Michael Dlouhy by John Milton Fogg

John Milton FoggOnce he was sold on network marketing, Mike decided to become a student of the industry. In a two year period he joined over 100 different companies and began figuring out how and why this business really works and doesn’t.  When did you first learn about network marketing? How did you get involved? An insurance salesman contacted us in 1978, he happened to be with A.L. Williams and he showed me about buying term insurance and investing the difference— and he started drawing circles. That’s how I first learned about network marketing and we actually joined A.L. Williams and started building an organization there. What was so good about that experience was that we learned, early on, about target marketing:

Only talking to people that have raised their hand and said, “I am looking for your product and service or your opportunity!”

 NULL  So, that was a real blessing to us and still, 26 years later, they send an annual check on the residual of some of the business we did way back then. Michael, what was your career at the time? I was a carpenter, in construction, building houses. We were probably building 100-150 houses a year, so we actually started with A.L. Williams strictly part time. When the upline said to make a list of your friends and family and to go get 100 ‘no’s’, I thought that didn’t make any sense! I don’t like the word ‘no’ and if three no’s hurt, real bad, what do I need 97 more for? So, we just didn’t go down that road and that’s why we focus so strongly on target marketing and we only talk to people that want to talk to us. How did you do that? We started doing ads for the product or the service and only talked to the people that wanted or needed insurance. Then we joined NSA, back then it was the water filters. What was so amazing about that time was that we were learning about compensation plans. I learned what a stair-step breakaway would do. And what I learned through that process was that nobody was retailing any product. It was all about buying a $5000 order of filters, sticking them in your garage and getting a $2500 check that you could wave in somebody’s face. But you don’t actually build an organization of people that are doing anything. It was all about getting them to buy a $5000 front-end load deal. And it doesn’t work, John. The reason it doesn’t work is because nobody is moving product to the end consumer. I saw early on that we were making $15,000 a month, real quick, and what we were good at was convincing people they needed to do like we did and buy that big package.

Once I saw that nobody was retailing to anybody, I said, “Man, this is never going to last long, it’s never going to work.” But the main thing was that it was going to hurt people. So, I knew I couldn’t do that.

But again, we ran ads for people that had bad water and wanted to have their water fixed. Mike, when you came to the realization that it wasn’t a viable business operation, yet you were receiving a good income, what went through your head? I just thought about how it was hurting people. I said, “This is not right.” Linda and I were retailing them, but when I realized people were not doing that, I contacted them and told them they needed to use my system for retailing or send it all back. I knew there would be charge backs, but I like to sleep at night. I just couldn’t sleep at night knowing that somebody had $2500 worth of filters on their credit card that they weren’t retailing. What I learned through that process and a lot of research and digging is…

92 percent of the population is ‘sales resistant’. They don’t like to sell and they don’t like to be sold. When they see a salesman coming they disappear!

People just don’t want to be sold. I guarantee you, John, if you go into the store and you were going in to buy a pair of deck shoes or loafers and they tried selling you something with a different design, a pointy toe or a big heel or something, you would run. You’re not going to be sold. But we, as humans, love to buy. The way I would describe it to you— My mother in law, so I’m told, absolutely makes the best fruitcake in the world. Her brothers and sisters, every year, beg for one of her fruitcakes. Now me, personally, I wouldn’t eat fruitcake if you put a gun to my head. I don’t like fruitcake. I’m just not a fruitcake eater. But the point is, all you have to do is find people that like fruitcake and see if they want the one with nuts or without nuts. It’s that simple. So that target marketing, learning to advertise and things like that to find those people was probably the greatest thing that ever happened to us. But I found in NSA, the people weren’t plugging into that system, they weren’t retailing products; I knew that it would not have a long life. So what did you do? Well, like I said, I contacted those people that weren’t retailing and told them to send their product back and get their money back. And how long did you remain with that company? We were probably only with them for about 10 months total. Then we finally walked away from it. I take it you walked away sold on network marketing? No question about it! Sold on network marketing and at that point I decided to become a student of the industry and really learn this thing. So I went ahead and invested very heavily. In a two year period I joined over 100 different companies to start figuring them out. I had to learn out why it works and why it doesn’t work.

What I found was that every company has its business model. The business model creates a certain behavior in the field.

Just like with NSA, the business model was front-end load and created a bunch of fast money for people. But if there’s not an end consumer getting the product and having the benefit of it, it doesn’t work long term. So, joining those 100 companies over that two year period provided me a greater education than I could have received in college. There is no college out there that you can go to and get a degree in this, so I figured the best thing to do was to just go out there and learn in the process. I ran into a gentleman, Tom ‘Big Al’ Schreiter, and I got his tapes and books and I read and listened to everything. I said, “You know, I really am going to figure this out” and that lead to more realizations. John, think about this for a second:

What’s the lifeblood of any business in any company? Product! Product movement, sold to an end consumer. I don’t care if it’s corporate America or network marketing, you have to have product being moved.

So, if you look at that you look at compensation plans differently. Look at a binary compensation plan. How much money are you paid for retailing a product? It doesn’t drive a retailing atmosphere— it drives an atmosphere of recruit, recruit, recruit. And then get the recruited people to buy the product. What that taught me was to study policies and procedures in these companies. When I found a company that was really hitting hard with the policy that you had to sell 70 percent of your product I wanted to know more about those business models. When I started to understand that there are companies that really emphasize the 70 percent rule, it was absolutely life changing. In those 100 companies I joined, the thing that I saw happen the most around why they would not make it and how they destroyed themselves was greed and ego. That was amazing and it’s been an amazing journey. Michael, about the greed and ego, was it everywhere or primarily at the corporate level or distributor level or…? Where I saw it, John, is if it was at the corporate level it permeated down through the entir
e organization. In other words, there’s a saying that says, “Fish rots from the head” and if corporate management is full of greed and ego then the master distributors and top organizations will follow suit. In that process of learning about all those different business models I started creating what I call the Five Pillars for Success. These are five cornerstones, five things you need in place to have success in a business.

Pillar number one, for me, was the company management experience. You have to ask if the company management had built an organization themselves.



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