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Today I listened to a pod-cast produced by Mark & Lauren Greutman. The couple makes a living helping people not only with financial budgeting, but they also show people how to save money using coupons, have published books, and much more. Please visit their website, you will not regret it. The aforementioned recording is primarily about their personal experiences with Mary Kay and Young Living, and how they truly feel about Multi Level Marketing (MLM). They referred to MLM as direct sales, although many companies such as Advocare promote a more recruiting style business model. Although Advocare is not mentioned I do believe their story is congruent with previous articles I have written.
They too were as hesitant as I was when I first started writing about Advocare. It is not easy when you have friends and family involved in the very same company you are about to expose, or talk negatively about. From the very beginning you can sense the uneasiness as they begin to explain why they were making the pod-cast in the first place. They made it clear from the beginning that Lauren still purchases some products such as essential oils, and still likes Mary Kay products. Some of the girls that work for the Greutman family still host parties and sell the products, but she refrains from both selling and hosting. It might be an intuitive conjecture, but she might still make commission from the other girls selling the essential oils if she was the one that recruited them. Lauren admits that she is still a member of Young Living because she receives a discount and likes the products. Although I believe the price of many MLM products are too high, joining for a discount is not as bad as joining because you were mislead to believe you will get rich quick. I would like to add that not all MLM companies have a 40% markup on the product like Advocare, but they all do have a significant price increase. That is how the commissions are earned. Once Lauren and her husband are done being honest about her involvement in MLM, they both go on to talk about what they describe as the dangers of MLM.
Mark and Lauren explain to the listener that there are dangers that are not presented to you at the time of a MLM presentation. Of course I was all ears because that is something I talk about on this website all the time, and is something advo-truth Facebook covers as well. That is when they began talking about Laurens experience with Mary Kay, and her husbands as well. Mary Kay is a company that I am not as familiar with, but I have been reading the Pink Truth website, so I am learning more every day. For those of you wondering, the Pink Truth is a blog that covers just about everything you need to know about Mary Kay and their pink Cadillac. See, Lauren signed up once again because she loved the products. She signed and purchase a starter kit, but it did not end their. Similar to Advocare and their Advisor package, she was confronted by her Mary Kay representatives pressuring her into buying the larger kit. Well, she decided that she would purchase the larger kit for $3600 because of her personality. Lauren explains she wanted to give it her all, and that is why she loaded up on the inventory. She believed at the time that having the products on hand would be a beneficial business move. Something she later admits was a bad idea. Similar to Advocare she was pressured into buying inventory, and she did. She describes it as her first mistake. After making money from her first few sales, she thought she would pay her debt. See Lauren used her credit card to pay for the inventory. She never was able to pay down her debt because every time someone would order something new, she felt she needed to order the new item to have on hand. So her inventory would continue to grow. But then she fast-forwards eleven months to the point where she obtained the Mary Kay pink Cadillac. This is where her husband begins to explain that buying products to have on hand did not stop at buying a starter pack or buying product inventory to have on hand. Please allow me to explain.
Mark explains that Laurens trouble started when she began team building. See, she was told that if she was able to get three more people to sign under her, and place a $200 dollar order, she would be eligible for the famous pink Cadillac. Lauren actually admits that she purchase the product under the new recruits so that she would qualify. Something I am sure takes place in all MLM companies. I also realize it took her a lot of courage to come out and admit that this type of behavior is common within the Mary Kay independent business model, and wrong. Mark did not think that making purchases to qualify for bonuses was something common. Lauren assured him that she discussed the situation with other Mary Kay sales reps and verified that it was in fact a common practice. That is not putting Mark down as I believe both of these individuals are sincere, respectable people. She goes on to admit that most of their debt came from Mary Kay, and that she was a competitive person. But that competitive nature is what drove her to buy her way to success in Mary Kay. Although she admits that she was encouraged to take the financial risk, she also accepts the responsibility of her actions, and blames herself for her poor financial decision.
Lauren explains that Mary Kay directors are taught to find individual weakness, and utilize what ever that weakness is to their advantage. In her case it was her eagerness to succeed, and willingness to put everything on the line to be successful, regardless. I guess Mary Kay is similar to the Advocare Bullet Proof Shield I talk about on a regular basis. Although not identical, the intent is to be deceptive. Apparently directors focus on personality test to determine if a person is family driven, sex driven, or business driven. Basically they find out what category you fit into and base their sales pitch on that. Her husband explained that she was driven by all the recognition she was getting and that she thrived from it, especially when she won the cars. But then they go on to explain how it all unraveled.
When Lauren and Mark moved down south, the other members of her team began to slack off on sales and her income began to decrease. Unfortunately, for her to keep the pink Cadillac, Lauren needed to maintain a $100,000 group volume in a 6 month period. The couple admits that it is typically maintained by purchases made by them or their group. Meaning, if they did not have people to buy the product, they would just load inventory. She was contacted by one of the directors up north and was told that she would have a co-pay of $900 a month to drive the pink Cadillac if she did not increase her group volume. Lauren admits that she paid $400 for a couple months, and another month she paid $900. She was forced into recruiting more people from down south to help make the payment on the car. Although she had refrained from recruiting from her church, she invited three people to attend a Mary Kay meeting. At the meeting the sales director said that they were going to give away two starter kits, and all they had to do was run up and sign their name on the dotted line.
That is when Lauren had enough, and told her friends not to do it. See, she knew that everyone that ran up there was signing their name onto a consultant agreement, and had no clue what they were signing. It was at that point she realized that Mary Kay was not an honest way of making a living, and many times resulted in marital arguments even in their own family. Lauren and her husband agree that selling the Mary Kay product can earn you a small income, especially if you are looking to earn and extra $100-$200 a month. But it is when you start recruiting, that is where the trouble and deception resides. Her husband Mark really puts it best when he said that she got sold on the dream and the need to load product inventory. But she still believes that people can be part of MLM if they truly like the product, and they do not make the mistakes she did. One thing is clear, they do not see MLM as a legitimate means to make serious money. But let me try to parallel this to Advocare and other MLM.
Similar to Advocare, Mary Kay requires everyone to purchase a starter kit. Once you are signed up they start encouraging everyone to purchase large amounts of inventory. Advocare starts pushing getting to adviser so you can purchase inventory at a 40% discount. The adviser purchase entails a $2100 dollar inventory purchase. Then the next step is promoting the rookie bonus so you can earn a $500 dollar bonus. Mary Kay promotes earning a car as motivation, similar to what we saw with Vemma. All MLM companies incorporate pressure to buy, over selling the product, and the use of inventory loading to ensure a successful climb to the top. Using deception and manipulation is not uncommon with either of the aforementioned companies. That was the point that resonated when I listened to Mark and Laurens story. Unfortunately, by the time most people realize what they have done, they are already in debt. The Greutman's sustained a $20,000 debt directly related to product loading. I personally would like to thank Mr. and Mrs. Greutman for their honesty and would encourage everyone to visit their other finance website where they help hundreds of people. I would also suggest that you take this one tip they both offer, and that is to do your own research. Understand the company you are about to get involved in. There is something I would like to add that I believe they did overlook.
Success with MLM companies is not just driven by product demand, but product availability in your area. That means that if a product is being over sold in your area, market saturation will occur. Too much of a good thing in your area will require you to extend your business into the next county or even the next state. I cover market saturation in many of my articles. I agree with the Greutman’s in that some MLM companies have products people want, and that it is alright if you want to sign on for the discount on an overpriced product. It is alright if you want to sell the product to earn a little extra money each month. But, it is not alright to use deception and misleading information to sell your product. It is not alright to avoid telling everyone that joins about market saturation and the fact that 98-99% will fail every year regardless on how hard they try, period. I believe Lauren separated herself from the sales aspect because she felt she was loosing self respect. I believe many people can learn from her and her experience. But the unfortunate truth is that most people do not. If you only knew how often MLM has resulted in marital separation due to the addictive nature of the business. Similar to gambling, some are able to pull themselves away, but others let it destroy their finances, and their marriage. Do not be one of those people!
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Note from Author:
Multi Level companies are a separate entity than Independent Distributors, and will not take responsibility for misleading and deceptive behavior. As a matter of fact, they can use the breach of contract against you to benefit themselves. Even worse, if you stand in the way of someone making money, people like Danny McDaniel will turn you in if they know the money will flow up to them. Be honest, and tell people the truth, and you will at least be able keep your self respect.
Thank you for reading, and please share your thoughts!