product is not saturated, even though it is sold at a 40% markup. But will people continue to buy at that price, if they do not continue to receive a discount?

This is the summary folks. Advocare wants and needs you to believe that the market does not get saturated. I am not saying the market does not bounce back every year, because I believe it does. When the market gets to the point of partial saturation, it probably becomes difficult for people in certain areas to continue, so they dropout. Even if everyone did continue, you would see a stall in the pyramid. You would have hardly anyone to sell your product to, and the distributors will become the only customer. The way it is setup, it probably will not crumble, people just leave, or Advocare uses the policy to force some distributors out before it gets that bad. Most of your family members will feel guilty so they will not ask for the refund. I know I would not. It would be interesting to know how many people actually receive a refund without fighting for it.

This is the fact McDaniel and others making money from Advocare do not want you to realize. Recruiting to obtain wealth, or even partial recruiting, is, in and of itself an unrealistic promise. I have shown you what will happen if just ten people are active today in your area. In a year those ten people can turn into five million. In one of my last articles I showed you what would happen if I took those numbers and cut them in half each month, and multiplied by three. In less than one year the 180,000 active distributors recruiting practices could surpass the United States Population. What else can I say to you that will make you realize that you are not playing with an even deck, and Advocare knows it or should know it. 

I am not telling you not to buy the product, and I am not putting you down because you chose to buy in for the discount. What I am telling you is that playing the MLM game is like playing the lottery, your chances of winning the big money is not in your favor. Unfortunately, I do not see any other way around MLM companies and the wide array of misleading deception and abuse. Maybe the FTC could force them all to incorporate a maximum distributor count. Other than that, they will only change the rules, pretend to comply, and secretly promote recruiting and nothing will change, unfortunately.

Please share your thoughts!

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