On this blog, we talk a lot about making money. For a change this time, let’s talk about breaking even. In Egypt, people sometimes do something called a gam`iyya. This is how a gam`iyya works: Ahmed, Busayna, Tamer, Gamal, Hassan, and Khalid are neighbors, and each of them wants to make a big purchase that requires setting aside part of his or her income for a few months. Every month for six months (the number of months almost always equals the number of participants in a gam`iyya), each participant contributes 600 Egyptian pounds (about 75 dollars) to the pot; you can do a gam`iyya with any amount of money, but for purposes of illustration, we chose 600 pounds. The first month, Ahmed takes the pot, Busayna takes the pot the second month, Tamer takes it the third month, and so on. At the end of the six months, each person has gotten a payment of 3600 pounds to use for his or her big purchase. Everyone has benefited, but everyone has broken even. In a gam`iyya, no one makes money at anyone else’s expense. The obvious question is this: how is a gam`iyya different from each person just putting 600 dollars into his or her savings account every month for six months. The answer is accountability. Six months is a long time to wait for a big purchase unless you stay focused on the goal. How many times have you tried to save for something, only for distractions and impulse purchases to get in your way? Let us say that, on pay day, Khalid gets a craving for Cinnabon on the way home from work. As he rides the bus home from work, he imagines the smiles on his children’s faces if he were to come in the door with a big box of warm cinnamon buns. The thing that stops him from making the impulse purchase is that he does not want to break his promise to his friends; he promised them that he would contribute 600 pounds per month to the gam`iyya; he would seem unreliable if he spent part of his gam`iyya budget on frivolous things instead of doing what he promised. Accountability is the same reason that none of the other neighbors will skip town after receiving their payments, leaving their friends high and dry.
I mention the gam`iyya because it involves several themes that relate to the multi-level marketing (MLM) scene. First of all, there is long-term planning. In MLM, as in the gam`iyya, you have to wait a while, and keep paying in, before you get your payout. You could also call it patience and self-discipline. The gam`iyya story also reminds us that breaking even is no small accomplishment. Then, especially when it comes to the network marketing side of MLM, there is the matter of financial dealings with friends. It is natural to want to do right by your relatives, friends, co-workers, and neighbors, people with whom you have a long, ongoing relationship. The gam`iyya, described above, works because no one wants to flake out on their friends. Now think about the promises you made to your friends and family members while trying to get them to sign up for one or another MLM program so you could get credit for being their sponsor, and think about how many of those things you promised actually came true.
The purpose of this blog is not to turn you against MLM. It is possible to earn income from MLM if you choose the right MLM program and if, within, that MLM program, you play your cards right. I have been reviewing different MLM programs on this blog, and in this post, I will review ACN.
ACN originally stood for American Communications Network. It began operating in 1993, but much like the SAT, ACN is now just initials that don’t stand for anything. The reason for this change was that the company wanted to emphasize that it was operating not only in the United States, but also in many other countries. The company’s founders are Tony and Mike Cupisz, Greg Provenzano, and Robert Stevanovski. You probably have not heard any of those names, but you probably have heard of Donald Trump, who acted as a spokesperson for ACN until he began his campaign for the presidency. ACN began as a retailer of phone services and utilities, but things really took off in 1996, when the regulations on phone services became less strict, allowing ACN to buy phone services (land line and cellular) from major phone companies like AT&T and sell them at a markup. In the days before smart phones rendered most of its phone services obsolete, it dealt in long distance phone service, video phones, and the like. It adapted its services to the times; for example, today, one of its products is an international calling app that works on smart phones like the iPhone and Android.
ACN Compensation Plan
Like almost all MLM programs, ACN costs money to join. People who sell CAN products are known as independent business operators (IBOs). You can join as Customer Representative, where you sell ACN products and make a commission of your own sales; this opportunity does not involve any recruiting. The fee to start as a customer representative is $99. The commission you receive on your own sales ranges from two percent to eight percent. Plus, you can receive monthly bonuses for reaching certain sales quotas. However, if you pay $499, you can start as a Team Trainer. Team Trainers are responsible for recruiting new IBOs, and they receive commissions based on their sales and recruitment success, as well as the sales and recruitment success of the people “down line” from them. (That means that if Adam recruits Hugh, Hugh recruits Irfan, Irfan recruits Jack, and Jack recruits Kevin, the Hugh, Irfan, Jack, and Kevin are down line from Adam. Irfan, Jack, and Kevin are down line from Hugh, and so on.) There are opportunities for advancement based on your success as a Team Trainer. You can advance to the levels of Executive Team Trainer, Team Coordinator, and Regional Vice President. There are additional bonuses available only to people who have signed up as Team Trainers or have advanced beyond the Team Trainer level.
Of course, unless you are really new to MLM, you know that getting the big bonuses is not very easy at all. The idea of paying such big fees to get started probably makes you cringe, and it should. Like many MLMs, ACN has not published a lot of figures about the income of its IBOs, but the most recent figures available show that the average active IBO makes 9 dollars per month from ACN activities. That figure only includes active members; it doesn’t even include the ones who have dropped out. If you ever tried to recruit a friend for MLM, you know that most MLM marketers drop out of most of the MLMs they join. 9 dollars per month is hardly enough to buy some cinnamon buns on the way home from work.
Advantages and Disadvantages of ACN
- The company has been around since 1993, making it one of the oldest MLM companies out there. If you have been reading this blog, you have probably heard the statistic about how most MLMs go out of business after two years. You don’t have to worry about that with ACN; it is entering its 23rd
- For certain people, an international calling app for a smart phone is pretty useful.
- There are so many things about ACN’s history and business practices that just seem sleazy. Even if you are not among the people who think Donald Trump is a slime ball, the idea of buying phone services from reputable companies like AT&T and reselling them for a higher price just seems unscrupulous.
- Most of the services that ACN offers are available for much lower prices with much less hassle. In the age of smart phones, where consumers are constantly connected to the Internet, almost all your potential customers know this. This problem is not exclusive to ACN; there are lots of MLMs that sell outrageously expensive vitamin supplements when you could get the exact same thing from store brand vitamins at the supermarket. Trying to sell technology services at an inflated price will not fool anyone except the least tech savvy people out there. How would you feel if someone tried to sell overpriced phone apps to your grandparents? You wouldn’t like it much.
- In general, when you are doing unsolicited sales, it is more difficult to sell intangible services than it is to sell physical products. People do not usually make impulse purchases for things like long distance calling plans. The people who really need them seek them out (and in today’s market, they usually comparison shop for the best price.) The people who don’t really need them don’t buy them. If you are selling tangible items, people might be sold on them for a silly reason; impulse is a powerful force in consumer behavior. Someone might buy an expensive bottle of vitamins just because the bottle is cool looking. Maybe it has a pomegranate colored cap, and it reminds the consumer of the health benefits of pomegranate, or it makes them feel inspired to decorate their kitchen, or the thought of it gives them a pleasantly tangy taste in their mouth, or something. But impulse buying usually doesn’t work with boring, intangible things like phone services.
- The dropout rate for participants in the ACN compensation plans is astronomical. This is not to single out ACN among MLMs; it is a disadvantage for other MLMs, too.
- To be nine bucks richer at the end of the month, you could do so many other things that would make you feel less sleazy. You could bring your coffee from home instead of stopping at Starbucks for just a few days. You could clip a few coupons, just a few. In most states, you could take a trash bag full of empty soda cans down to the recycling plant. You could bother to redeem a few mail-in rebates, just a few. You could take the bus to work instead of taking Uber. Best of all, none of those things involve preying on the naiveté of consumers.
There are much easier ways to get nine bucks per month. If you have a boring cubicle job, you can easily earn nine bucks a month on Amazon Mechanical Turk when you are bored at work. There are also much more fun ways to spend 500 dollars. If you put your mind to it, you could go on a romantic weekend getaway with your spouse for that kind of money. Meanwhile, whereas other MLMs name their levels thing like “Unleashed” and “Blue Diamond”, making you feel like you are in a video game, the names of the ACN ranks just make you feel like you are playing pretend in an empty classroom in the College of Business. If you want to spend your money on things that sound like Donald Trump named them, you can just as easily head to your local Burlington Coat Factory and buy some Donald Trump brand ties and business casual shirts. They cost a lot less than $499.
ACN is far from the worst MLM out there. If it were really just a pyramid scheme, it would have collapsed under its own weight a long time ago, like so many other MLMs have. When you look at the big picture, though, joining ACN, whether as a Customer Representative or as a Team Trainer, really is not the best use of your time and money. It isn’t easy to make money; it isn’t even particularly easy to break even. You have demonstrated the patience to read all the way to the end of this post, which means to me that you have some measure of self-discipline. You can use it in much more profitable ways than joining ACN.