If you feel like reading and have got nothing to do, here is opinion essay that I have written as one of my Marketing 101 assignments. =)
Marketing Ethics in Direct Selling Companies
Throughout the assignment, I will be discussing direct selling ethics. Before starting my points, I would like to explain what direct selling is and how it works. Direct selling is the marketing of products or services to consumers through sales tactics including presentations, demonstrations, and making cold calling phone calls. Most direct selling companies do not require “middle men” such as retail stores and brokers to sell their products. Their employees use word-of-mouth techniques to market their products and expand their network. As their network grows larger, they earn more profit without doing much because they rely on their networks to market the products. We know that people in our network will have another network of their own and so on, this is what we call the power of networking, which is utilized by most direct selling companies. Therefore, they do not spend on advertising like television, newspaper, and magazines etc; they prefer to use that amount of money on their employees. That is why the norm said that people who are hard worker will be likely to succeed in direct selling business.
In the past two years, I joined a few direct selling companies, and I have analyzed the methods they have used through observations and surveys and I would really like to express my thoughts and opinions on this issue. It sounds nice when the direct selling companies are able to expand their network and earn money from doing so. However, we have to know that getting someone to join your marketing network is not easy, especially when there is a requirement to purchase a minimum amount of products (it does not matter whether they are necessity products or luxury products) to maintain your membership every month. In addition to that, there are differences between ethics and law. No one will be enforceable in court as long as their actions do not violate society’s values and standard; however, it does not mean that they do not violate moral principles and values. Hence most direct selling companies fall into the category of unethical but legal business. (Note that I stated “most” not “all” direct selling companies because I might not know if there is an ethical direct selling company. Also I am reflecting direct selling companies ethics in my home country in Malaysia, not United States, so I do not know whether they operate the same methods).
The first unethical behavior of direct selling companies is that they often take advantage of young adults or students. They tend to focus on young adults around the age of eighteen to twenty-four due to their immature mindsets. After graduating from high school, most of them tend to experience working while studying in college or pre-university. Somehow, through network of friends, some of them will get in touch with direct selling. At their age, if they join the company, they tend to work hard and follow the steps they have been exposed to. I believe that this is the case because they have got nothing to lose; all they gain is experience (or money if they are hardworking, sometimes it is really hard for starters to sell any products). If the recruiter’s company’s business plan is well-planned, most of the students are very likely to be persuaded, especially when recruiters structure their sentences and plans in a very convincing way. However, most of the recruiters are deceitful. They usually have a set of calculations whereby if their down-lines (or the people who are recruited) sell any product, as up-lines do (recruiters), they will get rewards points which will be converted into cash. In other words, some of them are ‘using’ the young adults to help them market their products yet they themselves are not doing anything productive.
To further elaborate on the previous point, recruiters’ companies have already developed a ‘beneficial’ program for the people who sign up. Upon signing up, students will receive packages as new members, including a guidebook to assist them on how to start the business. In exchange for that, they are required to pay an annual fee or membership fee which is costly. On the other hand, the recruiters will get incentives (or cash) for successfully hiring someone. In addition, recruiters often persuade students by challenging them. For example, they will say something like “We only recruit hard-working people.” I presume this action is unethical because they are saying that students are not hard-working if they do not join. Well, a mature adult would not even care what the recruiters say; recruiters are mainly taking advantage of the naive minds of students.
The second unethical behavior of direct selling companies is that recruiters often misuse the network of friends. I am going to describe how they take it for granted. Firstly, they will ask their down-lines to make a list of contacts of the network of friends that they have. After that, they will ask them to make short calls to invite them out for a cup of tea while explaining a little about the business over the phone. So far it sounds nothing wrong. However, let us consider this. How likely will your friends reject you directly if you ask them out and discuss a business? I would say most of them will not directly reject you, they will do it indirectly instead. For instance, they might say that they are not free on that day or they are always busy. Somehow, most of the down-lines do not get the message that their friends had rejected them, thus they keep on pursuing another call on some other days; they will keep on calling until their friends tell them directly - “No, I am not interested.” If I am your friend and you kept making calls to my private cell phone telling me about your business, most probably I will try to avoid answering your calls and put you into my blocked list. Basically, the up-lines just simply neglect the fact of this issue; they only focus on whether “Did my down-lines manage to recruit someone yet?”
To further enhance the previous point, I’m going to use my personal experience as an example. Back then, I was too naïve, playing with the phone by simply calling anyone in my list. After few months of trying, I have never gotten anyone to come out and discuss the business with me. To explain this story, I would use another real life example. A friend of mine kept on telling me that she was so annoyed by a friend of hers who texted her nearly every night. The reason was to ask her when she had time to come out for a business talk. She did not want to reject it directly and she just kept on complaining to me about it. He did not only texted her, sometimes he even called her every night. At the end of the second month, my friend could not stand it and she blurted out that she was not interested. It simply meant the friend of hers did not attempt to give up despite two months of persuasion. Personally, I have worked in the same direct selling company. I have used the same method to call my friends, so I know how embarrassed I was when I started to call my friends.
If I were to be in charge of a direct selling company, I would definitely stress on my recruiter’s methods of recruiting and expanding their network. I would prohibit any program that misuses or manipulates the minds of young adults (or students). Any recruiter who violates the rule of my company will be fired. I believe that if there is no action taken on these issues, the image of my direct selling company will most likely be destroyed in the long-run. Hence, together with my business partners, we will discuss on the recruiting plans. I will not allow my company to use any methods which most direct selling companies are using to invade the privacy of my potential sellers from any age range.
I understand that every business’s main objective is to maximize profit (except non-profit business). However, their way of doing business might be ethical only for their own company. Thus, this results in conflicted interests between company and society. Business ethics can be examined from various perspectives. In this case, it will be from company’s perspective and society’s perspective. Whatever recruiters do seem to be ethical for their company but it does not seem to be ethical for society. Hence, I will propose a plan where it benefits both company and society. Instead of aggressively approaching potential sellers and customers, companies should have let the potential sellers and customers approach them. For instance, they could set up a talk or demonstration about their products and business plan in a regional area. They could set up mini advertisements like posters or flyers (which does not cost much) somewhere noticeable a week or two in advance to notify the people around that area. People who are interested may call in so that companies could provide transportation on that day of the talk. On the day of the talk, they can start recruiting those who are interested without ‘forcing’ them. I strongly believe that by doing so, society’s image of direct selling companies will turn positive in the long-run.
In conclusion, I think the direct-selling companies’ methods of recruiting are unethical in Malaysia. They are unethical because the employees take advantage of young adults through various ways to get them involved. The solution that I have proposed above is the best solution for direct-selling companies to recruit people through talks or presentations. This way, they allow society or community to decide on whether they want to join without coercion. However, this method might not recruit more people than the aggressive method and it might require recruiters to relocate. Last but not least, it is ethical to both the company and the society.
