Monday, March 9, 2015

Pyramid Schemes, Direct Sales, and Empowering Women

Annie Malone, direct sales pioneer and personal hero of mine

Yesterday I skimmed a clickbait listicle about how all direct sales is a pyramid scheme where no one makes any money, and it has been bugging me ever since. I don't want to give them the satisfaction of a link or a Facebook comment, but there are a few things I just have to say.

First of all, let's get this notion of pyramid scheme out of the way. A pyramid scheme IS an scam. There is no product being exchanged, or if there is, it's a minor amount relative to the startup costs and focus on recruiting. It is true that in a pyramid scheme, no one is making any serious money without signing up more people, because the actual money to sign up is distributed up the pyramid. Pyramid schemes are illegal in many countries, including the United States.

Direct sales companies use independent consultants to sell products directly to the consumer, instead of using retail stores. You can't buy Tupperware at Target. You can't buy Usborne books at Barnes and Noble. You can't buy Paparazzi at the mall. They don't spend a lot of money on advertising, because they rely on the consultants for that,  so instead they reward customers and party hosts with free products and monthly sales. That's really all there is to it. There's no trick.

Why do people sign up to be direct sales independent consultants? In most cases, it's just to make a little extra money sharing a product that they love with their friends and family. If you read The Tipping Point by Malcolm Gladwell, you know there are three kinds of people who make something go viral: Connectors, Mavens, and Salespeople. Direct sales people usually start out as Mavens - people who like to connect people with information. They really like to tell you about the things they have discovered, and it's extra exciting for them to find out that they can get paid for their opinion.

Direct sales companies that use multilevel marketing (MLM) or network marketing rely on these Connectors, Mavens, and Salespeople to build the company, which is where this issue of recruiting and pyramid scheme confusion comes in. I am a Team Leader for Jewelscent, and this is my full time job.  My typical week involves at least two conference calls, a lot of spreadsheets, coming up with contests and games to reward my team, being available most of the day to answer questions, and managing and growing my own business. I am not just sitting back with a cocktail on the beach watching commissions roll in, which is what people seem to think is going on when they say "You can't make any money at this if you don't recruit." In actuality, you're not going to make a lot of money at this if you don't WORK.

So why does this make me so mad? Because while there are plenty of savvy men involved in direct sales companies, more than two-thirds of the 15.6 million direct sales consultants in this country are women (source). Why? Because we have abysmal maternity leave in this country compared to other first world nations, and pardon us women if we don't want to punch a clock 40 hours a week just to hand our paycheck over to day care. And also because the average household only need $200-300 extra a month to avoid bankruptcy, and $2400 is about average annual income for most people doing direct sales part  time (source). Direct sales gives us an opportunity to make a meaningful contribution to our households on a flexible schedule.

I joke all the time that direct sales is like a crazy underground market of women making money only to spend it on something another woman is selling. There's truth to this, though. I know that when I buy something from a direct sales consultant, I'm helping a mom stay home with her kids, a family take a vacation to Walt Disney World, or a student pay for a master's degree. I have switched many of the brands I buy from faceless corporations to one where I know that my personal interaction may inspire that woman to take her business to the next level.

Are there companies out there selling inferior products or making bogus claims? Of course, and all you have to do is listen to commercial radio to hear about plenty of non-MLM companies who are also selling crap. I'm happy to talk to you about them if you're looking to vet a company. But when you say that ALL direct sales is a scam or a scheme or that it's impossible to make a living at it, what I hear is that you think women are stupid and gullible and don't even know when they are losing money. If you don't need the products, you don't have to buy them. Just don't contribute to the myth of the pyramid scheme,

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