When your friends turn into salesmen

Beware chums selling water filters. 'Network marketing' will be the soc ial hazard of 1995, warns Alex Spillius

Alex Spillius
Sunday 01 January 1995 01:02 GMT

IT SEEMED an innocent enough invitation at first. A neighbour asked me round to discuss a new business she was involved with. Presuming she wanted some advice from a journalist about where she might publicise it, I agreed to pop round one morning .

We chatted about the neighbourhood and she told me a bit about her very successful business career as an importer. Then she got to talking about enzymes and medical curatives, and did I realise that the nutritional industry was one of the largest growingin the world? She said that she had been wanting to get into that area for a long time but only recently had she found a product she thought was really worthwhile. All very interesting. At this point a very attractive woman in a very short dress - who my neighbour said was also "involved" - arrived and sat in on proceedings, beaming encouragingly.

Did I know, continued my neighbour, about this wonderful product called Juice Plus, which was "flash-dried", powdered raw fruit and veg in capsules? Not a vitamin, not a dietary supplement, but the real thing. The company that made them was called NSA, and the amazing thing about all NSA's products was they are not available in the shops. How was it done? Had I heard of network marketing?

Her patter went on for about an hour before it dawned on me I was being baited to join a pyramid selling outfit. I should have walked out there and then, but I was too polite and her chat was too good. After I left I felt literally sick with stupidity athaving been duped so easily.

Network marketing is, its advocates claim, one of the few boom businesses of the Nineties. How it works sounds simple: you join a company, buy their products (your initial layout might be a few hundred pounds), and sell them on a part-time basis to friends, family and colleagues. But the more important part of the business is to recruit people to join the structure below you, and then make roll-on commissions from their sales. For example, you join and then recruit five people below you. All they need to do is recruit five each, making 25. Then if each of those recruits five, and so on, you soon have 625 people in your organisation, all selling things from which you take a cut. In a few years time you could be making, oh, about £18, 000 a month. Sound good?

The growing numbers involved in network marketing suggest that plenty of people think so. In the last four years of recession the larger network companies have particularly targeted middle-class recruits with the promise of a lucrative part-time income.

Most of the big companies are American: appropriately, the best known, Amway, is an acronym of "the American Way". Amway's main lines are household cleaning fluids, nutrition products and cosmetics. Other major players include NSA, specialising in Juice Plus, water filters and security devices, Herbalife (nutrition) and Cabouchon (jewellery and fashion accessories).

Unemployed graduates, freelancers and management victims of "company downsizing" are particularly likely to be tapped, as are married couples (which are seen as more efficient networking units). If it hasn't yet happened to you, it is likely that sometime this year, sooner rather than later, a colleague, an old friend, or someone you meet at a wedding will mention a "business opportunity you might be interested in". Over 442,000 people are now involved in the whole direct-selling business in the UK.

Network marketing companies would like to be seen as part of the same tradition as the Tupperware and Avon ladies, but it is a cosy connection which is almost perniciously misleading. You can close the door on the Britannica man, and you know exactly what he is offering. But as I found out, the whole process of recruitment into network marketing is more insidious, exploiting social and family relationships to personal advantage.

Another journalist friend had a similar experience. "Some old family friends said: 'As a freelance you'll be interested in a business opportunity from a $4bn company.' I agreed to go to a meeting and dress smartly: they said someone was coming from a long way to talk to us. It turned out that I knew all the other people there - all of them were family friends. It was ridiculous and embarrassing."

Alistair, an administrator in the music business, and his wife recently met another young couple a friend's wedding. After they had been chatting and drinking for a while, Alistair admitted he felt that for someone in his mid-thirties he was under achieving. The man said he knew of a business opportunity, and how about lunch at a hotel near Heathrow.

"I had the impression we were discussing a serious sideline proposition, but it turned out to be one step up from door-to- door, as it were," recalls Alistair. "As soon as I saw all these books under the coffee table about Success I began to have my doubts. But he was an excellent salesman and I left the hotel feeling 50/50 about it. Fortunately my wife snapped me out of it." Had she not, Alistair could have ended up joining Amway. "As soon as I thought it through I realised I was going to lose all my friends because you have to sell to them, and the products they were offering weren't even that great."

The products are in fact of secondary importance. As Alistair discovered, the recruitment process involves a lot of dream talk: where do you want to be in five years time, don't you want to walk the beaches of the world in retirement? "A lot of people are unsatisfied in their job and if a short-cut is offered I can understand why they would want to do it," says Alistair. "A lot of people don't value their friends that highly, and the family is the only important thing. They think, well, if w e lose our friends we've still got each other." And indeed in the lobby of Amway's UK headquarters in Milton Keynes one wall is adorned with photographs of happy, smiling prosperous couples.

Peter and Gay Lewis, as youthful a pair in their early 50s as you are likely to come across, fit that description pretty well. They are top-ranking distributors with Caura, one of the fastest growing network marketing companies, selling costume jewellery. "I really enjoy it," chirps Gay. "I love the product and it's great to run your own business, though you have to work hard." She concentrates on selling the wares while Peter looks after building the network, which already has 300 members. (Formerly they ran a small jewellery company of their own.) "Over the next three to five years this will become an international business of people we can work with as friends," beams Peter. "We are both Roman Catholics and I like to be doing a business that is ethical and where we can make friends some money." There have, however, been accusations of cultishness levelled at some network marketing companies. Leaders of Amway "groups" are known to organise huge, evangelical-style rall ies to deliver their message ofpersonal fortune. My own experience with NSA, following my neighbour's initial sales pitch, raised questions about where super-sales techniques become psychological manipulation.

About a week after she had approached me, I was invited to an NSA meeting to find out more, and as my journalistic hackles had been raised I decided to go along. It was held at the prestigious Institute of Directors. Everyone in the audience of about 40 people was very smart, the men in suits, the women power-dressed.

A woman called Fatima Murray, evidently someone at or very near the top of a pyramid, gave a talk which used the classic techniques of both the salesman and the evangelist of repeating key phrases, gradually slipping from "I" to "we", and of posing questions only a fool would say no to. "The question that begs to be answered is: is this business worth six years of part-time effort for an income of approximately £19,000 per month? Do ask yourself that question." Then there was the cultish paranoia about the outside world's ignorance. After the meeting someone high up in NSA told me: "I would suggest you didn't talk about this too much to your friends because of course there is a negativity. It might spoil things for later."

When I told the same man that selling wasn't for me, he said selling had little to do with it. "What we are is messengers, we are creating a picture. That picture can be whatever you want it to be - you know, people think they might pay the school fees or buy a holiday." The products were easy to move, they sold themselves.

Dan Shuster, general manager of Amway UK, also insisted: "We don't promote hard selling. We don't tell people to go door- to-door." When I asked how important it was to actually shift a large amount of products, he agreed that, "some people concentrate more on building the business than selling. And that's where the real money is."

This is the old problem with pyramids: the top glitters and the bottom struggles. The turnover of personnel in the network marketing business is 120 per cent a year. There is every indication that many drop it pretty quickly. It is plugged as a part-timebusiness, but it seems it has to be more or less full-time to make proper money.

Yet somewhere in all this there is a genuine business trend. Ten years ago, another direct purchase method, the mail order business, was negligible: now it is worth £5bn. There does appear to be more willingness among the British to shop at home and buy from friends, even in well-to-do circles. Caura, for example, is well established among the Chelsea set, and even the Princess of Wales is thought to have bought some of their trinkets. The managing director, Charles Owen, is aware of the uneasiness manyfeel buying from friends and is launching a direct-order scheme soon.

"People know where they are with jewellery - a harder sell is needed for washing-up liquid," he says. "If you look at women speaking socially, they say, 'That's a lovely dress, where did you get it?' " Caura, he says, in 18 months has grossed £5m and has5,500 distributors.

It sounds harmless enough. But if my neighbour ever changes her line to jewellery, I wouldn't cross the road if she was giving it away.

6 An advice sheet on network marketing is available from the DTI, tel 071-215 3342

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