Have you heard the ‘Penny Doubled Daily’ story? First, assume you have successfully interviewed for a job and your new employer is offering you one of two compensation packages. Next, the big question, which package would you choose:
- $500,000 a year or
- the total dollar value of a penny (one cent) doubled every day for a month (28—31 days)?
Did you choose $500,000? If so, this table will surprise you.
That’s the ‘Penny Doubled Daily Story.’ Whether you call it compounding, geometric growth or exponential growth, it takes time before the dollar amounts become significant, but once they do… WOW.
Do you think it’s fair for network marketing companies to suggest that your income will experience exponential growth? Network marketing leaders love to draw circles, representing distributors, on a whiteboard. The big circle at the top is you. The ever-expanding number of circles drawn below represents your team. OK, now, wait for it, here comes the ‘Big Money’ pitch. The leader will now attach a dramatic, high-dollar, income projection. Once the board is full of circles and big money, they will ask, “What if your income was just one-half or even one-quarter of that amount?” No hyperbole there, right? My sarcasm relates to the fifty-plus year history of over-the-top BS in multilevel marketing (MLM).
Q: Does exponential growth happen in real-world MLM?
A: Rarely, if ever. Credit card balances and a pitiful income lead most network marketing distributors to quit. Early on, they see money going out and little, or nothing, coming in. The industry refers to quitting as attrition. Attrition is a huge problem, I’ve seen estimates that 95–98% of distributors quit. Many, probably most, quit after just three months. A network marketing aphorism is, “The only way to fail is to quit.” Sadly, industry-wide, people quit in large numbers every day. The brutal truth is that even if you hang in there, the odds do not favour achieving your income goals. MLM corporate public disclosure statements (their ‘Statement of Average Gross Compensation’) reveal that most distributors never see a profit.
If you’ve encountered a persuasive individual who is suggesting that you can earn a fortune, working from home with what you already have. Take a deep breath and ask for her/his company’s Statement of Average Gross Compensation. Contrary to what you’re told, there is no urgency. There’s even time to read Network Marketing Heads Up.