Today, I’m joined by Mark Davenport for a fascinating conversation about the ways in which companies have corrupted the fields of network marketing, direct marketing, and multilevel marketing. In his new book, Manipulated: The 12 Deadly Lies of Network Marketing, Mark shares with readers the twelve red flags they need to be on the lookout for as they are considering engaging with a company.
Mark shares his views on how companies arrived in this place of corruption, the toll it takes on those who invest in and engage with these companies, and how to protect yourself when working in this field, which Mark says is still a viable field–as long as you are discerning about the companies you work with.
Mark Davenport: I have been in the industry of direct marketing for so long and I’ve seen the same things happening over and over again. Because I like the industry, I could not understand why things were going that way. Why are people being abused and tricked into a business that they probably wouldn’t have chosen in the first place? I thought, instead of just writing another book where you are telling how to stay motivated and do their business, to have a positive message by warning people what they have to be aware of, so they can make a better choice in the first place.
Nikki Van Noy: Let’s dive into that a little bit. How has the once viable enterprise of network marketing and multilevel marketing been corrupted, and also, what does that corruption look like?
Mark Davenport: I think that’s why we have chosen the title Deadly Lies. It’s an unspoken agreement between different parties. It is the companies that are forming that are part of the problem, it’s the leaders that are hungry for more success, and it’s even the new person joining the business that are all striving to have the success they always dreamt about. Instead of using just the good stuff that the industry has to offer, or the company has to offer.
It seems to be a battle of who can over-exaggerate, who can make the good stuff even better because they seem to be afraid that the facts are not good enough. It’s like a snowball effect. One person starts to say we are the best in everything, so the next person has to find something to make even bigger and better. Even if the company probably wouldn’t say some of the information, they just start adding more stuff to the story in order to make it more attractive.
At a certain point, you’re out of control. Then it becomes performing, and that is when the new person that doesn’t know any better is falling for it and not having the chance, or the interest, or the time or the knowledge to do a fact check. Before they know, they are sucked into the business and find themselves in the place that they shouldn’t have been the first place.
Honesty is the Best Policy
Nikki Van Noy: Talk to me a little bit about the toll that these companies are taking on the marketers who are buying into this and getting involved. How can they get harmed in the process?
Mark Davenport: I’m a big fan of framing. If you promise one thing, you have to live up to it. If you are a person that I am going to work with side-by-side and I do it for ten days or ten years, you just have to live up to it. The toll that it’s taking on people is really that they are falling for false promises, such as that they don’t have to invest a lot of time.
Instead of telling people what is normal for any kind of business, that you have a learning curve, you have to be open-minded to learn new things, you have to invest at least eight to ten hours a day, or otherwise you can’t possibly expect to earn a four, five or six-digit income per year, that’s not possible.
They tell them that they can do it part-time, they tell them that they don’t have to invest time or money, and then they find out once they’re in the business, that they have to go to educational meetings, which cost money and time. Then they find out that they have to have some kind of stock. You have to invest in a business. Everybody has to invest in whatever business they run.
It’s the fact that they have been promised that this is so special, and that is not the case in network marketing, then eventually they find out, when it is either too late or when they have to take another step in order to stay in the business and have a chance to succeed.
Nikki Van Noy: It sounds like there’s some magical thinking at play here.
Mark Davenport: Well, it depends what magical means. It’s like wishful thinking. I tell you only half of the story, and then people think once you’re trapped into the business, then you can’t leave. Instead of telling you, which is so much better long-term, that this is what it takes, this is the amount of time, this is the amount of money you have to invest, and this is what you can expect. This would make life so much easier because then you couldn’t come back to me and complain about me having painted the wrong picture.
The way most people work in the industry, which is by telling you that it doesn’t take time, that you don’t have to invest money, and you can have a fantastic income in no time. 99% of that won’t happen. Now you have all the reason to come back to me and say, “Hey Mark, you told me that this is going to be a different story here. What’s wrong with you?”
They are creating their own problem, but somehow you would think that common sense would tell them that after the first, the second, or the hundredth time, it’s time to change, but it seems to me like a trap that for some reason, they can’t escape. I thought the book would be a chance for them to read it.
Nikki Van Noy: One of the things that shocked me when I was reading through your book is how widespread this is. I believe you said that 50 million people are approached with these sorts of opportunities–that is a lot of people to potentially fall prey to this.
Mark Davenport: DSA is a direct sales association from the body of meta marketing. If you just look at their official numbers and then think about all the markets where they are because all the big MLM marketing companies are working in China.
You have to add an even bigger number of existing business partners, distributors, and reps. If you just take that amount and multiply it by five or ten people that they have to pitch to per month, we easily end up having a number that is even bigger than fifty million.
The book is addressing not only the existing network marketer that’s already full-time in the business, but especially those that are being pitched or have been pitched recently, and they want to have a chance to see if they can find if one of the lies that are in the book has been used on them. Now they have a chance to respond and do their due diligence in order to come up with an educated decision.
Nikki Van Noy: Is there in your mind a certain group or population of people that MLM particularly like to prey upon? Is there an at-risk group here?
Mark Davenport: I can say that I won’t be gender racist since I’m a male, but I can talk about my own people. I think males, in general, are more receptive because they are the ones that want to live the high life. They want sports cars, they want to live in massive mansions, they want to impress their girlfriend or wife.
For us, it’s easier to fall for the promises and the hope that this is my way to stardom. To become rich and wealthy and famous at the same time, which was a big deal recognition in this industry. If you compare males and females, I would absolutely say that the male population is the one that is at risk, and then if you talk age groups, between twenty and thirty-five when men are trying to find who they are and grow up. This is the main risk group, I would say.
Nikki Van Noy: Are there any stories or companies that stand out in your mind that really exemplify what has gone wrong, or what the collateral effect of this can be?
Mark Davenport: There is actually a recent story that’s gone viral, and they were acting globally. Maybe you have heard about it. OneCoin was one of those cryptocurrency and network marketing companies. When they came out, they had the old fantastic story, the founder who was a kind of doctor from Bulgaria, and a former investment banker, and she had enough and wanted to create a better world, which is always the case.
You could invest in a cryptocurrency that would be bigger one day than bitcoin, but it wasn’t real yet. It has to be built, so that’s why you buy tokens for the right to have the currency at a later stage.
If you applied common sense, everyone would say, that must be a fraud, that can’t work. It will never be the way they are saying. The way the top leaders pitched and pushed for having people investing, not like normal MLM businesses, where it is maybe 200, 300 or $400. They had start packages that went all the way up to 25, 50,000 or $100,000 and so, now we’re talking serious harm because once greed starts taking over your brain, people started to get another mortgage on their house.
Despite the fact that newspapers and authorities started investigating the company, everybody was on the winning train and singing songs because obviously, if you don’t have a product, and you do a couple of billion dollars in sales, you have a lot of commission to payout, because you don’t have to buy or produce anything. You just have air.
Then a couple of months ago, the first country started to seize assets and shut down the company. They eventually arrested the founders and their brother. Currently, governments from different countries are guessing that they probably stole anything between three and fifteen billion dollars from people. This is so sad.
What I’m saying, is that we can look at the companies, we can look at the distributors, and the leaders, but we also have to look at the government bodies. You can do that business model, but you have to be focused on customers, which once again, should be common sense. Why would you produce a product in the first place, if you don’t sell it to anyone but your own people? It doesn’t make sense.
They have a lot of grey zone where people then start becoming creative, especially criminal minds, and then you get companies like OneCoin, who are not only destroying lives and stealing money but also giving the entire industry an even worse reputation.
Nikki Van Noy: That is a staggering amount of money for a product that doesn’t even exist–that’s kind of mind-blowing.
Mark Davenport: Yeah, it is. Once you have enough people making big money, and big income, then it seems like an unspoken agreement that you are in network marketing magazines and online portals, who then start appraising those leaders and say, “Well, fantastic story. The guy from OneCoin last month made $1.5 million,” and so obviously if people read that on the “news” they are saying, “Well if that magazine is reporting about it, it can’t be all that bad. This company is legit, and the leaders are making so much money. Maybe I am just too negative. I should join them and make money as long as it lasts.” So, it is really a combination of many factors that lead to the disaster of destroying a beautiful industry that is fantastic in many ways.
The Problem With Technology
Nikki Van Noy: It occurred to me as you were telling that story that one of the things that seems like it could get very tricky here is how entrepreneurialism and technology play into this. The MLMs of old that mainly involved tangible products, people were wise to those and could identify what was going on, but now, we are so deep into this world of entrepreneurialism and products like cryptocurrency that are not necessarily tangible.
It seems like there is a lot more room here for lines to get blurred and for people to potentially think they’re getting into one thing when actually they’re getting into something else. Is that correct?
Mark Davenport: Yes, absolutely I agree. The other side is that even as a criminal in the old days, you had to have some money to produce a product. You needed to have warehousing–you needed to figure out how to ship a product. You needed logistics. Now all you need to have is a laptop, and you can put up a website, and put up some fake names, that are often not even real and in the worst cases that I have seen, give them a fantastic background story.
“This awarded investment banker is the CFO and we have a marketing genius as a CMO.” Information seems to be at your fingertips and people have stopped doing proper due diligence. Now you don’t need to invest any money in order to become a fraud artist, if you have enough friends and followers who believe your story and start repeating it often enough. They then start believing that they are a part of something very special and are aligned to a social cause or something bigger than themselves. Obviously, technology and being an entrepreneur from the dark side is a bad combination.
Nikki Van Noy: One thing you mentioned there that I do want to touch on is that this can be a really wonderful industry. So, we’ve talked about the negative aspects of it, but let’s round that out a little bit by talking about what is good and why it’s worth people’s time to discern between companies that are legitimate and companies that they want to stay away from.
Mark Davenport: If somebody is listening now or sitting at home and thinking about becoming an entrepreneur, you have to look at options. You could say, “Well I will do ecommerce,” and there are a million of people out there who are saying, “Well, it is super easy. You just put up a shop, you do something you like that you are passionate about, and you start blogging about it and you make money,” which couldn’t be farther from the truth.
If you look at the statistics, and once again it depends which source you believe, but between 60 and 85% of all ecommerce projects die within the first twelve months, leaving the people in debt an average of about $25,000. Not a lot of people talk about that, but that is the reality.
So, you might say, “Well that’s ecommerce. I could do a franchise–that seems to be safe.”
Once again, the average franchise investment is around $185,000 and between 35 and 65% of all franchisee get out of business the first eighteen months. Franchise as a business model has a greater support. You have to dig and look for the numbers, but even on their own franchisee platforms, you have got to read those numbers. So once again, it is not as easy as some people might think by saying, “Well, I will open a McDonald’s.”
That is one million-plus dollars to get going in the first place. So, there is a huge risk and the story goes on. If it is a traditional business, we all know that within the first two years, eighty percent of businesses have debt–the average debt accumulated is $45,000. So, now you compare the traditional models with network marketing where you usually have an investment to have some basic products of 300 to $500, and you really have something that is great to start with.
Then if you look at the fact that you literally can start part-time while you are doing your main job, so you don’t have to risk losing your main income stream. Once you have a plan, you have all the time in the world, you can take two or three or four or five years to replace your main income. I usually tell people to have at least twice or three times the income from network marketing that they had in their main job as being an employee.
Then it is time to move on and to make the decision and to go full-time. Those are all the ingredients to have a fantastic business model. Add to this that you have almost every kind of product, and every kind of marketing strategy that really could suit the way that you like to work–whether it is having home parties, which is more a direct marketing model where you probably invite people to your house and present the product, or it could be more online driven, or you do online presentations through webinars.
You really can find a model that suits your personality. All of that combined makes a great opportunity, hence me being angry that people abuse the model, instead of using all of those positive facts. The fact is it is growing for the past fifty years every year. The fact that it has created more income millionaires than any other industry, but instead of focusing on the great facts they exaggerate and have messed the whole story up by using something that does not have a positive effect on their business in the first place.
Nikki Van Noy: What is the first or most important thing people want to look at when it comes to deciphering whether this is an opportunity to get on board with, or one they want to run away from as quickly as possible?
Mark Davenport: I tell people that if they’re together in a relationship, they really have to decide at home what they want. It is a balance of how much time you’re willing to spend as a family because obviously, it takes time away from your own family, your kids, and your hobbies. Number one is examining what outcome you expect. Number two, you have to give yourself twelve months in order to find out if it is good for you.
You know there are a million books that you can find where people say it takes 10 to 20,000 hours to achieve excellence. So, there is no difference in this business model. You have to give it time. If you wanted to be an entrepreneur in a different area, in a different type of marketing, you would have to start learning the strategies, and the way it works, and then you can conclude after twelve months if it was worth it or not.
Number three, you have to do your due diligence and examine the core facts about the founders, and about the product. If they say it is unique, and it is special, that it has been tested, and all the necessary things are done, you have to spend some time to see if that is true, because that will be the foundation and it will determine if your business will be stable in three, four, five, or ten years.
A summary of the 12 lies and the 12 pieces of core information you want to know about, and you want to check, that is what’s all compressed and can be found in the book. That will give you the chance to really come to a good decision. Then, hopefully, have a second career that allows you to do whatever you have in mind, whatever the goal might be.
Nikki Van Noy: Perfect. One of the things that really stood out to me in what you were just saying is that we really need to abandon ourselves of the notion of get rich quick schemes.
Mark Davenport: That is true and it is the same story that we have probably all heard or received in the email, what they call the inherited scam, where somebody is telling you, “Hey, I am so and so from Nigeria and I have $150 million inherited and we need somebody to take 50,” and people say, “Well you can smell this is a scam,” right? Nobody is going to reach out to you via email that you never heard of offering you $50 million.
This scam is generating, I think this year so far, so six months, it has already generated $4.5 billion. Why are those people falling for that? It’s crazy. It is like you said, it is the hope that maybe because we heard of stories where people got rich quick, maybe this is the one chance and if you don’t lose a lot, we can invest a few bucks in order to be the lucky one that can make all that money without hard work and dedication.
Unfortunately, if you don’t win the lottery, which is a one in 140 million chance, it ain’t happening. And that is the point.
Nikki Van Noy: Is there anything I haven’t asked you yet Mark that you want to make sure that you get into this podcast?
Mark Davenport: No, I really am happy that the book is out. I really believe that it is going to help all the different groups in the industry, whether you are brand new or existing. That is my main wish, that all those parties read it and sits together and says, “Well it really makes sense once I apply what he said.” That we can see that our business is not only better, but it is honest and building long-term relationships.
So that is really my main wish and my main hope.