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Q: Multilevel marketing, network marketing, company success factors ( Answered 5 out of 5 stars,   6 Comments )
Subject: Multilevel marketing, network marketing, company success factors
Category: Business and Money
Asked by: pangus-ga
List Price: $200.00
Posted: 20 May 2004 13:57 PDT
Expires: 19 Jun 2004 13:57 PDT
Question ID: 349596
Why/how did the Multi Level Marketing companies Amway and Herbalife
become succcesful?

Clarification: What were their strategies and what made them different
from other MLM companies that fail? I am looking for the 5-10 success
factors behind their billion dollar companies. There must be articles
written or interviews with their CEO online. Would expect answers to
be like: Charismatic leader, sales force buy the products themselves,
products are consumed etc.

Please note: I am *not* looking for how a sales rep can become
successful in their industry.

Request for Question Clarification by nancylynn-ga on 25 May 2004 13:54 PDT
Hello pangus-ga: 

I've been working on your question for several days and want to assure
I am close to completing my answer.

I was hoping to post it late tonight or early tomorrow morning;
however, the area where I live is now under severe storm and tornado
watch for the night. So, that may delay my posting the answer.

I will try to get it posted for you no later than tomorrow evening.

Best Regards,
Google Answers Researcher
Subject: Re: Multilevel marketing, network marketing, company success factors
Answered By: nancylynn-ga on 25 May 2004 17:51 PDT
Rated:5 out of 5 stars
Hello again pangus-ga: 

Fortunately, those nasty storms missed me.(Though we're being warned a
new batch is en route.)

I hope you find my research of help: 

Note: Amway co-founder Rich De Vos's name is misspelled as De Voss in some
of the following references, which can be confusing.


A good starting point is this history about the evolution of MLM, "The
History and Truth of Network Marketing," by Greg Stewart, from MLM
Secret, MLM Truth, Network Marketing Secret, Network Marketing Truth:

Both Amway and Herbalife have had to overcome tremendous obstacles in
the form of bad publicity. While Herbalife's charismatic founder would
ultimately (and tragically) harm his own creation's image, Amway has
consistently managed to stay on-message in its wholesome family
appeal, even while battling (eventually dismissed) charges of
wrong-doing, early in the company's history.

Both companies thrived the way any hugely successful MLM does:
recruiting wave upon wave of distributors. That's achieved thanks to
both companies' dazzling ability to inspire ordinary people to believe
they can realize their dreams of personal and financial fulfillment
come true by hooking up with Amway or Herbalife.

Another reason for these companies' enduring success has been their
ability to adapt to changes in the marketplace, and pioneering new
ways to advertise: back in 1980, Herbalife founder Mark Hughes
transformed his fledgling company into an overnight sensation, thanks
to infomercials on cable TV.

Overcoming overwhelming setbacks, effective marketing and recruiting
messages, and proven business organization, have made these companies
giants of the MLM industry.


According to that same article:

". . . in 1959, former NutraLite distributors Rich DeVos and Jay Van
Andel started the Amway company as the American Way of marketing
products. Like many truly innovative breakthroughs, the development of
true network
marketing was an accident. . . . ."

The article goes on to explain how some early MLM companies recruited
via chain letters " . . .  by the 1930's the U.S. post office
estimated that 10 million letters were being mailed each day. Postal
Authorities and law enforcement agencies battled the fraudulent
schemes and the chain letter phenomenon began to subside in the early
1940s. Unfortunately, this scam
spawned schemes which came to be known as pyramids, where money was
given for the right to involve others, as no valid product which was
being purchased from the company.

"In 1974, Senator Walter Mondale [D-Minnesota] declared such companies
to be the nation's number one consumer fraud."

" . . .with no clear understanding of what constituted a legitimate
use of network marketing, the Federal Trade Commission and state
agencies across the nation turned their eyes to almost all network
marketing companies. In 1975, the FTC filed suit against Amway,
alleging that the company was an illegal pyramid and that its refusal
to sell its products in retail stores
constituted a restraint of trade.

"Amway spent four years and millions of dollars in legal fees to clear
its name. In 1979 the FTC (Federal Trade Commission) ruled that Amway
was *not* a pyramid, that its revenue was generated from the sale of
its products, and
the FTC acknowledged network marketing as a legal and efficient
distribution system. Network Marketing exploded in the next decade."

Amway's Company Structure:

The article "The MLM Recruiting Nightmare: Find Out The #1 Reason Why
95% of All Network Marketers Fail to
Ever Earn a Penny in Any MLM Program,"
provides a important glimpse at how 1950s, 1960s era MLMs like Amway operated:

"In the past, most MLM'ers were taught that they must emphasize
product above all else. That may have been true 30 years ago when
people worked programs like Amway, Mary Kay Cosmetics, Avon, and
Tupperware in their local

"The compensation plans of those programs were built around retailing
product. People sold to family and friends (their warm market) and
through parties in which the product was the focus. Recruiting
downline members was not a primary activity. Retailing was how most
people made money. . . ."

The article goes on to note how that structure has now changed: "Most
MLM plans today are far different. They pay the lion's share of
profits to those who build a sales organization of people who consume
the products themselves, and who may or may not retail a small amount
on the side. . . ."

Amway's Recruiting/Public Image/Marketing:

Amway's "Dream Night": Amway's seminars convey a strong sense of you
can succeed; you can achieve all your personal and financial goals
with our help.

Here's an abridged recounting of one Dream Night session, albeit by an
underwhelmed participant, published at Baffler "Dreams
Incorporated: Living the Delayed Life with Amway," by Matt Roth, first
published, in full, in Baffler, issue 10, 1997:

"Dream Night was not the first Amway event I had been to, but it was
the most hallucinatory. It began with the triumphal entrance of the
Amway Diamond couples, half-jogging through a gauntlet of high-fives
to the theme from Rocky, as the audience whooped and hollered and
twirled their napkins over their heads.

". . . We gawked hungrily as real-life Amway millionaires strutted
about sprawling estates (proudly referred to as 'family compounds')
and explained that such opulence was ours for the asking."

" . . .The Amway approach supposedly avoids impersonal door-to-door
sales, as each distributor need only sell directly to a small customer
base of friends and family. Business 'growth'--and an ascent to the
flashier 'bonus levels' (Ruby, Emerald, Diamond, Executive Diamond,
Double Diamond, Crown Ambassador)--comes mostly through expanding
one's downline."

"In theory, this odd marketing system ensures that benefits accrue not
to Madison Avenue slicksters, but to ordinary folk capitalizing on
their close-knit community ties--a scheme that seemingly reflects the
small-town, Protestant populism
of Amway's co-founders, Rich DeVos and Jay Van Andel."

The article also notes Amway's troubles with the FTC back in the
1970s, then goes on to report on the company's reform:

"The reform efforts seem to have paid off. Today Amway is portrayed as
a model business. A spate of articles in newspapers around the country
have crowned "multilevel distribution" the Third Wave of marketing: If
it looks like Amway, we're now told, then it's not a scam. Trade
magazines laud Amway as a high-quality manufacturer; the United
Nations has given it a rare Environmental Award; Jay Van Andel, the
recipient of a score of business awards, served a term as president of
the U.S. Chamber of Commerce; Ted Koppel has cited Rich DeVos as one
of America's premier philanthropists . . . ."
(At the bottom of that article see some helpful footnotes pertaining
to FTC's ultimate ruling that Amway is not a pyramid scheme.)

I personally can recall an early Amway strategy, albeit, I recall it
only vaguely. During the late 1960s and into the 1970s, my parents
would receive invitations to "dinner parties" or "cocktail parties"
from some neighbors and casual acquaintances.

After enjoying some refreshments and chitchat, the host or hostess of
the party would ask everyone to take a seat, then announce he/she was
in the midst of a life-changing experience and wanted to share it with

No doubt some additional recruits were obtained this way, but many
people just felt duped and ambushed.

There are still Amway parties -- actually many MLM'ers throw parties
-- but I believe it's now much more standard to tell invitees that
that's the basis for the party -- a strategy that makes much more
sense because, like  Amway's "Dream Night" seminars, you're preaching
to a crowd  that's already interested, or they wouldn't be there.
(Another rule of marketing is, don't waste your time trying to sell to
someone who just isn't going to buy -- ever. Move on to warmer leads
and prospects.)

You can also see a brief bio of the company at Amway's Web site:
"As carefully planned by Rich and Jay, the second generation Van Andel
and DeVos families took the helm during the ' 90s. Steve Van Andel and
Dick DeVos succeeded their fathers as Chairman and President.
Distributors witnessed a similar trend, with the second generation of
many distributor families taking on important leadership roles."

This underscore's a cornerstone of Amway's marketing message: that
Amway is a family-friendly, family-oriented business, and it's a
strong factor in Amway's always successful recruiting efforts.

Both Amway and Herbalife have successfully marketed strong messages of
self-empowerment and "You can do it!" spirit, allowing them to build
legions of distributors.

" 'Amway is more than just a company, it's a movement to help people
help themselves,' " Amway co-founder Rich DeVos told writer Paul
Klebniov, in Klebniov's not-entirely flattering profile of Amway, "The
Power of Positive Inspiration," which appeared in the December 9, 1991
issue of Forbes Magazine.

DeVos also talked about how that "Movement" has brought Amway success
around the world: " 'In Mexico, people will ride a bus for hours to
come to an Amway meeting because Amway will give them a shot at
success. Most of these people have believed for generations that they
would never be anybody, because the rich guy on the hill told them
they'd never be anybody. But the Amway business has come to symbolize
for great numbers of people their chance to get out of their rut.' "

Also from Klebniov's article, an outline of how Amway is structured
and what motivates its associates:

"Perhaps [DeVos] can't keep his eye on a million distributors, but he
does know how to inspire almost every last one of them. The underlying
principle is simplicity itself: Persuade the distributors that their
interests and Amway's are exactly the same. . ."

". . .here's how it works. Distributor A recruits distributors B, C, D
each of whom recruits three more distributors to work for them. If
this recruiting pattern continues ten times - that is, there are 11
levels in the distribution chain - then the fellow who started the
network, distributor A, would have 88,572 distributors working for
him. If each of these people sells, on average $1,000 worth of
products, you've got an $89 million marketing organization stemming
from that one distributor A. At offices,
health clubs, beauty salons, churches, Amway recruits. . . ."

"The lion's share of money earned by Amway distributors is pocketed by
2% of the sales force, the organization's 35,000 so-called direct
distributors. These distributors typically have about 50 downline
distributors channeling orders up to them. Direct distributors gross a
minimum of about $35,000 a year. The really big money - bonuses of up
to $300,000 and more - is made by a handful of kingpins at the top of
the heap . . . ."

Another powerful component of Amway's success is making its
distributors feel that they are part of a team or a family:

From Klebniov's article: "But Amway goes a crucial step beyond mere
money. It offers its recruits membership in a community of like-minded
people - entrepreneurial, motivated, upwardly mobile people who
believe in their
country, in God and in their family. 'This country was built on
religious heritage, and we had better get back in it. We had better
start telling people that faith in God is their real strength of
America!', Richard DeVos writes in his book "Believe!". Amway
distributors are bound by a set of shared beliefs reinforced by myths,
icons and documents."

This helps explain why Amway's detractors call it a "cult," but the
depth of the company's appeal to its distributors and potential
distributors is profound. Amway has succeeded, in great part, by
keying in on and recruiting people who share the company's founders'
beliefs regarding religion and family. This homogeny regarding
fundamental personal values has allowed Amway to create a great sense
of a-company-as-a-family for its workers.

Other Amway Resources:

"The Good, the Bad, and the Ambivalent: Managing Identification among
Amway Distributors," by Michael G. Pratt, published in Administrative
Science Quarterly,  Sept, 2000:  

Read this lengthy excerpt from Jay Van Andel's autobiography "An
Enterprising Life" (Zondervan; September 1998),  which was published
in the Nov/Dec 1998 issue of The Saturday Evening Post:

" . . .Usually I would not approach the children with the idea of
pushing my view on them, but I would certainly give them advice and
urge them to reconsider their behavior if it was going to cause

"I think that way of doing things has affected the way my children
work as leaders in Amway today. I've observed Dave [DeVos] using the
same technique--he gives individuals considerably free rein and tells
them, 'I'm giving you the freedom to do this work the way you see fit,
but at the end of the day, you're responsible for the actions you
took. If I see something that is incompatible with the way we do
business around here, or if there is something substantially wrong, at
that point I'll intervene.' Micromanagement of an employee's work is
likely to produce the same sort of outcome that would result from
constantly looking over a teenager's shoulder . . . ."

A used copy of Van Andel's book can be obtained via

See this profile of Dick DeVos from the Nov. 1998 issue of Success,
written by Gerald Secor Couzens:

I found a review of the now-out-of-print "Empire of Freedom: The Amway
Story & What It Means to You" [Prima Publishing, 1997] by James
This link at Powell's shows you how to order a copy:

MLM Survivor, an archive of Amway-related articles:


Like Amway, the ability to convey a strong message of self-empowerment
reeled in distributors -- in droves. But Herbalife had another
dimension: the product appealed to people who had struggled with
weight problems, just like Herbalife's founder and CEO, Mark Hughes.

Tied into Herbalife's message of self-empowerment was the equally
compelling element of self-improvement: the good-looking, energtic
Hughes had triumphed over a miserable childhood and a serious weight

Everytime Hughes stood before a crowd, or appeared in an infomercial,
his own life story (he always told the story of how his overweight
mother died from diet pill overdose) proved that anyone could overcome
adversity. Anyone in Hughes's earshot who had been touched by tragedy
during their childhood and/or battled the bulge for as long as they
could remember, was likely to be moved, and many of them were moved
enough to sign on with Herbalife.

Hughes grew a brand, and a company, so strong in its appeal, it would
ultimately survive even the scandalous circumstances surrounding his

"Mark Hughes and the Herbalife Story":
(The official bio.)

"Death and Denial At Herbalife: The Untold Story of Mark Hughes'
public image, Secret Vice and Tragic Destiny," written by Matthew
Heller, from the Los Angeles Times,February 18, 2001:
". . . Hughes has racked up 20--and become extremely rich in the
process. In the preceding fiscal year, he earned more than $2 million
in salary and bonuses; he controls 60% of Herbalife stock, worth about
$250 million, and has interests in suppliers of the company's
products. In 1998, he collected a tidy $43 million in a leveraged
buyout of
one manufacturer. . . ."

The article goes on to note that, when Hughes was a boy, his mother
had died, Hughes claimed, as the result of chronic fad dieting and
diet pills.

According to Heller: "The real story was a lot more complex, and fit
less neatly into an inspirational parable. Jo Ann Hughes did die of an
overdose . . . [but] his mother died addicted to painkillers, not diet

Herbalife's Structure:

According to Heller: when Hughes launched his company in 1980 the
"products weren't cheap. A weight-loss program alone cost about $30 a
month . . . But Hughes had a way around that. Customers who became
distributors would get a minimum 25% discount on everything they
bought in lieu of the money-back guarantee; with that discount, you
could make a profit selling products to others. You could even get
commissions by recruiting other salespeople. The bigger the
organization you built, the bigger the payoff.

"The payoff for Herbalife, which didn't have to worry about
sales-force overhead, was dramatic. In its first five years, sales
soared from $386,000 to $423 million, an increase of more than
100,000% . . ."

Key To Herbalife's Success:

The key to Herbalife's extraordinary success was Hughes's magnetic,
inspirational personality:

"At rally after rally--many of which were broadcast as infomercials
over the USA Cable Network and by TV stations across the
country--Hughes projected a boyish enthusiasm and charisma . . .
Hughes' appearances were part revival meeting, part Richard
Simmons-style pep talk, part the Apostle Paul finding his vocation as
a missionary. . . .Hughes could deliver his rags-to-riches tear-jerker
. . . so that it resonated with just about anyone who wished to lose
weight--or dreamed of becoming fabulously rich like him. 'Against all
odds, he made it big," says one Herbalife distributor. 'It was one of
the things that drew people to him. He turned his life around. Maybe
we could do it too.' "

But Herbalife hit troubled waters which crested in June of 2000, when
Hughes was found dead. Cause of death? An overdose, and interaction,
of alcohol and anti-depressants. See a June, 2000 CNN report reprint
at the Rick Ross

Herbalife was struggling before Hughes's death, due to other bad
publicity. See "Herbalife Faces Struggle After Death of Founder Mark
Hughes," reported by Bloomberg News, August 11, 2000:
"After sales grew at a compound annual rate of 18 percent from 1996 to
1999, they were up just 7 percent in the first quarter. Since the
Class B stock hit a 52-week high of 16 1/4 on Jan. 18, it has fallen
40 percent after Hughes' failed effort to bring Herbalife private in a
leveraged buyout. . . ."

"There are also new problems: ephedrine, used in Herbalife weight loss
pills, has been linked to cardiac arrests, strokes and deaths by the
Food and Drug Administration. . . . Hughes' own image of clean living
has been tarnished by evidence he smoked cigars and died after a
four-day drinking binge.

" 'It's very much a cult of personality,' said David Stewart,
professor of marketing at the Marshall School of Business at the
University of Southern California. 'When you begin to hear things that
are inconsistent with the image, that can cause all kinds of
problems.' "

Herbalife managed to hang on and, in 2003, appointed Michael Johnson
(formerly with the Disney Corporation) as chairman:  
And read more about him in this April 2003 edition of Business Center News:
See the article "Herbalife Puts Weight Behind New Push," from a June
2003 edition of Brand Week, announcing the company's plans to launch
its first TV ad campaign in over a decade:

Herbalife is now also involved in a strategy of affiliating/conglomerating MLMs:

"Heavy Hitters in the Millionaires Club -, multilevel
marketing," written by Debbie Selinsky and published in the October 1, 2000
issue of Success:

"Kmiglobal's [Kmiglobal is an amalgam of top MLM companies] list of
company officers and distributors reads like a "Who's Who" of network
marketing: David Sage, Jeff Schlegel, Gil Kim, Judy Kim, Dwight
Johnson, and several other million-dollar babies from companies such
as Herbalife, National Telephone & Communications (NTC), and National
Safety Associates (NSA). . .

" was formed as the online division of
nutrition/lifestyle organization KareMor International  . . . 
Independent business owners can sign up for $25 and qualify for their
position by generating $250 in purchases and bringing on two people
who've sold $250. 'That means you can earn up to $1,000 in your first
paycheck,' Schlegel says. 'Through this plan, people can truly do what
multilevel marketing was intended to help them do--earn full-time pay
for part-time work.'"

I had trouble finding comprehensive articles about Herbalife online If
you want, you can search for these articles at your library. (If the
paper copies aren't archived there, you may be able to access them via
the library's computer system. Just tell the librarian their in
EBSCO's "Business Source Premier" section.)
The April 4, 2003 edition of "The Wall Street Journal" contains a
profile of Johnson.

The October 20, 1997 issue of Forbes features the article "BUT WHERE
When U.S. customers for Herbalife's dubious elixirs got scarce, Mark
Hughes went trolling for suckers overseas," by Steve Lubove.

"The Power of Simplicity," an interview with Mark Hughes," by Duncan
Maxwell Anderson, was published in the May 1997 issue of Success

The Nov. 1, 1999 issue of Business Week: "It's a Wonderful Herbalife,"
a profile of Hughes, written by Kathleen Morris.

Another MLM giant:

Mary Kay Cosmetics:

Regent Business Review:
features a review of "More Than a Pink Cadillac: Mary Kay Inc.'s 9
Leadership Keys to Success," by Jim Underwood (McGraw-Hill, 2003) From
the review written by Diane Wiater, Ph.D., Associate Professor and the
Assistant Dean of the Regent Graduate School of Business:

"Rather than being a work about Mary Kay the woman, it's really about
how focusing on others and valuing them will both improve people and
make a business successful. It's not a 'just for women' book; it's a
'just for managers who want to be great' book.

"Underwood presents the nine leadership keys practically, with
significant anecdotal support that they've worked because Mary Kay
walked the 'Golden Rule' talk. And he explains that payback was far
more than financial. Mary Kay changed lives. She provided women with a
sense of destiny while encouraging the priorities of God first, family
second, and career third."

In fact, Ashe's impact can't be overestimated: When she began her
company in 1963, not only did she make the women who worked for her
feel deeply appreciated, she provided them with a (at that time) rare
opportunity to build a career,and one in which they controlled their
own destiny, at that; there was no glass ceiling at Mary Kay

Mary Kay established the most famous blueprint ever for MLM success;
her legendary "Nine Leadership Keys":

"Create and maintain a common bond.
. Shape the future (think and act strategically).
. Make me feel important (value people).
. Motivate others with recognition and celebration.
. Never leave your values.
. Innovate or evaporate.
. Foster balance (God, family, career).
. Have a higher purpose."


Just as Amway and Herbalife used some already-pioneered principles,
the lessons of these, and other giants among MLMs continue to be
practiced by other smart MLM leaders.

You can think of these points as the legacy of early giants like Mary
Kay and Amway, then Herbalife.

I asked Greg Arnold,
who the author of "The Multi-Level Mangler In King Arthur's Court":  
to please offer some expert commentary for my answer, regarding the
success factors of Amway, Herbalife and other major MLMs.

Arnold is an MLM veteran who's started several MLMs (he "once helped
build an organization of over 11,000 distributors in less than a
year.") He's now also a consultant to network marketing companies and
network marketers, and an MLM trainer.

Arnold offered these observations on what made some MLMs, like Amway
and Herbalife, so hugely successful:

"You can't discount timing.  All of the billion dollar companies in
the MLM industry had great timing.  They were born during a time of 50
cent per minute long distance phone calls and information had to be
passed on through word of mouth, printed advertising or printed
material, which had to be stamped and mailed.  This meant that all
information passed on outside of friends telling friends was very

"If you were to survey 100 network marketers today as to how they
originally got involved in the industry, I believe over 90 would tell
you through a friend or relative.  Yet today, most unsuccessful mlmers
want to build their business through the internet or some other
impersonal "no-contact" way of recruiting and selling.  If you look at
the giants today, their main mode of prospecting is still the solid
old fashion, face-to-face, way.

Visionary Leaders:

"All of the giants have two more very important things in common: They
all had leaders that had laser vision that were totally committed to
that vision.  From day one, they saw ten, even twenty, years into the
future.  When problems arose they knew that some-how, some-way, they
would get through because the company's history was already written in
their mind's eye.  All of these leaders were able to share their
vision with the masses in a very powerful and inclusionary way. . .
.The vision of the owner and their ability to communicate it is one of
the two great keys to the success of the giants."

Company Culture:

"Culture is another key ingredient they all share.  Each company has a
distinct culture.  Their participants that stay long term stay because
the culture is an important part of their individual lives.  Money is
not the key issue for longevity or growth.  We all get paychecks,
there isn't anything special about getting a check from your company. 
People want to
feel like they have an identity and they are a part of something
special. The giants provide that."


"High quality products, great customer service, wonderful computer
programs, these are all important, but the giants had a very strong
vision and culture."

To Greg's list I would add:

Tenacity & Resiliency:

From the article: "The Need For SPEED - Michael Jackson, CEO of EcoQuest
written by Debbie Selinsky, from Success Magazine, Dec. 2000:

"But Jackson says he in no way deludes potential EcoQuest distributors
that multilevel marketing is a get-rich-quick option. 'It's not easy.
It requires a lot of hard work, a lot of sacrifice, and a huge
personal commitment as a family,' he says. 'There's also a huge amount
of disappointment. You think the next person you sponsor will catapult
to the top, and two days later their commitment turns to `I quit.' You
have to overcome that. A successful career in network marketing is
built on tons of failures' . . . ."

Greg Arnold offers this from-the-trenches observation:

"Most MLM companies start off with little or no money and have no real
hope of surviving long term.  Also, most new company owners have no
clue what they are in for.  Running an MLM company is not only hard
work, it is
painful. I believe all successful company owners have high tolerances to pain."

When considering resiliency, just look to the Amway and Herbalife
stories: both had to overcome major setbacks, but both companies hung
tough and remain superstar MLMs.


Arnold believes the best recruitment tool is "the product line. I
believe that people who enjoy and are even passionate about the
products make the best distributors."

When Amway began there were Amway parties, like the ones I remember
from my neighborhood. As Arnold notes, "There are many generic
training seminars out there that are held throughout the country. 
Atending these and getting to know other networkers personally as
friends I feel is the best way."

Solid Organization:


Arnold says, "Many companies start with terrible products, false
notions about the industry or some idea about getting rich quick. 
Many new company owners are ex-distributors who were never successful
as a distributor so they try there hand at ownership.  Most companies
start out pricing their product too low while paying out too much in

Successful MLMs have viable "breakage plans." To learn more about
that, read "Compensation Plan Breakage - Why and How," By Dan Jensen,
Chairman of Jenkon International, Inc.:
"Reward specific behaviors which are most desired by the company such
as recruiting, retailing, building managers and leaders, and

Think Pink: perhaps the most famous MLM reward of all time was Mary
Kay's Pink Cadillac program.

Structure: The Downline (and Upline) Approach:

Downline has actually been around for decades, starting (at least)
with Amway and remains a mainstay of MLM.

According to Arnold "Both downline and upline are old terms.  They
have been used in the industry for all of the thirty years I have been
in the industry and I suspect from almost the very beginning.

"Downline: All of the distributors you personally sponsor plus all of
the distributors they personally sponsor and so on and so on to
infinity.  Everyone under you in your group is in your downline.

"Upline:  Everyone above you in which you are a member of their
downline.  Obviously your personal sponsor and his sponsor and his
sponsor and so on are all in your upline."

Corporate Leadership:

 A "charismatic" CEO is certainly a valuable asset, as both Mary Kay
Ashe (Mary Kay Cosmetics), and Mark Hughes, both proved), as he or she
may draw the interest of economists and the financial press, and then,
perhaps, the general media.

But the fact is, most founders and CEOs don't look like movie stars
and, while very likable, aren't necessarily "charismatic." (Granted,
Frank Perdue didn't look like a movie star, yet his became a
recognizable face and helped
to drive his brand.)

Most successful business leaders never become known outside the
business press/community. That's not a problem, as most products/MLMs
aren't sold based on the CEO's personal appeal.

Successful business leaders instill a sense of confidence and pride in
everyone throughout the organization; a sense of the company
constantly going forward with a sense of purpose.

MLMs are especially dependent upon a team approach and team spirit;
successful MLM leaders know how to make their workers and feel
involved, appreciated, and valued.

At NetWork Marketing/ MLM Watchdog: "The Essence of Leadership," by
Rod Cook,, M.A., M.B.A, discusses MLM businessman and trainder
Greg Arnold's theory of "overlapping leadership"

"Greg's Rule #3: 'Communicate with all your leaders, no matter how
deep they fall in your organization, whether you get paid on them or
not.  Practice and teach over lapping leadership.'

"Don't leave the task of growing a superstar to inexperienced people. 
Large organizations don't just happen.
Like roses you have to cultivate them.  By keeping in close contact
with all the leaders on your team, you build long-term relationships
and loyalty. Leaders always want to work with other leaders, they want
to win and they don't like being ignored by their upline. . . . Make
them a part of your inner-circle."


When studying any topic, it always helps to look at the pros and cons
of an issue for greater scope. So, you might want to check out these

"The Anti-MLM, Anti-Amway Webring":

Barbara Ling's Entrepreneurial Web site, "Opposing Views of Home Based
Businesses," has a comprehensive library of articles that delve into
the pros and (sometimes rather ugly) cons of MLM:

Search Strings:

keys OR secrets AND success AND Amway OR Herbalife
success AND MLM
why MLM fails
leadership AND MLM
leadership AND OR Amway OR Herbalife
giants OR "household name" AND MLM
"Mark Hughes" AND Herbalife
DeVos AND "Van Andel" AND Amway
"Michael Johnson" AND Herbalife 
Mary Kay AND Leadership Keys

I hope my research is of help to you.

If you require any clarification, please post a "Request For
Clarification," PRIOR to rating my answer and I'll be glad to assist
you further.

Best Regards,
Google Answers Researcher

Clarification of Answer by nancylynn-ga on 26 May 2004 07:42 PDT
As noted before, I had a hard time finding online interviews with Hughes. 

I just found this site, which may be of interest to you:

At "The Herb TeamMark Hughes Training

You can read a brief essay by Hughes, "The Meaning of Success," and at
the top of that page you'll see links to four audio recordings of
Hughes's training seminars. (You'll need Real Player to hear them.)
pangus-ga rated this answer:5 out of 5 stars and gave an additional tip of: $25.00
Hello nancylynn-ga,
thank you for providing excellent answers. Nice job! 

Very much appreciated your pasting of MaryKay's 9 steps as well.I
might come back and post more questions regarding the MLM industry

Hope your house weathered out the storms :)
With kind regards,

Subject: Re: Multilevel marketing, network marketing, company success factors
From: nancylynn-ga on 26 May 2004 11:19 PDT
Thank you for your kind words and for the tip.

Thanks also for your concern: the storms veered north of here, and we
just got a few thunder boomers. Last summer, my house was damaged by
lightening, so I now take storm warnings very seriously!
Subject: MLM peddles greed and pride
From: daytrader76-ga on 04 Jun 2004 08:08 PDT
A post at 

They have virtually destroyed our lives. My husband got recruited
"part time" about 7 years ago. Attending meetings at least twice a
week and not really making any money. Through their form of
"brainwashing"- meetings, meetings, meetings, he was convinced that he
would make his fortune if he went into it full time and quit his job!
He wouldn't listen to anybody who made WAS going to work!
Each time he took money out of our retirement fund to help us make it
through the month he still insisted it WAS going to work! Well, it
hasn't worked! He was working 60-70 hrs a week, still going to
meetings and doing very little business. He has hit rock bottom with
severe depression but still has that little bit of hope that it will
work.NEVER! He has been letting me in on some of the propaganda that
goes on in these meetings: God's hand is in this business; Don't
listen to your family they will try to take the dream away from
you-when you start making money they will become believers; we need to
deprogram you from the business world-they want you to think you have
to work for somebody else; I talk to God directly; Don't get on my
wrong side because I'm vindictive and I pray that people die! These
are just a few. His "upline" even called to wish us a Merry Christmas
but when his call was returned it was really just a pressure call to
see if he was with us in 2000 or not...but no pressure! He has even
yelled at me on the phone..wonder if i'm one of those people he prays
to die! Please if you have any sense don't be conned into a MLM!
Subject: Re: Multilevel marketing, network marketing, company success factors
From: lacarney-ga on 15 Jun 2004 19:52 PDT
Just an "FYI" the FTC (Federal Trade Comission) has required Amway to
post a label on their products that state "54% of Amway Recruits make
no money and their upline makes and average of 65 dollars per month"
Subject: Re: Multilevel marketing, network marketing, company success factors
From: nancylynn-ga on 16 Jun 2004 01:08 PDT
Quoting from: lacarney-ga:
"Just an 'FYI' the FTC (Federal Trade Comission) has required Amway to
post a label on their products that state "54% of Amway Recruits make
no money and their upline makes and average of 65 dollars per month"
That's an improvement on the 1991 figures I cited in my answer: "The
lion's share of money earned by Amway distributors is pocketed by 2%
of the sales force, the organization's 35,000 so-called direct

I made a point of noting criticisms of MLMs in my answer, because --
there's plenty of criticism out there! Some people do incredibly well;
many don't.

Besides the setup of the company, it's up to the individual -- it
takes tremendous effort and salesmanship to make money selling these
products. The reality is, many distributors find their friends and
family start avoiding them because they're tired of being pressured to
buy products! You have to be very creative, as well as very dogged, in
order to sell enough product to make a profit.
Subject: Re: Multilevel marketing, network marketing, company success factors
From: pesadilla-ga on 23 Jun 2004 15:18 PDT
I can appreciate the concept of multilevel marketing except for one
*small* factor.  In multilevel marketing, you job - if you want to
make the big bucks - is to get as many people below you AND as many
people below them.  If you wanted to get a conservative 10 people
below you and each of them wanted to get a conservative 10 people
below them - 10 generations deep would more than cover the entire
population of the earth.  MLM is a great concept on paper; however,
the only people who get rich are the people who start it and the
people at the low end of the totem pole are the ones that get screwed.
 Granted, you will find that rare exception of a person who started
late in the game on the low end of the totem pole that actually makes
it big.  IT IS the rare exception though.  Just my two cents, nothing
more - nothing less.
Subject: Re: Multilevel marketing, network marketing, company success factors
From: askimbofan-ga on 21 Nov 2004 11:53 PST

Mary Kay is not a MLM.

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