Updated: Aug 7, 2022
The problem with Internal Consumption and the majority of MLM companies.
What I learned was that I was part of an internal consumption company, a concept that was new to me because I had assumed they were all the same. I figured this was how this business had to go, so the thought of doing it somewhere else was off the table because, Jesus Christ, it was hard.
So what’s the problem with the standard internal consumption model of MLMs?
The first Network Marketing companies in the US came about during the Great Depression. I can only imagine the relief some had when it came to a new way of earning money. It was genius, really. If you think about any other sales position, it’s set up so much the same, only with less control for the sales force and less opportunity to succeed.
The problem is that the model itself has not changed much and 1930 was a long time ago.
In the majority of companies, including the one I was originally officially affiliated with (and the few I was guilted into for a hot second before that), is that the lure to becoming a consultant is to get a large discount and some free product. There is an incentive to try and sell the product (mine was more free product and the threat of a $200 fee which we ABSOLUTELY could not afford at the time). The funnel worked perfectly on me. I was terrified of having to tell my husband we would have to pay that $200, so I did what I was told and threw a party, started earning money, saw a potential future, couldn’t believe my own success and shared like crazy because if I could do it ANYONE COULD!
But, they can’t. I had something at stake- our family’s wellbeing. I also have drive, desire, a background in education and leadership, a love of teaching, I have discipline, and a brain for research, and I will do things that I put my mind to. I had determination. At the time I hadn’t had a lot of therapy…so I assumed this was how everyone is. It’s not though, anyone is capable of it, but it’s not how many function. Luckily for me, my ambition did draw in many other incredible people who also had ambition. So I did have a team of incredible leaders…but they only made up about 1% of the team (at best)…and none, but one came close to earning what I did. That one worked so much it made my head spin and I was worried for her and her health, but those things don’t matter to most.
The internal consumption system works, just not in the way you think or should want. There's a big discount, nothing to lose, the potential to earn some money, and MAYBE you’ll go so so big you’ll become a big earner. They focus a lot on the big earner part though. You see the big earners all the time. They win all the awards and speak on stage. They inspire, but rarely share details. They have assistants and systems in place that no one knows about…because if everyone knew, nobody would really want to do it. It would feel impossible, and it maybe is.
How can you tell if it’s an internal consumption company? There’s a great big discount on all your products right off the bat. That’s going to be your biggest sign. Seems like it makes sense though right? You want the wholesale pricing…but that’s where the problem will lie in the business and comp plan.
I would tell you to look at the comp plan but honestly, most comp plans are so confusing that unless you’ve been in the industry for years and read through tons you couldn’t possibly understand them until you’re neck-deep and realizing what you’re up against.
While you can absolutely sell the products and earn money in a company like this, you will likely be giving a percentage of your discount away in order to incentivize people, despite what you were told would be amazing incentives. People want free shipping, they want a deal, and they don’t want to spend money on certain products. In an internal consumption company, what you are supposed to do here is recruit these people. Then they can have all the discounts they want. It’s not illegal, it’s not a pyramid scheme, and there are actual products and services, but it is a grind. It produces volume within a team that does not come from sales and events where pure customers buy products…it comes from team members using their discount so that they won’t lose it…or because they want to help a leader out. Or in some cases, because they’ve been contacted so many times by so many people that they finally give in even though they don’t need or want any more of said product.
Again, I didn’t know any better. Most of us don’t. It worked for me, it worked for others. I wanted it to work for everyone and I believed it could, so much so that I just did what I thought I was supposed to do and didn’t realize the reason it was such a struggle.
I remember one team member who was not active ask me straight up if I just needed her to place an order. I did, and I said so. Then she went to my team and encouraged everyone to do the same…and they did, because they cared about me. I “promoted” that month, these people who did this for me got nothing out of that. I shared that story so proudly among leaders…it was what I truly and honestly thought the business was about. I knew nothing and I am simply embarrassed, mortified really, by it all now. I still appreciate the people so much, but I wish I had seen it all for what it was. I wish I had questioned this more at the time.
Most companies are like this, it’s archaic, it’s an old model. It makes some sense but it becomes more of a club…some have even likened it to much more extreme things. When they do it sounds dramatic, and it may be, but when you consider the vitriol, lies, gossip, and ex-communication that occurs when people leave…it really doesn’t feel that far off.
I can think of no other business that people are so chastised for leaving when they find a better fit for themselves or their family. Firefighters don't do this when someone moves to a department for more pay or to be closer to home. Realtors don't do this when they finally have grown enough to go off on their own. We cheer on people in every other profession for making decisions that will improve their lives and further their careers. If network marketers want to be taken seriously, then much more professionalism is needed in this area.
The biggest reason I can come up with for why it happens is fear…and it all goes back to the scarcity mindset, which is going to be impossible to avoid when a business is dependent upon internal consumption and buy-in by those who have signed a contract to get a discount.
It is because of this and because of the untruths that are spread but never explored, and the lack of understanding most all people have…because let’s face it, they’re mostly all little housewives, like me, just wanting a discount and to maybe earn a few dollars (educated or not…we go in blind). Everyone believes what they are told, especially when they have a charismatic leader, they aim to please and keep in line.
Leaving is too scary to even consider, because when someone leaves we are afraid and we disagree with them together and teach our teams to as well…so that nobody learns that there may be something better for them or their family. Once you’ve seen that happen once…you certainly don’t want to be at the center of it, right?
I didn’t care. Quite honestly my world was falling apart and my business no longer brought me joy. I was trying to find it again and help others, but I had done a lot of soul searching, praying, and growing and I didn’t care about what the people would think or do…once I learned that there are healthier ways to grow a business and that I would have the freedom to do anything else I wanted both in business and financially, I didn’t have a choice, if I wanted to stay in alignment with who I was and the leader I claimed to be.